Will Deutsche Telekom buy Sprint Nextel‾

Merrill Lynch has started a maelstrom of speculation that Deutsche Telekom, Europe's biggest telco, might consider acquiring Sprint Nextel. In a desperate bid to stop the rot - Sprint continues to rack up huge losses (€19.2 billion/US29.5 billion in Q4 2007) and haemorrage customers (1.2 million are expected to leave this quarter) - it has  launched an all-you-can-eat package of phone calls, SMS and push-to-talk services for €58.58/US89.99 a month.

The bank argues that this will put the most pressure on Deutsche Telekom's American subsidiary T-Mobile USA, which is the US' fourth biggest operator behind Sprint at number three.

Analysts at the bank stressed that they were not aware of any negotiations between the two parties, but also point to the fact that currency shifts favour a European take-over with a strong euro against a flailing dollar.

However, a merger between the third and fourth largest US operators would not meet universal approval: the merger between Sprint and Nextel in 2005 is often blamed for the company's ills. It failed to integrate and streamline the two operations, never mind deliver their supposed combined benefits.