EUROPEAN regulators would intervene in any attempt by Deutsche Telekom to take over BT, in a deal that could value the UK telecoms company at up to £25 billion.

News that the German telecoms group, Europe’s largest, is examining the feasibility of a bid for BT is expected to send BT’s shares surging in the United States today.

Experts believe that the dominance of the telecoms groups in their respective markets, and the potential impact on pricing, mean that any deal would be almost guaranteed to face intervention from Brussels.

It is understood that regulatory issues were the key deal-breaker in the German group’s attempt last year to swoop on O2, the British mobile group. O2 instead went to Telefónica, the Spanish telecoms giant.

Any attempt by Deutsche Telekom to take over BT would face serious obstacles not only from regulators but also from the German group’s supervisory board.

Over the weekend, people with links to the supervisory board, whose members include Michael Summer, chairman of the German trade union federation, made clear their opposition to any such deal. A takeover could bring further job cuts on top of the 32,000 that are being planned as part of a streamlining of the group.

The relatively low valuation of shares in Deutsche Telekom is also thought to be an impediment to the deal.

Deutsche’s interest in BT comes after the surprise move by Blackstone, the American private equity house, to snap up a 4.5 per cent stake in Deutsche Telekom.

Blackstone has acquired a seat on the supervisory board under the terms of the deal, and could be expected to negotiate with unions and workers’ representatives over any acquisitions.

Lawrence Guffey, a partner in the American group, is to be nominated for election to the board next year.

Many people were puzzled by Blackstone’s move to take a stake in the partly state-owned German telecoms group. It seemed to be out of keeping with its usual strategy of acquiring a company as a whole, or at least buying a controlling stake.

However, it is understood that Blackstone, which has pledged to hold its shares for at least two years, believes that it can help to streamline the company and boost its valuation.

Kai-Uwe Ricke, chief executive of Deutsche Telekom, has already begun that process, with plans to cut jobs.

Like its peers across Europe, Deutsche, owner of the T-Mobile business, is struggling with increased competitive pressure, especially in its home market. Its traditional business is also under threat from new technologies, such as voice-over-internet calls.

Deutsche so far has refrained from any big deals and has concentrated on cutting debt. Its biggest buy abroad since 2001 has been T-Mobile’s €1.3 billion (£890 million) acquisition of Telering, the Austrian mobile business.

STAKEHOLDER

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