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Global Crossing Surges on Reports of Deutsche Telekom Talks

Deal would give German firm access to U.S., Latin American and Asian markets.

Shares of telecommunications firm

Global Crossing

(GBLX)

surged 5% Thursday on speculation that

Deutsche Telekom

(DT) - Get Report

, Germany's largest phone company, is in talks to buy it.

The talks are still in their early stages but a deal would enable the German behemoth to expand in the U.S., Asia and Latin America and develop Internet connections for businesses, according to reports.

It was also reported that Deutsche Telekom has approached

Qwest Communications International

(Q)

and its merger partner,

U.S. West

TST Recommends

(USW)

about an acquisition.

Global Crossing closed Thursday trading up 2 9/16, or 5%, to 54 5/16. Qwest was up 1 1/8, or 2%, to 59 1/8 and U.S. West was down 8 1/4, or 10%, to 70 3/4. Meanwhile, the American Depository Shares of Bonn-based Deutsche Telekom rose 10%, or 8 13/16, to close at 97 1/16.

"Any foreign telecom company with ambitions to be one of the top 10 global telecom companies will have to secure an American presence," says Eric Melloul, an analyst at

Argus Research

. "There is definitely no way around that." He rates Global Crossing a buy and his firm does not participate in underwriting.

"The unwinding of the

Global One

consortium freed them to seek more ambitious partnerships," Melloul says. In January, Deutsche Telekom sold its stake to

France Telecom

(FTE)

and announced that it would invest its $2.76 billion in proceeds "for the execution of its internationalization strategy."

The core of Deutsche's operation is in Europe. Acquiring either Global Crossing or Qwest -- "the two jewels left for mergers" in the U.S., according to Melloul -- would give Deutsche Telekom a "very lean, well-managed company with a developed strategic portfolio of services and customer base," Melloul adds. He rates Qwest a buy.

Both companies have advanced fiber-optic networks in the U.S., while Global Crossing has a presence elsewhere in the world. Global Crossing is also in the process of building a network in Asia and Europe with a sea connection to link the continents. Qwest is a Web-hosting leader and also possesses sea links between America, Europe and Asia.

A call to Global Crossing was not immediately returned for comment. Deutsche Telekom was not available for comment.