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Deutsche Telekom Interested in Buying Sprint Nextel?

Deutsche Telekom fell 1.7 percent in Germany Monday following a weekend report that it is interested in buying Sprint Nextel.

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AP

The deal is Deutsche Telekom's top priority, Der Spiegel reported without citing sources, but not formal approach has been made. The possibility of a takeover is attractive because of the strength of the euro against the dollar and Sprint Nextel's relatively low market capitalization of $22 billion, the paper said.

Deutsche Telekom declined to comment.

A deal would combine the No. 3 and No. 4 wireless carriers in the U.S. Deutsche Bank already owns No. 4 player T-Mobile.

Some analysts were skeptical that a merger could go through.

It would be "crazy" for Deutsche Telekom to purse such a deal, one analyst told CNBC Europe.

T-Mobile and Sprint Nextel would not be technologically compatible, T-Mobile margins are still quite healthy as a standalone and U.S. regulators would likely block the deal, the analyst said.

"It is doubtful that the United States would allow a large part of its mobile phone infrastructure to fall into foreign hands," a trader said. "It is also open whether the German government as largest Telekom shareholder would support the Americanization of the company."

But another analyst told CNBC Europe that a low price could trump any concerns and justify elevated costs for consolidating technologies. The move would also fit into Deutsche Telekom's non-German market share expansion strategy, the analyst said.

-- wire services contributed to this report