Deutsche Telekom's 'logical expansion'
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Deutsche Telekom's 'logical expansion'

Ringing up big numbers out east

Deutsche Telekom's $2 billion offer to buy MediaOne International's east European mobile operations could well be the region's telecom deal of the year. If this complex deal, which has already taken nearly six months to complete, gets regulatory approval, Deutsche Telekom will acquire most of MediaOne's mobile operations in Poland, Hungary and Russia as MediaOne is itself merged into AT&T. The deal is one of the largest-ever emerging-market corporate deals, topping the 1997 $1.8 billion sale of Russian local phone company Svyazinvest.

Although the element of Russian exposure adds risk to the venture, the markets applauded the deal. Deutsche Telekom's share price rose nearly 2% on the news as its chairman, Ron Sommer, described the complex transaction as the "logical expansion" of the company's presence in Europe.

Says Todd Berman, head of European emerging-market investment banking at Salomon Smith Barney, which acted as adviser to Deutsche Telekom on the deal: "It was a bold and positive move for Deutsche Telekom. This really has to be the central and eastern European telecom deal of the year. It was a highly complex deal involving four sovereign jurisdictions and it has been well received across the board.

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