France Telecom pulls plug on 'bad idea'

Monday morning saw France Telecom abandon its controversial proposed hook up with Nordic carrier TeliaSonera.

The announcement confirmed what many already believed, that such a pairing would be unlikely.

With recent acquisitions in Niger and Kenya, and a renewed interest in Ghana, it’s clear that the French operator has its eyes on emerging markets, which, with the exception of its Eurasian interests, isn’t really where TeliaSonera’s main operations are.

Commenting on the news Monday morning, Michael Kovacocy, European telecoms analyst at Daiwa SMBC, said the deal, “lacked compelling industrial logic from the outset, and given that it mixed currency and shares, was always likely to have led to being rejected by TeliaSonera, which would rightfully hold out for a more significant offer given that many such cross-border/currency deals require a 30 per cent plus premium, in cash.”

Kovacocy went on to say that the credibility of the French incumbent’s management team has, “been seriously impacted by what was in our view a bad idea from the outset.

“Make no mistake about it, France Telecom has a major task ahead of itself to regain credibility – which will be neither easy to do nor will it come quickly,” the analyst said.