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Deutsche Telekom is examining the potential merger with the Orange-Handelsblatt

BERLIN (Reuters) – Deutsche Telekom is examining a possible partnership with the French pear and Orange), the German business newspaper Handelsblatt reported on Wednesday, according to executives close to the matter.

FILE PHOTO: Leaflets with the logo of Deutsche Telekom AG are listed in the shop at the headquarters of the German telecommunications giant from Bonn, Germany, February 19, 2019 at the latest. REUTERS/Wolfgang rattay

A spokesman for Orange, said: “there were no ideas or discussions going on” about such an initiative.

Deutsche Telekom declined to comment.

Orange and Deutsche Telekom have been talking about it off and on for years, even though the merger negotiations in 2017 to fizzle out, because it was not feasible for the companies on an equal footing, a source told Reuters last year.

Handelsblatt said Deutsche Telekom was the assessment of the potential of a tie-up with Orange, who added that the two companies had worked together on acquisitions in the past eight years.

Deutsche Telekom shares were up 1.5% at 1446 GMT, the biggest gainer on the German blue-chip index,. Orange’s shares initially rose by 1.4% after the report, but slipped back into negative territory, after the French company’s denial.

The French and German governments have self-interests in the respective companies, making a deal with a political dimension. The size of Deutsche Telekom, it means that a deal would be likely to mean that a take-over of Orange, may be hard for Paris to swallow it.

Deutsche Telekom is one of Europe’s largest telecommunications company, with a market capitalization of about 72 billion euros ($79 billion), according to the Refinitiv of the data. The paris-listed Amber has a value of about 40 billion euros.

“We believe that the likelihood of such a combination is very, very low,” said analysts at Jefferies, citing the difficulties that are to be included, the likely political opposition, and the German firms of larger size, and limited cross-border synergies.

The european telecoms industry is highly fragmented compared to the US market, making efforts to increase investment, despite the competition from internet-based companies, such as Amazon.

Reporting Tassilo Hummel; Additional reporting by Mathieu Rosemain, by Danilo Masoni and Anika Ross, writing by Emma Thomasson; Editing by Thomas Seythal and Edmund Blair

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