UPDATE 1-Bonn prosecution drops probe against D. Telekom CEO

* Prosecution drops probe against CEO Obermann

* Says initial suspicion was not confirmed

(Adds prosecutor’s comment, detail, background)

FRANKFURT, Jan 3 (Reuters) - German prosecutors have dropped an investigation against Deutsche Telekom DTEGn.DE Chief Executive Rene Obermann over a suspected bribery case in its eastern Europe operations due to lack of evidence.

“Initial suspicion about bribery in the Balkans has not been confirmed,” prosecutors in Bonn said on Monday.

German prosecutors had investigated eight people including Obermann at the request of U.S. authorities who are looking into suspected bribery in Macedonia and Montenegro. [ID:nLDE68D25T]

Prosecutors searched Obermann’s home and confiscated documents in August as part of the investigation. [ID:nWEA7771]

Deutsche Telekom’s top lawyer, Manfred Balz, said in September that the case centred on suspicions that bribes were paid to politicians and officials in the two Balkan countries, allegations he said emerged only as searches in Germany began.

Obermann was accused of approving dividend payments to Macedonia's MakTel -- a unit of Deutsche Telekom's Hungarian subsidiary Magyar Telekom MTEL.BU -- at a meeting with MakTel's CEO in 2005 on the condition that the Macedonian telecommunications market not be opened up to other competitors, Deutsche Telekom has said.

“The public prosecutor’s office (in Bonn) is linking this to alleged bribery payments made by third parties,” it said.

Balz had acknowledged the two CEOs had met but only for a chat.

Reporting by Peter Maushagen in Frankfurt, Writing by Nicola Leske