Germany denies urging Deutsche Telekom to merge

FRANKFURT, May 13 (Reuters) - Germany's Finance Ministry dismissed as "speculation" on Tuesday a newspaper report that the ministry was suggesting a merger of Deutsche Telekom AG (DTEGn.DE: Quote, Profile, Research, Stock Buzz) and France Telecom SA (FTE.PA: Quote, Profile, Research, Stock Buzz).

"This is wild speculation," a ministry spokesman said of the report in the German business daily Handelsblatt. "Nobody at the top of the ministry will publicly now or in the future express an opinion on Deutsche Telekom's business opportunities."

The Handelsblatt, in a story to appear on Wednesday, reported that the ministry was urging Deutsche Telekom Chief Executive Rene Obermann to either merge with a partner or buy a rival this year.

France Telecom is Berlin's favourite choice, the newspaper reported, adding that, if a deal with France Telecom could not be reached, Obermann should target other European operators.

"In any case, the situation that the European telecoms market would consolidate and Deutsche Telekom would not be part of it should be prevented," the newspaper quoted a Finance Ministry source as saying.

A source familiar with the government's thinking told Reuters earlier this month that Berlin was pressing Deutsche Telekom to make large acquisitions in the hope of raising its sagging share price.

Deutsche Telekom is currently looking at a deal to buy a further 3 percent stake in Greece's OTE (OTEr.AT: Quote, Profile, Research, Stock Buzz), after agreeing last month to acquire a 20 percent stake.

The Handelsblatt quoted a Ministry source as saying the government backed Obermann despite the push for a big acquisition.

"Obermann has our complete confidence the source was quoted as saying in the newspaper.