France Telecom has offered a bid to take over TeliaSonera. The offer stands at US$42 bn, which is about a 17% premium. The rational is the usual market access, cost savings and synergies.
There has been lots of speculation about a potential acquisition in the Nordics by the French telecoms giant, but why oh why? The Nordics markets are saturated with less growth potential. Take TeliaSonera's main rival in the north, Telenor, and all its focus is outside of the Nordics; be it the Balkans, Eastern Europe, or Asia. It is the focus on fast growing mobile markets outside of the Nordics that has pushed Telenor past its rival in Sweden/Finland in terms of market cap, and into the very top league around the world, so why would France Telecom try to acquire an operator that has most of its business in saturated markets? Granted, the Nordics is the home of some of the most affluent European customers, and thus for a successful operator there could be some earnings potential.
However, if France Telecom aims to spur revenue growth it should instead focus on faster growing markets and look outside of Western Europe. Furthermore, let's not forget the failed marriage between Telenor and Telia back in 1999, which was due mainly to bad chemistry between the Swedish and Norwegian government and senior management of the companies. The famous off-hand comment "Norway is the last Soviet state" is often seen as final piece that turned Telenor into the run-away bride. It will be interesting to see what kind of reactions of Sweden and Finland when working through the big with its French counter parts.
If France Telecom wants to ward off the now more agile Telefonica, or some of the other incumbent operators in Western Europe, it needs more vision than TeliaSonera.
