Phone Merger: Europe Gets It Together

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LONDON: How very un-continental. On Thursday, two former state-owned telecom monopolies, Italy's Telecom Italia SpA and Germany's Deutsche Telekom AG, will announce their intentions to wed in a share swap worth nearly $82 billion -- the largest corporate merger in history behind last year's Exxon-Mobil pairing. The deal had been rumored all week; holding things up was a demand by Telecom Italia's board that the German government, which still owns 72 percent of Deutsche Telekom's stock, promise not to try to run the new behemoth. The Germans promised -- and Europe is getting more like the U.S. every day.

It's also a sign, says TIME senior economics reporter Bernard Baumohl, that with the European economy nominally unified in the past year but mostly just slowing down, the continent's corporate giants are ganging up in search of profits. "The single currency makes these deals much easier to put together," he says. "The mergers are the best way for these companies not only to cut costs while the European economy is in the doldrums, but also to compete in global markets against the U.S." If the merger clears its many regulatory hurdles, the combined company will be the world's second largest telecom company and the largest local phone service provider, as well as being one of the biggest mobile phone companies, with a strong presence in Europe, Asia and Latin America.