Frankfurt, May 29 (Reuters): A bid by Deutsche Telekom for British Telecom (BT) looks unlikely, analysts at four German banks said on Monday, pointing out that such an acquisition would be too expensive for the German company.

Britain’s The Times reported on Saturday that Deutsche Telekom was thought to be considering a bid for BT.

The Times said Deutsche Telekom was understood to be interested in BT’s global services division, which sells telecom and IT services to corporations.

Deutsche Telekom declined to comment on the matter.

Shares in Deutsche Telekom were 0.4 per cent lower at 12.52 euros at 0845 GMT on Monday, roughly in line with a 0.6 per cent drop in Germany’s DAX index.

The yield spread between the German telecom operator’s 8.125-per-cent-coupon 2012 bond and same-maturity euro zone government bonds widened to 59 basis points on Monday from 55 basis points on Friday.

“Purely from an industrial standpoint a get-together in any format looks reasonable,” said Heino Ruland, an analyst at Steubing.

“But as Deutsche Telekom is believed to have a war chest of 11.0 billion euros for acquisitions, we assume that a bid for BT is to be ruled out,” he said in a note.

Deutsche Telekom has a market value of 53.6 billion euros ($68.4 billion), according to Reuters data. BT’s market value is ?19.1 billion ($35.70 billion).

WestLB analyst Stefan Borscheid said a deal “would make strategic sense for Deutsche Telekom but looking at the size of the potential deal, Deutsche Telekom’s current share price and the company’s rather cautious acquisition strategy in recent years, it looks unlikely in our view.”

Deutsche Telekom’s enterprise value (EV) is 4.6 times forecast 2007 earnings before interest, tax, depreciation and amortisation (EBITDA), according to Reuters estimates, while BT’s EV/EBITDA ratio for 2007 is 4.8.