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Business

Deutsche Telekom Still Behind in Confidence Stakes

Shares in Germany's troubled telecommunications giant Deutsche Telekom climbed nearly four percent to just over 12 euros after broker Merrill Lynch revised its rating on the European telecoms sector from "underweight" to a "marginal overweight" on Monday. However, Merrill Lynch said it was basing its revision mainly on the performance of British and Swiss companies and continued to recommend caution in respect of both Deutsche Telekom and its French counterpart, France Telecom.

The investment bank JP Morgan, on the other hand, revised its rating for Telekom from "overweight" to neutral, setting the fair price for its shares at 15 euros. Morgan cited concerns about the general economic situation and currency fluctuations for its decision and said that the recent sacking of Telekom boss Ron Sommer had diminished confidence in the company's restructuring plans.

Moody's, the international financial ratings agency, seems to agree with JP Morgan's assessment, announcing on Monday it is considering downrating Deutsche Telekom. Pointing both to Telekom's lack of progress in clearing its own debts and to the long-term indebtedness of Telekom's US subsidiary VoiceStream, Moody's said it intended to complete its review within the next four weeks.