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Orange eyes up TeliaSonera

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France Telecom (Orange) has confirmed it's looking at linking up with Scandinavian operator TeliaSonera, after rumours of a possible merger surfaced in the Le Figaro newspaper yesterday.

TeliaSonera is partly owned by the Swedish and Finish governments, who have 37 per cent and 14 per cent stakes, respectively, and was created in 2002 by the merging of operators Telia and Sonera.

A merger with France Telecom would give the firm the chance to fully privatise the company, something the Financial Times reports it's been wanting to do for a while.

Any merger would require the agreement of all three governments (18 per cent of France Telecom is still in French government hands), so it's unlikely to happen quickly.

TeliaSonera has extensive interests in emerging markets such as Russia, Turkey, Ukraine, Lithuania, Latvia and Estonia. Combining with Orange/France Telecom would create one of the largest European operators, but with such diverse markets it's unclear if the merger would reduce costs.

France Telecom's finance director Gervais Pellisier told the FT: "If you ask me whether we are examining a number of companies, including TeliaSonera, I would say yes, ... But if you are asking whether this is a full-blown examination, we are not there yet."

Le Figaro reports that any deal would be a share swap, to avoid increasing France Telecom's already-impressive debt.

With Orange and France Telecom still fitting together, and Telia and Sonera not achieving the synergies they had hoped from their merger, it might seem foolish to throw them all together.

TeliaSonera's shares jumped ten per cent at the news, while France Telecom saw a six per cent drop in its value. ®

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