Suit, Revised Offer Shape Battles in Germany

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Frankfurt, Germany -- European MSO United Pan-Europe
Communications N.V. (UPC) filed a lawsuit against Deutsche Bank A.G. earlier this month,
claiming that the bank abused its privileged position as a UPC advisor to win the bidding
war in May for Germany's second-largest cable operator, Telecolumbus GmbH.

A Deutsche Bank spokesman confirmed that the company
received the suit, saying, "We knew before what UPC was up to."

Telecolumbus, which serves about 1.7 million German cable
homes, was sold by utility companies Veba A.G. and RWE A.G. after they decided to cut down
on their telecommunications businesses and focus on mobile communications. Prior to the
Telecolumbus sale, the two had already unloaded their "o.tel.o" telephone unit
to Mannesmann Arcor A.G.

Deutsche Bank's investment arm, DB Investor GmbH, acquired
Telecolumbus for about 1.45 billion deutsche marks ($US773 million).

Deutsche Bank was advising UPC in financial matters at the
time Telecolumbus was being sold. UPC alleged that the bank used privileged information in
order to submit a more attractive offer for TeleColumbus than UPC's bid.

Deutsche Bank and DB Investor sources described UPC's
allegations as "pretty absurd."

One question that remains is whether Deutsche Bank even
needed the information from UPC, since DB Investor had already hired o.tel.o's cable
managers long before Veba and RWE decided to sell Telecolumbus. "We don't think
anything will come from the suit," a Deutsche Bank source said.

However, the incident illustrated the intensity of the
battle for German cable systems.

DB Investor and UPC have placed bids for stakes in nine
regional cable systems owned by telco Deutsche Telekom A.G.

About two weeks ago, Deutsche Telekom said it would sell
outright only a 35 percent stake in the systems, rather than an originally planned 75
percent. It also plans to sell an additional 40 percent to the public. Company sources
said the two-tier sale would be more lucrative for the company.

Deutsche Telekom had estimated that it would earn DM30
billion ($16 billion) for the systems. The systems' infrastructure currently reaches more
than 18 million German homes, although other operators use part of the network. Deutsche
Telekom's wholly owned cable operators serve about 6 million homes.

Some observers believe Deutsche Telekom altered terms of
the sale because investors were not responding favorably to some of the conditions it had
set. For example, sources involved with some of the potential investors reported that
Deutsche Telekom wants to prohibit the systems from offering Internet-protocol and
traditional telephony service until 2003.

Bidders contended that this stipulation would hamper their
ability to pay off their investment in the systems, which will also require upgrades
expected to cost DM 6 billion ($3.2 billion).

Investors would also have to exclusively grant the
digital-frequency band to Deutsche Telekom unit MediaServices GmbH.

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