France Telecom defends TeliaSonera plan
By Astrid Wendlandt
PARIS (Reuters) - France Telecom on Friday defended its possible takeover of Nordic rival TeliaSonera, as its shares hit an 8-month low on concerns the deal would be risky and could destroy shareholder value.
The French telecoms operator, which trades now mainly as Orange, said TeliaSonera would bring economies of scale, strengthen its position in Western Europe and expand its footprint in emerging markets such as Russia and Turkey.
"We believe TeliaSonera represents a strategic opportunity," France Telecom Finance Director Gervais Pellissier told reporters on a conference call. "Critical mass is an important factor."
"France Telecom and TeliaSonera are complementary, share a common strategic vision and both have significantly transformed their business models," he added.
France Telecom stock fell nearly 3 percent early on Friday and by 0800 GMT it stood 1.8 percent lower at 19.46 euros, after touching a more than 8-month low.
"We believe that an acquisition of TeliaSonera or Telenor by France Telecom would be value destructive, but are more worried that FT's interest in this deal signals larger weakness in the domestic business," Bernstein Research wrote in a note.
"To make matters worse Orange has traditionally been a weak owner of non-domestic European assets, so we worry that there will be an incremental destruction of value if they take over these assets."
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