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Technology Stocks : Nokia (NOK)

NOK 6.610

+0.3%

Dec 26 3:59 PM EST

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To: 49thMIMOMander who wrote (19137)	3/26/2002 7:56:38 AM
From: elmatador	Read Replies (1) of 34857

Sonera/Telia Published: March 25 2002 20:14 \| Last Updated: March 25 2002 20:17 We have been here before. Every past attempt to merge two of the European Union's incumbent national telecommunications companies has ended in failure. Telia itself has tried to pair up with Telenor, TDC and Sonera, without success. But it would be unwise to assume Telia/Sonera will fail this time. Expectations - from politicians and investors - may now be low enough for a deal to go through. Moreover, Sonera's share price is now close to its 12-month rolling average, which any bidder would be forced to offer to minorities under Finnish law. The strategic fit is not bad. Telia would acquire Sonera's market leadership in Finland, plus Sonera's interests in their joint ventures in the Baltic states and Russia. But it would also be paying for Sonera's interest in Turkcell, plus (now limited) exposure to greenfield third generation projects in Germany, Spain and Italy - which have no place in its Nordic strategy. There is at least a case to be made for acquiring TDC first, though Telia could always pick up Sonofon if Telenor was stung into buying the Danish incumbent. The biggest problem may not be politics but premium. There are synergies on offer - Telia could shut down its loss-making Finnish mobile venture, and crunch head office costs. But they appear rather limited. The merged entity would not gain economies of scale in mobile to compare with a Vodafone or an Orange. Telia may find it hard to make an offer that does not destroy value for its shareholders, but is still worth Sonera bothering to accept.

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