26/11/2009 ( Source: http://www.businessweek.com )

France Telecom, TDC to merge Swiss operations

France Telecom said Wednesday it will pay euro1.5 billion ($2.25 billion) to Danish telecoms group TDC as part of a deal to merge their respective operations in Switzerland.

France Telecom's Orange Switzerland will merge with Sunrise Communications of TDC to build "the leading nationwide alternative provider" of telecom services in the country. Rival Swisscom is the market leader.

France Telecom said in a statement that it will become a 75 percent shareholder and TDC will hold the rest.

A company would unite 3.4 million mobile customers and 1.1 million fixed-line and broadband customers, with annual pro forma revenues of 3.1 billion Swiss francs (euro2 billion) last year.

"Swisscom will face a strong competitor with a wider range of products and more sales points," said analysts at Zuercher Kantonalbank in a research note.

"The question is whether the new company will really increase competition though. The two companies (Orange and Sunrise) have already been using aggressive marketing methods to attract customers. The reduction in operators could eventually even lead to a lessening of competition particularly in the cellular business."

If cleared by regulatory and antitrust authorities, the deal is expected to close by February.

France Telecom shares were up 1.7 percent at euro17.35 in Wednesday morning trading in Paris.

Shares of TDC soared 10.2 percent to 249 Danish kroner on the NASDAQ OMX Copenhagen exchange.