Multibillion-dollar telecommunications mergers show how global cellular powerhouses are scouting for growth in emerging economies while consolidating in their own, crowded backyards. France Télécom offered to buy TeliaSonera, a Swedish-Finnish telecommunications operator, but within hours, TeliaSonera rejected the offer as too low. Analysts said higher bids—either from France Télécom or others—could persuade TeliaSonera to accept a deal. In the United States, Verizon Wireless agreed to buy Alltel for $28.1 billion—a deal that would make the company the biggest mobile phone operator in the United States. A combination of France Télécom and TeliaSonera would create the world’s fourth-largest mobile operator, smaller only than China Mobile, Vodafone, and Telefónica of Spain.
a. Explain the rent-seeking behavior of global telecommunications companies.
b. Explain how mergers may affect the efficiency of the telecommunications market.