Mergers & acquisitions

France Telecom in Takeover Talks With MTS

Russian news site RBC Daily reports that Sistema JSFC (London: SSA) is in talks to swap a majority holding in mobile giant Mobile TeleSystems OJSC (MTS) (NYSE: MBT) for a minority stake in Orange (NYSE: FTE), according to Bloomberg.

Sistema currently owns nearly 53 percent of MTS, which operates in Russia (where it is the mobile market leader), Ukraine and a number of other Eurasian markets. Almost 47 percent of MTS's stock is publicly traded, and, not surprisingly, the share price has risen as a result of the speculation: It is currently at $14.44, having started the week at $14.22, but had been as high as $15.08 Thursday.

Such a deal would be massive. MTS has more than 106 million mobile customers, plus 2 million fixed broadband and 2.6 million pay-TV customers, and generated revenues of US$3.13 billion and net income of $367 million in the second quarter of this year. (See MTS Reports Q2.)

France Telecom, meanwhile, has more than 158 million mobile customers globally and generated revenues of €11.34 billion (US$15.65 billion) and operating cash flow of nearly €2.5 billion (US$3.45 billion) in the second quarter.

A stock swap of this magnitude would be unparalleled, but would fit with France Telecom's strategy to develop its global presence through investments in emerging markets. (See FT Unveils New Action Plan.)

— Ray Le Maistre, International Managing Editor, Light Reading

movvask 12/5/2012 | 4:53:26 PM
re: France Telecom in Takeover Talks With MTS


Do you think that FT will enter China and India using this platform?.



movvask 12/5/2012 | 4:53:25 PM
re: France Telecom in Takeover Talks With MTS

Thanks for your comments. I think since Siestma Telecom has presence via MTS in India, I thought FT might enter India which is a large market/has a great potential.

^Eagle^ 12/5/2012 | 4:53:25 PM
re: France Telecom in Takeover Talks With MTS

not a chance.

Question: how much love is there between russia and china?  hmmmmm?

And India?  the systemic barriers to entry are large.

more likely emerging markets in resource rich areas: africa and south america, south east asia, etc.

but china?  don't think so.

india? in my opinion, not likely.  And if they did, I would be thinking SHORT THE STOCK!


^Eagle^ 12/5/2012 | 4:53:24 PM
re: France Telecom in Takeover Talks With MTS

They might try India via MTS.... but my bet would be on other truly "emerging" resource rich markets.  Just my guess.

To enter India I think would take another big M&A to buy one of the dominate providers already there. 

This would be challenging I think.


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