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Telekom waits on Sprint
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July 10, 2000: 11:18 a.m. ET
German firm poised for deal with US telco once WorldCom tie-up evaporates
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LONDON (CNNfn) - Deutsche Telekom was poised Monday to make its latest attempt to clinch a big deal in the United States. Sprint Corp.'s merger with WorldCom Inc. is unraveling, leaving Deutsche poised to step in with a $100 billion plan of its own.
Deutsche officials on Monday maintained their policy of silence, with WorldCom's deal with Sprint not yet officially dead. Having spluttered in its overseas strategy in the past however, Telekom is unlikely to want to miss this opportunity.
Telekom's track record at pulling off international acquisitions is patchy, with at least as many misses as hits. Computer maker and mobile-phone operator Olivetti last year defeated the German company's surprise bid for Telecom Italia, an offer that also turned former ally France Telecom into an enemy. A more recent attempt to buy Denver-based Qwest Communications International Inc. (Q: Research, Estimates) also foundered.
On the plus side the company succeeded in acquiring One-2-One, Britain's fourth-largest cellular network provider, in a $13 billion deal last August. And last week it took a step forward in eastern Europe, cementing control of Hungarian operator Matav in a deal valuing the company at $7.4 billion.
There's no doubting Telekom's ambition to expand overseas. The collapse of its alliance with France Telecom also meant the end of its participation in Global One, an international joint venture with Sprint Corp. (FON: Research, Estimates), later bought out entirely by France Telecom.
That left a hole in the company's coverage. Ironically, it could be Sprint that fills the gap. Money isn't a problem. Deutsche recently launched the world's largest corporate bond, raising $14.5 billion, and ambitious chief executive Ron Sommer boasts he has around $100 billion in the pot to fund expansion.
A big U.S. deal would be a fitting culmination to former Sony executive Sommer's reign at Telekom. He takes the credit for overseeing the company's transformation from inefficient, state-owned monolith to a publicly traded telecom firm - privatized in 1996 - that ranks as Europe's largest, with a market capitalization of nearly $180 billion.
In the process Telekom has been instrumental in creating an equity culture among Germany's private investors, helping to reduce the domination of fixed-income securities in German's asset portfolios. Telekom is the largest and most widely-held company on the Frankfurt Stock Exchange. The government retains a majority holding.
In the Internet arena too, Telekom is looking to make a big splash. Already T-Online International AG, its Web access unit, is Europe's largest Internet service provider, and has won the business of an impressive proportion of Germans going online.
T-Online's successful IPO earlier this year was primarily aimed at giving the firm the ability to make big acquisitions among Internet companies. Telekom retains a stake of around 90 percent. 
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Deutsche Telekom
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