While both companies have strenuously denied any suggestion of a merger, reports carried by Le Figaro claim that the French government is backing the acquisition of Sweden's largest telco, TeliaSonera, by France Telecom.
If the deal, valued at €34 billion, was to go ahead, then the combined company would create Europe's largest provider of telecoms services together with holdings in numerous mobile and fixed operators in Africa, Eastern Europe and Asia.
However, there are many issues for both companies to consider--getting EU regulatory approval, convincing the Swedish and Finnish governments (both large shareholders in TeliaSonera) that the deal makes political sense, and there is a good strategic fit. The latter point remains in question given that both firms have a stated objective of expanding into developing regions--not forming European mega-operators.
What might have triggered France Telecom's thoughts is the growing interest that the Swedish government has in selling its near 40 per cent holding in TeliaSonera.
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