People in France Telecom officially confirmed yesterday they are eyeing the purchase of Norwegian Telenor or Swiss TeliaSonera. France Tel to finance TeliaSonera in cash, debt.
Both Nordic operators are big players on Russia’s telecom market and a great portion of France Telecom interest roots probably exactly in this feature. France Telecom is Europe’s third telecom operator in terms of capitalization ($86.9 billion), yielding only to Vodafone and Telefonica. The 2007 revenues reached $82 billion. The company owns assets in Eastern Europe, including Romania, Moldova and Russia (the Orange brand with services rendered to corporative clients exclusively), as well as in the United States, Central Africa, China and Vietnam.
The market capitalization of TeliaSonera equals $38 billion and Telenor has $35 billion. In Russia, TeliaSonera owns 40.8% in MegaFon, it also has cellular assets in Uzbekistan, Tadjikistan, Kazakhstan, Azerbaijan, Georgia and Moldova. Telenor holds 33.6% in VimpelCom and has 56.5% in Ukrainian Kyivstar.
According to Yuliy Matevosov, who heads an analytical department at Dresdner Kleinwort, the arrival of France Telecom may pave the way to Russia for a few big telecom brands. “Russia has been long the blank spot on the map of Europe’s biggest telecom brands, though France Telecom, Vodafone and Telefonica are present in the overwhelming majority of European states. One of the reasons why France Telecom wants to buy out one of two Scandinavian operators is perhaps, the chance to promptly turn into a noticeable player on the markets of Russia and CIS, where the actual penetration of cellular communication is much less than in Eastern Europe. The example of France Telecom may inspire other companies,” Matevosov said. (Kommersant)
France Telecom on Friday said it would finance the potential acquisition of Nordic operator TeliaSonera in cash and debt and could exceed its key debt ratio this year if it clinched a deal. The French operator said it was in exploratory talks to buy TeliaSonera, but no negotiations had started at this stage. “It would be a balance of cash and debt...which has not yet been determined,” France Telecom Finance Director Gervais Pellissier told a conference call with journalists. Pellissier said France Telecom planned to continue to increase the dividend payout. But he added it was possible it could not meet its target of maintaining the ratio of debt to gross operating margin (margin on earnings before interest, tax, depreciation and amortization (EBITDA) under 2 if it completed the acquisition. “In case of a tie-up with an operator of this size, we are giving us the possibility of going over this ratio for a limited period,” Pellissier added. (Reuters)