France Telecom mulls higher cash bid for TeliaSonera

France Telecom said on Thursday it had opened talks about whether to enter formal negotiations with TeliaSonera and could sweeten its indicative $41 billion bid for the

Swedish-Finnish group.

The talks about talks were disclosed by Finance Director Gervais Pellissier in a meeting of investors in Lisbon and confirmed by a company spokesman.

Pellissier told investors France Telecom may be willing to increase the cash portion of its offer but insisted the margin for doing so is “extremely limited,” the spokesman said.

France Telecom shares fell around 2.4 percent, while TeliaSonera shares fell 3.1 percent.

Pellissier’s comments came after sources familiar with the matter said on Wednesday that France Telecom was hoping TeliaSonera’s investors would persuade it to enter talks.

Telia’s shareholders want a higher bid and some have told France Telecom and its advisers they favour TeliaSonera entering talks with its French suitor to try and negotiate a higher bid rather than turning away the approach, the sources said.

France Telecom is willing to remain in the exploratory talks for a reasonable period of time but is also ready to walk away from the deal, the spokesman quoted Pellissier as saying on Thursday.

He ruled out changing the share component of the deal.

Pellissier told the investor conference that contacts with TeliaSonera had taken place to “study the conditions under which formal negotiations can take place,” the spokesman said.

Pellissier said the current situation “should not extend beyond a reasonable period of time”.

France Telecom had given TeliaSonera two weeks until this weekend to enter discussions.

“Either TeliaSonera agrees to have a proper dialogue on the offer or France Telecom will walk away,” said one of the sources on Wednesday. “They will not bid against themselves.”

France Telecom announced its indicative takeover offer on June 5 and said it aimed for a “friendly” deal but would not change the indicative cash-and-shares offer.

Such a move — announcing the terms of a bid without fully launching it, in the hope that a target company’s board will be pressured into talks — is known as a bear-hug.

It is a way of avoiding the additional cost and risk of failure associated with a full-blown hostile offer.

TeliaSonera’s board and the Swedish government, which owns more than 37 percent of the company, have rejected France Telecom’s offer as too low, prompting the French company on June 7th to set a deadline of 15 days for the sides to start talks.

Additional cash in the offer could help offset a fall in France Telecom’s share price — lowering the value of the bid — since it announced the indicative bid earlier this month.

In a newspaper interview on June 7th, France Telecom Chief Financial Officer Gervais Pellissier said the French firm could drop its offer either if its own share price continued to fall or if the bid was not accepted as friendly.



‘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.