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