Deutsche Telekom (NYSE: DT - News) has held talks with Electronic Data Systems (NYSE: EDS - News) , the US computer services company, to sound out the chances of a takeover by the German telecoms group, which is keen to beef up its small IT services unit.

FT Deutschland, the Financial Times's sister paper, reported that people familiar with the situation said Telekom was considering a subsequent merger of EDS with its T-Systems computer services division and then a flotation of this bigger entity.

Given EDS's market capitalisation of about $10bn, any move on the US company would mark a spectacular strategic reversal by Telekom, which had pledged to keep its powder dry for buying mobile phone groups.

However, plans by René Obermann, chief executive, to bolster Germany-focused T-Systems through "partnering" with a global rival have proved so elusive that some talks, albeit preliminary ones, have taken a new path.

In March, four months after taking the helm, Mr Obermann said Telekom was looking for partners for T-Systems' corporate services business: two weeks ago, he said only the systems integration unit was up for grabs.

Part of the rationale for seeking a partner, rather than trawling for a takeover target, was to reassure investors that Telekom's cash reserves would be used in a more focused way - in particular to grow in high-margin mobile phones.

In an apparent attempt to reduce the danger of a backlash from shareholders over any change to this acquisitions policy, Telekom is said to be considering bringing in a private equity partner to help finance any takeover of EDS.

Telekom had forecast free cash flow of about €6.5bn ($9.5bn) by the year's end, so the group could fund the larger share of such a move, even though it only recently hinted that the cash would go towards stabilising dividends, even as profits fall.

The Bonn-based company is in the throes of a painful turnround after its profits threatened to go into a tailspin last year.

Increasing numbers of German fixed-line clients were being lured by rivals offering cheaper high-speed internet and mobile phone services.

The crisis led to Mr Obermann being promoted from heading Telekom's T-Mobile unit to chief executive a year ago. While he has been successful in raising productivity in the group's home market, investors have been slow to applaud.

The sluggish performance of Telekom stock has disappointed Mr Obermann and the group's main shareholders: the German government, with 32 per cent of shares, and Blackstone, the private equity group, with 5 per cent.

A strategic U-turn could wipe out any goodwill on the markets. Any major share-price setback could force state-owned KfW bank to pay back €5bn to bond investors it had planned to reward with Telekom stock.