France Telecom aims for small buys after Telia

By Cyril Altmeyer and Astrid Wendlandt

PARIS (Reuters) - France Telecom (FTE.PA: Quote, Profile, Research, Stock Buzz) said on Wednesday it was seeking acquisitions that would be smaller than its failed $40 billion bid for TeliaSonera (TLSN.ST: Quote, Profile, Research, Stock Buzz) but declined to comment on a possible cash return to shareholders.

France Telecom has repeatedly said it is aiming to make acquisitions in emerging markets in Africa and Asia.

After becoming a majority shareholder in Kenya Telecom, the French operator is eyeing stakes in Ghana Telecom, Algerie Telecom and Vietnam's Mobifone.

"The matter is closed and definitely closed," France Telecom Chief Executive Didier Lombard told a telecoms conference organized by Les Echos newspaper, referring to its failed bid for Nordic operator TeliaSonera. "We will make more modest things in the coming months," he said.

He declined to comment on the possibility of a cash return to shareholders, which many analysts say they expect the company to consider.

"We expect the board to look at the different strategic options, including enhanced distribution, in July," HSBC said in a note on Wednesday.

France's leading telecoms operator which trades mainly as Orange walked away from TeliaSonera on Monday after the pair failed to agree on valuation. "In light of the state of the markets, it was a bit difficult to continue," Lombard said about the failed bid.

Its cash-and-shares indicative bid was rejected as too low by TeliaSonera's board and the Swedish state, its main shareholder.