TeliaSonera turns France Telecom down

Nordic operator TeliaSonera has spurned the advances of France’s incumbent carrier, maintaining that it’s worth more than Telecom’s initial offer.

TeliaSonera confirmed France Telecom’s interest in a statement from the board of directors, released Thursday, which revealed an offer of SEK252bn (Eur).

“TeliaSonera is a strong business with excellent growth prospects in its own right. The board and management are focused on developing the company to its full potential, driving strong and sustainable earnings growth and maximising value for all shareholders.

“The indicative price of SEK56.225 per share significantly undervalues this potential,” said Tom von Weymarn, chairman of the board of TeliaSonera.

The news sent TeliaSonera’s shares up nearly 7 per cent, confirming analysts earlier beliefs 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.

When rumours of the merger proposal first emerged, analysts at Dresdner Kleinwort were, ” far from enthusiastic,” about TeliaSonera’s assets. They say the attraction for France Telecom would be to gain exposure to Russia and Turkey, “but these are financial investments and we cannot imagine the combined entity would have better success in gaining control.”

The analysts are also puzzled by the motivation of the respective governments. “They both want some cash, not shares in a large entity. This deal would only make sense if it convinced the market that it created value – which it doesn’t seem to do,” Dresdner said.

The French government owns 27 per cent of France Telecom, while TeliaSonera is 37 per cent owned by Sweden and 14 per cent owned by the Finnish state.