France Telecom Reportedly Weighs $54 Billion TeliaSonera Bid
LONDON (Dow Jones) -- France Telecom is considering an all-stock bid for TeliaSonera, Sweden's largest telecommunications company, according to a media report Wednesday.
French newspaper Le Figaro said a deal could be valued at a minimum 34 billion euros ($54 billion) and would involve complex political negotiations. That's because France Telecom is 27%-owned by the French government and the Swedish and Finnish states have respective 37% and 13.7% stakes in TeliaSonera .
France Telecom has the backing of the French government for the operation and would use stock to make the purchase, Le Figaro reported, without citing its sources.
Shares of TeliaSonera rose 5.4% in Stockholm. France Telecom shares fell 3.9% in Paris late morning trading.
France Telecom, like many other European incumbent telecom operators, has been looking to enter fast-growing markets beyond its borders to offset slower growth at home. It already has operations in Spain, Poland, the U.K. and several Eastern European countries. It has recently bought assets in Kenya and Jordan as part of a strategy to build its presence in Africa and the Middle East.
A purchase of TeliaSonera would be France Telecom's largest acquisition since it bought Orange in 2000 for 27.8 billion pounds. Although the transaction would mark a slight departure from the French group's strategy of recent years -- Scandinavia is not exactly an emerging market -- it would bring exposure to a new geographical area. TeliaSonera also boasts a wider operating margin than France Telecom's.
A deal would create a giant with annual sales of 63 billion euros and allow it to compete better with rival Deutsche Telekom, which is Europe's largest telecommunications company.
Goldman Sachs analysts told clients in a note published Wednesday that sizeable cost savings are hard to envisage as France Telecom is already a "scale player" and its only overlapping market with TeliaSonera is Spain where they would face uncertainty regarding licenses.
It noted, however, that a deal would be positive for the sector, especially for smaller players with en emerging-market presence such as Telenor , Telekom Austria and potentially Portugal Telecom.
Telenor shares rose 1.9%; Portugal Telecom shares added 3.1% and Telekom Austria shares inched 0.4% higher.
A France Telecom spokesperson was not immediately available for comment.
Sweden's government has said it plans to sell assets to cut its debt.
In case of a takeover, the French government's stake in France Telecom would be diluted and the Swedish and Finnish governments could join the company's board, according to the Le Figaro report.
(END) Dow Jones Newswires
Posted to the site on 16th April 2008