More industry news that could impact SDLI, at least if Alcatel's involved:
November 17, 1999
Dow Jones Newswires
Deutsche Telekom Siris Deal Only A Small Step In France
By STEPHAN KUEFFNER
FRANKFURT-- Deutsche Telekom AG's (DT) EUR700 million takeover of French fixed-line operator Siris S.A.S. will boost the German group's position in France but isn't the blockbuster deal market participants and investors are awaiting in that market.
The move still leaves the group without a stake in the French mobile telephone sector - a key telecommunications growth area.
Telekom officials in October said they were close to a deal in France, but a Telekom spokesman Wednesday wouldn't confirm the Siris deal was the one mentioned by executives.
Analysts said taking over Siris from Unisource N.V. enhances Telekom's market presence in France, where Telekom says it needs to be if it is to be a dominant pan-regional presence.
"It's a young company with potential to help Telekom to a larger market share in France," said telecommunications analyst Christoph Vogt at M.M. Warburg in Hamburg.
Siris serves 30% of CAC-40 blue-chip companies, Telekom said.
Telekom said it will expand Siris' network in France to 5000 kilometers of fiber optic cable by the end of next year from 2000 kilometers currently.
"Even though it isn't the rumored big merger, the move is an important step because Telekom is gaining net access," said Frank Rothauge, telecommunications analyst at Sal. Oppenheim said.
The transaction is subject to approval by Telekom's supervisory board. It is one of a number of acquisitions by Telekom in Europe over the past months, all of which have been dwarfed by rival Mannesmann AG's (G.MMN) EUR34 billion takeover of Orange PLC (ORANGY). Mannesmann itself is the target of Vodafone AirTouch PLC's (U.VOD) hostile takeover bid, possibly valued at EUR116.7 billion.
Telekom paid about EUR10 billion for U.K. mobile phone operator One2One and $850 million for a 35% stake in government-owned Hrvatske Telekomunikacije d.d. of Croatia.
Analysts say there's strong pressure on Telekom to consummate a major deal or risk becoming a takeover target itself.
In 2000, Siris' sales are expected to reach FRF1 billion, said Telia AB (S.TLA), one of the partners in the Unisource joint venture.
However, since the deal doesn't lead Telekom into the French mobile phone sector, market speculation will continue that it's eyeing the acquisition of France's Bouygues Telecom, the country's third-largest mobile provider in terms of subscribers. Bouygues Telecom is owned by construction conglomerate Bouygues SA (F.BOU).
The EUR700 million price tag shouldn't hurt Telekom's share price, analysts said. It's even seen by some as adding value, along with other of Telekom's activities.
"We've raised our target price to EUR60," Vogt said. "Its T-Online (Internet provider service) is undervalued...and its D1 mobile phone service alone should be valued at around EUR56 billion."
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