Deutsche Telekom sees drawbacks to France Telecom network merger

There is little value from in merging the German mobile network of Deutsche Telekom (DT) and France Telecom's (FT) French network, according to Niek Jan van Damme, the head of Deutsche Telekom's domestic operations.

"I'm not sure there are many advantages for both parties because you get to limits," Jan van Damme told Bloomberg in an interview. "The management of a bigger network normally has more challenges than a smaller network."

The operators revealed in February 2011 that they planned to investigate sharing their Radio Access Netowrks across Europe as part of a wider cooperation deal, with Ed Kozel, DT's CTO at the time, claiming that co-operation with FT would enable both operators to bring sustained benefits to their customers.

While the joint handset and infrastructure purchasing deal between DT and FT is today running at €13 billion a year, Jan van Damme couldn't say whether this current alliance might lead to deeper integration, according to Bloomberg.

This comes after France's new Industry Minister, Arnaud Montebourg, revealed at the weekend to Journal du Dimanche that he favoured FT merging with DT to create a single company based upon the model seen with European Aeronautic Defence & Space (EADS).

Montebourg is said to have floated the idea of a merger at a recent meeting with FT CEO Stephane Richard, although any discussion with DT on this topic has been denied by France Telecom spokesman Tom Wright, according to Bloomberg.

Separately, Neelie Kroes, vice president of the European Commission for the digital agenda, has indicated that M&A activity in the European telecoms sector could help improve broadband coverage across the continent.

Speaking at the Reuters Technology and Media Summit, Kroes said Europe "needs to get back to the driver's seat of the digital society"--and that M&As might be one way of achieving this goal, according to

Kroes added that cross-border consolidation within the telecoms sector could enable these larger firms to then invest more in mobile and broadband networks, allowing Europe to close the gap which has opened up with other regions like Asia.

For more:
- see this Bloomberg article
- see this article

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