Rumours of France Télécom interest in TeliaSonera send stock soaring
TeliaSonera chairman will not confirm or deny speculation
Rumours are circulating that the French telecommunications giant France Télécom is planning to make a bid for TeliaSonera.
In the deal, which would involve a straight share swap, TeliaSonera is valued at between 20 and 22 billion according to some sources, but others have placed the figure as high as EUR 34 billion.
The rumours caused TeliaSonera shares to jump around 11 per cent in Stockholm and Helsinki on Wednesday, but analysts were less impressed with the wisdom of the idea from the French perspective, and France Télécom’s share price took a serious hit, falling by around 6 per cent in Paris.
Tom von Weymarn, the Chairman of the TeliaSonera Board, was unwilling to comment on the subject in any shape or form on Wednesday evening.
He also refused to confirm or deny the information gained by Helsingin Sanomat that TeliaSonera was actively seeking a new partner.
The possible merging of France Télécom and TeliaSonera was reported on Wednesday in the Wall Street Journal, the Financial Times, and the French broadsheet Le Figaro.
Both companies have substantial state ownership. If a deal were to be struck, it would be negotiated among the governments of France, Sweden, and Finland.
The French state owns around 27% of France Télécom, which trades mostly under the Orange brand, after buying the mobile network operator and Internet service provider in 2000.
Meanwhile, the Swedish state has a 37% holding in TeliaSonera, and Finland owns just under 14% through Sonera, the former Finnish PTT and Telecom Finland.
The Swedish and Finnish governments have parliamentary approval to sell TeliaSonera stock if they see fit.
The need for European teleoperators to consolidate has been discussed for years.
The largest player in the Nordic market, TeliaSonera could be an interesting prospect for France Télécom because of its activities in Russia, Turkey, and Central Asia.
Through its Orange operations, France Télécom is strong in France, the UK, Spain, and Poland.
Thus far none of the big European operators has really managed to break into the important growth markets of Russia and Central Asia.
In Turkey, the market is dominated by Turkcell, in which TeliaSonera has a 37 per cent stake.
France Télécom has hitherto been expanding its reach into emerging markets primarily in West and Central Africa.
There is little overlapping between the two groupings, with the only exception being in Spain.
In 2004, TeliaSonera acquired France Télécom’s Danish Orange operations.
Were France Télécom and TeliaSonera to reach an accord, the union would create the third-largest operator in Europe by market capitalisation, surpassing Deutsche Telekom.
The French company is also reported to be interested in the Norwegian operator Telenor. Telenor's stock also rose in trading in Oslo on Wednesday and continued to attract investors on Thursday morning.
TeliaSonera was down somewhat in Stockholm and Helsinki on Thursday after Wednesday's sharp spike.
Previously in HS International Edition:
TeliaSonera to cut 1,000 jobs in Finland, 2,000 more in Sweden (8.2.2008)
Swedish industrialist named new TeliaSonera CEO (30.7.2007)
"F Telecom eyes bid for TeliaSonera", Financial Times, 16.4.2008