The telecommunications industry is seeing quite a bit of action in recent months. First there was the ongoing drama in South Africa starring MTN and two of India's largest companies Bharti and Reliance Communications, followed by Vodafone's proposal to increase its stake in joint venture Vodacom and Verizon Wirelesss making  a $27-billion bid for the fifth-largest US mobile operator Alltel.

Now comes the news that Europe is next on the list of churning in the industry as France Telecom makes an unsolicited bid to buy Sweden's TeliaSonera AB for 252.5 billion kronor ($41.9 billion) in cash and stock to become Europe's biggest telephone company.

In a statement, France Telecom said its informal bid offers is made up of 52 per cent cash in euros and 48 per cent shares based on an exchange ratio of 3 newly issued France Telecom shares for 11 existing TeliaSonera shares. A cash guarantee option would be available to all shareholders for their first 500 shares tendered.

The bid values Stockholm-based TeliaSonera at 56.23 kronor a share, 26 per cent higher than the price on 15 April, the day before France Telecom's interest in a deal became public. Since then, the latter has lost 16 per cent in Paris trading on concern it would pay by issuing new stock. (See: France Telecom looking to acquire TeliaSonera in $38 billion deal)

As of now, France Telecom is the third-largest communications entity in Europe, after Germany's Deutsche Telekom and Spain's Telefonica SA. However, a successful acquisition can catapult France Telecom to the top of the heap with 237 million subscribers, of which 168 million would be mobile-phone users and 69 million would be fixed-line customers.

Buying TeliaSonera would be France Telecom's biggest deal since it bought Orange for £27.8bn ($55.1bn) in 2000.

Such a takeover will would add operations in the four Nordic markets, the Baltic states and countries including Kazakhstan, Azerbaijan and Uzbekistan, at a time France Telecom's CEO Didier Lombard is looking to diversify in emerging markets including Vietnam and Ghana, where mobile-phone use is growing faster than in the operator's main markets of France and the UK.

However, some analysts have been critical of the proposed deal, citing little overlap between the two groups, whose core operations lie in mature Western markets. They especially pointed towards the tough competitive dynamics in Sweden, the limited synergies of any deal apart from the closing down of TeliaSonera's loss-making Spanish operations and the lack of control over Russia's Megafon and Turkey's Turkcell, in which TeliaSonera has minority stakes.

''We have made our calculations regarding a fair price for the type of deal we have on the table,'' Lombard said on a conference call. ''We have 15 days to adjust, discuss.''

However, TeliaSonera chairman Tom von Weymarn didn't share Lombard's views on ''fair price'' and said that his company will reject the offer because it's ''far below'' the company's value.

A France Telecom purchase of TeliaSonera would also involve complex political negotiations as France Telecom is 27 per cent-owned by the French government while the Swedish and Finnish governments have 37 per cent and 13.7 per cent stakes in TeliaSonera respectively.

While TeliaSonera investors responded positively to the offer, the French major's shareholders continued with their negative stance dragging the share price further down. While TeliaSonera rose as much as 4.75 kronor, or 8.8 per cent, to 58.5 kronor in Stockholm, France Telecom dropped as much as 95 cents, or 4.9 per cent, to 18.28 euros in Paris.

(See: Reliance Communications in acquisition talks with MTN after Bharti withdraws  and Vodafone offers $2.5 billion to increase its stake by 12.5 per cent in South Africa's Vodacom)