Europe phone deal: clearly a work in progress

Article Abstract:

The proposed merger of Deutsche Telekom and Telecom Italia faces skepticism. It's perceived that the Italian company's desire is to fend off hostile takeover by Olivetti, which plans to continue its efforts on the assumption that shareholders will think its deal is better. The combination of the German and Italian phone companies will result in the largest phone services giant in the world. . Shares in Deutsche Telekom dropped 2.2% to 35.30 euros. Shares in Telecom Italia went down 7/10ths of a euro to 9.84. Chief executives of the two companies, Ron Sommer and Franco Bernabe, promoted the plan, pointing to the relative absence of overlap of services and the large number of subscribers the new company will have. They expressed no intention to cut the large work force left over from the days of government monopoly, but did mention plans for U.S. expansion. Other problems are the regulatory maze the new company will have to navigate and the suspicions of the Italian government, concerned that it will be 40% owned by the German state. The merger is also likely to have a negative impact on alliances between France Telecom and Sprint.

United States, Olivetti S.p.A.

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Italy's phone monopoly confronts a new world

Article Abstract:

Societa Finanziaria Telefonica per Azioni (Stet) and IBM are discussing the possibility of cooperative ventures that will help Stet relinquish some of its power as a state monopoly. Stet is interested in changing its practices because other European countries are deregulating their telecommunications industries. As a result of this deregulation, many European telecommunication companies are forming strategic partnerships with American companies and have technological advantages over Stet. This will give the other companies a lead over Stet when the entire European telecommunications market is deregulated in 1998. IBM offers Stet the opportunity to partner with a company that has global telecommunications networks all over the world. Analysts say that Stet has been reluctant to give up its control over the Italian market and is one of the last large companies to search for international partners.

Planning, International Business Machines Corp., Cooperative agreement for product marketing, Company organization, Societa Finanziaria Telefonica

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Phone giants say merger hinges on role of Germany

Article Abstract:

Telecom Italia and Deutsche Telekom have tentatively agreed to merge. Germany would have about a 45% stake in the new company, but has indicated it would be willing to divest enough of its shares to make its voting rights equal to Italy's. Italy, which only owns about 3.4% of Telecom Italia but retains veto rights, supports the merger if the German government gives up most of its voting rights in the new company. The merger would result in the largest telecommunications services company in the world, with a market capitalization of $180 billion. Deutsche Telekom would offer three of its shares for each Telecom Italia share, leaving current Deutsche Telekom shareholders with 56% of the new company. The merger would put a stop to Olivetti S.p.A.'s attempted hostile takeover of Telecom Italia.

Economic aspects, Telecommunications systems, Government ownership, Nationalization

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