France Telecom dismisses Deutsche Telekom merger rumors

France Telecom (NYSE: FTE) may be looking for ways to diversify through acquiring assets in emerging markets, but one deal it's not going to make is a merger with Deutsche Telekom (XETRA: DTE.DE).

Rumors about a potential marriage of the two European telecom superpowers emerged yesterday after Deutsche Bank (NYSE: DB) increased its stake in France Telecom to over 5 percent.

The CFE-CGC/UNSA union said in a Reuters article that the Deutsche Bank's move was a "profound change in the current balance of the shareholding" and "perhaps a precursor to consolidation operations that are liable to change the world of telecoms in Europe."

Given France Telecom's employee morale issues--a problem that spurred multiple suicides at the service provider in the past year--the union wanted to hold extraordinary meeting with management to discuss shareholder structure and how it will "protect France Telecom's independence."

However, a France Telecom spokeswoman immediately dismissed rumors of a potential deal between the two service providers, while Deutsche Bank would not comment.

"There is no plan to bring together France Telecom and Deutsche Telekom," the spokeswoman said.

For more:
- Reuters UK has this article

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