France Telecom builds acquisition war chest

Despite repeated denials that it is not talking to TeliaSonera, France Telecom (FT) has approached a group of five banks to raise US$10 billion to finance a large acquisition.

However, analysts are becoming increasingly skeptical about FT's ability to make such a large and complex merger with the Scandinavian operator a success. FT's track record is less than stellar as seen with its investments in the German mobile and Internet group Mobilcom and British cable operator NTL, and the purchase of Spanish mobile operator Amena has been viewed as disappointing.

Nonetheless, a deal could boost the Paris-based group's purchasing power with mobile handset vendors and with suppliers of media content, an area expected to become more important in the future.

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Related:
Why European telcos are looking to make deals. Merger story