Deutsche Telekom AG and France Telecom have begun negotiations over swapping a strategic equity stake in order to strengthen their alliance. Joachim Kroeske, Telekom chief finance officer, told Reuters, he was confident the two companies would swap shares. An equity swap is very likely on the basis of decisions of the companies, he said. In the long term there is no doubt. While the two companies in the past have spoken of the option of exchanging capital, the basis for an equity swap is only now being established. Last Thursday’s move to allow the German government to find strategic investors for an additional 25% of Deutsche Telekom’s over the next two years, combined with a proposed partial privatization of France Telecom should provide the companies with an opportunity, although it is likely that any deal would require approval from the European Commission.
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