France Telecom in TeliaSonera bid

France Telecom has made an informal takeover offer for TeliaSonera, valuing the Nordic telecoms company at up to 291.9 billion kronor ($48 billion), people familiar with the situation told the Financial Times.

France Telecom said it has made a “friendly” and “indicative” 63 kronor per share cash-and-stock offer for Nordic telecoms operator TeliaSonera and said if a deal is agreed, it would be EPS positive from 2009 onwards.

It said a successful deal would create a worldwide leader in convergent communications, the global number three in fixed broadband and number four in mobile.

In a statement, France Telecom said its informal bid offers is made up of 52 percent cash in euros and 48 percent shares based on an exchange ratio of 3 newly issued France Telecom shares for 11 existing TeliaSonera shares.

A cash guarantee option would be available to all shareholders for their first 500 shares tendered.

The well-flagged merger approach has been harshly criticized by analysts who complained there is little overlap between the two groups, whose core operations lie in mature Western markets.

But France Telecom insisted Thursday that the proposed combination is a “well-balanced portfolio between developed and emerging markets”.

It said the indicative proposal would represent a premium of approximately 39 percent over TeliaSonera’s closing share price on April 15 – the day before the potential deal was first rumoured in the press.

France Telecom said the potential synergies could generate operational free cash flow savings of nearly 1 percent of 2007 pro-forma revenues for the combined group by 2013, with approximately 70 percent of such savings being achieved by 2011.

It also estimated a deal would be accretive in 2011 in terms of free cash flow per share.


‘Rotten’ business claims at Nordic TeliaSonera

Swedish-Finnish telecom operator TeliaSonera has been accused of “rotten” business dealings in Azerbaijan, following a separate bribery scandal in Uzbekistan.

'Rotten’ business claims at Nordic TeliaSonera
A TeliaSonera conference in Stockholm last year. Photo: TT

Folksam, which is one of the largest insurance companies in Sweden, has accused the firm of “systematic cheating”, after it emerged that TeliaSonera’s subsidiary in Azerbaijan had ties with the family of Ilham Aliyev, the Arab nation’s leader.

It has been claimed that the dictator’s daughters were shareholders of TeliaSonera's subsidiary Azertel, via a connected company based in Panama.

“It is distressing that in a large Swedish company…people thought that cheating would pay off in the long run,” Carina Lundberg Markow, one of Folksam’s managers told the TT news agency on Wednesday.

She criticized TeliaSonera for failing to act “in an honest and open way” when entering new markets.

“Instead, they choose to pay for success,” she added.

TeliaSonera is one of the biggest telecom operators in the Nordic and Baltic countries and also operates in several emerging markets in Eurasia including Russia and Turkey, as well as Spain. The Swedish state owns 37.3 percent of the company.

Swedish prosecutor Gunnar Stetler is already investigating claims of unethical business practices in Uzbekistan and told TT he had also been given new information concerning potential bribery in Azerbaijan.

The company has voluntarily cooperated with the investigation, handing over what Stetler describes as “extensive information” about “the terms and conditions in Eurasian countries”.

Stetler said he was unable to discuss how he had responded to the information. But calls are growing for TeliaSonera to release a public report about its business dealings.

“Now it is extremely important to create transparency,” said Lundberg Markow.

“This shows the importance of having a set of values when doing business in complex markets or countries,” she added.

TeliaSonera and Norwegian rival Telenor recently merged their operations in Denmark, while the telecoms giant last year purchased rival Tele2's Norwegian division for 5.1 kronor.