France Telecom eyes Nordic rival

France Telecom owns UK mobile operator Orange

France Telecom says it is in exploratory talks to acquire Nordic telecommunications firm TeliaSonera.

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

The firm stressed that negotiations had not yet started, but said the two companies were complementary.

The news hit France Telecom shares, which fell 2.01% to 19.46 euros in morning trading in Paris - making it the main stock index's biggest loser.

The firm's finance director, Gervais Pellissier, said France Telecom would probably pay for any deal of the size of TeliaSonera in a combination of cash and stock.

He said the company would stick to its cash dividend policy - a source of concern for investors - but warned it might miss debt targets.

France Telecom's European expansion in the 1990s resulted in a huge debt burden.