France Telecom has defended its proposed take-over of Nordic rival TeliaSonera. Its shares were at their lowest for eight month because of concerns that the deal would be risky and could destroy shareholder value, a Reuters report said. Its stock fell nearly 3% last week.
The French incumbent argued that TeliaSonera would bring economies of scale, strengthen its position in Western Europe and expand its footprint in emerging markets such as Russia and Turkey.
'We believe TeliaSonera represents a strategic opportunity,' France Telecom's finance director Gervais Pellissier told reporters on a conference call, 'Critical mass is an important factor. France Telecom and TeliaSonera are complementary, share a common strategic vision and both have significantly transformed their business models.'
Bernstein Research disagreed and stated, 'We believe that an acquisition of TeliaSonera or Telenor by France Telecom would be value destructive, but are more worried that FT's interest in this deal signals larger weakness in the domestic business'.