Deutsche Telekom Hopes to Keep Cable Access


Frankfurt, Germany -- Deutsche Telekom A.G. is holding out
on selling its cable systems to the country's largest bank because terms of the sale
would require it to forfeit any future access to the network, according to the minutes of
a meeting between the company and representatives from firms that work with the cable

The minutes also said that although Deutsche Telekom's
financial board had recommended the sale of all of the company's cable assets, the
general board decided to demand keeping a strategic minority stake in the cable system,
while also controlling access to it.

Deutsche Bank A.G. had offered up to 9 billion deutsche
marks ($US5.1 billion) for the entire system. However, Deutsche Telekom values the system,
which is connected to 17 million homes, at DM20 billion ($US11.2 billion), a Deutsche
Telekom spokesman said.

Deutsche Bank has made an informal complaint to the
European Commission over Deutsche Telekom's delays in selling its cable assets.

Deutsche Telekom countered that the company is going beyond
the EC's original request by selling most of its stake in the system outright. The EC
had requested only that Deutsche Telekom's cable and telephone businesses be run as
separate companies.

Under a plan that it unveiled last fall, Deutsche Telekom
aims to break its cable network into five or six regional systems, and to keep stakes of
at least 25 percent in each operation.

A Deutsche Bank source said the wide spread between the
bank's offer and Deutsche Telekom's asking price is rooted in how the two
companies are calculating the system's value.

Deutsche Telekom is basing the value on its entire
homes-connected base of 17 million, while Deutsche Bank is only using the company's 5
million to 6 million cable customers, the source added.

Although only 5 million to 6 million customers subscribe
directly to Deutsche Telekom's service, the other cable operators depend on the giant
because it owns the distribution backbone.

Deutsche Telekom has long reflected an interest in staying
in the cable business. On Jan. 1, it established MediaService GmbH, a wholly owned unit
that will focus on bundling services for cable TV, such as subscriber management and
marketing channels.