France Telecom Outlines TeliaSonera Takeover Plans
France Telecom has confirmed it is interested in acquiring Nordic telecoms group, TeliaSonera, in a deal which could create Europe's largest telecoms group by revenue. Speaking to reporters in a conference call, France Telecom chief financial officer, Gervais Pellissier, said the company believes that TeliaSonera represents a strategic opportunity as it gives the group bigger scale to compete in the future. "France Telecom and TeliaSonera are complementary, share a common strategic vision and both have significantly transformed their business models," he added. Responding to concerns that the deal could affect dividend payments, Pellissier said a deal would have to be paid in both cash and equity, and would most likely hurt the group's debt-to-gross-operating-profits ratio. However, in an attempt to diffuse growing investor concerns, he pledged that the group will continue to increase its dividend. He also suggested the group was looking at other options including a possible link-up with Telenor.
Significance: Despite Pellissier's explanations, the scepticism over the deal is not going to go away. France Telecom and TeliaSonera have little overlap in their operational markets, leaving little opportunity for joint action. Besides, merging with TeliaSonera will expose France Telecom to the low growth markets of the Nordic region.
