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Mergers Accelerate as Telecoms Seek Growth

BERLIN — A multibillion-dollar telecommunications merger was announced Thursday, reflecting a trend for mobile phone operators to consolidate in their own crowded backyards while they scout for growth in emerging economies.

In the United States, Verizon Wireless, which is owned by Verizon Communications and Vodafone, announced it would buy Alltel for $5.9 billion and the assumption of $22.2 billion in debt. That would make it the biggest cellphone operator in the country, with 80 million subscribers.

In Europe, France Télécom offered Thursday to buy TeliaSonera, a Swedish-Finnish telecommunications operator with a variety of holdings in Turkey, Russia and former Soviet states, for $42 billion in cash and stock.

Within hours, TeliaSonera, based in Stockholm and owned jointly by the governments of Sweden and Finland, which have a combined 51 percent stake, rejected the offer as too low, but analysts said higher bids —from France Télécom or others — could persuade those governments to accept a deal.

A combination of France Télécom and TeliaSonera would create the world’s fourth-largest mobile operator, with 168 million subscribers, behind China Mobile, Vodafone and Telefónica of Spain, which operates the O2 brand. France Télécom operates mobile and other consumer services under the Orange brand.

Operators around the globe are looking increasingly to the world’s last relatively untapped mobile markets in Africa, the Middle East and Asia. Sales momentum has slowed as cellphone penetration, or the number of phones in relation to the population, has approached or exceeded 100 percent in many European markets.

As Western markets have matured, the pace of acquisitions involving emerging market operators has accelerated. Last week, Vodafone, the largest European operator, said it wanted to acquire control of the South African wireless operator Vodacom, in which it owns 50 percent, as a springboard for further acquisitions in Africa. Last month, Reliance Communications, an Indian mobile operator, said it was in talks to acquire MTN, the largest mobile operator in Africa.

Deutsche Telekom agreed in May to buy control of the former Greek telephone monopoly, Hellenic Telecommunications, which owns mobile operators on and near the Balkan Peninsula in Serbia, Romania, Bulgaria, Albania and Macedonia.

TeliaSonera, which was created in the 2002 merger of the former state phone companies in Sweden and Finland, also has extensive business in emerging markets. The company owns 44 percent of MegaFon, one of the largest mobile operators in Russia, as well as operators in Lithuania, Latvia, Estonia, Kazakhstan, Azerbaijan, Uzbekistan, Tajikistan, Georgia, Moldova, Ukraine and Turkey.

John Delaney, an analyst at IDC Europe, a research firm, said an acquisition of TeliaSonera would allow France Télécom to improve its roaming packages for business travelers in Europe. France Télécom has also been trying to broaden its offerings in Europe by selling fixed-line and mobile calling, broadband and video services as a package to customers and advertisers.

Despite TeliaSonera’s rejection of the offer, Didier Lombard, the chairman and chief executive of France Télécom, signaled that talks between the companies might not be over. During a conference call with analysts, he described TeliaSonera’s rejection as logical and a “first response.”

France Télécom said its bid was worth 62.35 Swedish kroner, or $10.42, a share, which valued TeliaSonera at 252.5 billion kroner (about $42 billion). The offer was a 26 percent premium to TeliaSonera’s share price on April 15, the day before France Télécom first expressed an interest.

After the announcement of the bid on Thursday, France Télécom’s share price fell as much as 4 percent in Paris as some investors deemed the offer too high.

Mobile operations in the Baltic region, Russia, the former Soviet states and Turkey made up only about 11 percent of TeliaSonera’s sales last year, but analysts say there is strong potential for growth in those regions.

“This is one of the last relatively untapped regions in the world for the wireless industry,” said Kresimir Alic, an analyst at IDC in Zagreb, Croatia. “Most of the countries in the former Soviet Union have huge growth potential.”

Eric Pfanner contributed reporting from Paris.

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