Swedish telecoms shares soar

Stockholm-based Telia marches ahead

Shares of Swedish telecommunications operator Telia soared on its stock market debut on Tuesday, marking the largest privatisation in the Nordic region and valuing the company at more than $30bn.

The company's initial public offering is expected to be the largest in Europe this year.

Telia's shares kicked off at 93.50 crowns (£7.15), sharply up from their issue price of 85 crowns (£6.50).

In early afternoon trading, they slipped slightly to 92.50 crowns (£7.07), but were the most heavily traded shares on the Swedish market on Tuesday with 11.5bn crowns, or £88 million, worth of shares changing hands.

The Swedish government can breath a sigh of relief at Telia's successful debut.

Market volatility

The recent volatility in telecommunications and technology shares on global stock markets had sparked speculation that the government might be forced to postpone the company's initial public offering.

It set a wide price range of between 70 crowns (£5.36) and 92 crowns (£7.04) to tempt investors.

But the issue was four times oversubscribed, forcing the state to sell 30% of the company, rather than the 20.9% it had initially envisaged.

"Telia is a winner, the state is a winner, the shareholders are winners," Sweden's Industry Minister Bjorn Rosengren said.

And the government now has plans to reduce its stake to 51% by the end of the year.

However, there are doubts to whether Telia can maintain its strong performance.

"It's too early to say whether the issue is a success," said one analyst.

"It's to be expected that it trades higher than the issue price in the first few days," the analyst said.

Growth concerns

Other market watchers had some concerns about the company's potential for future growth.

"It looks cheap now, but I'm not convinced," said one broker. "A lot of Telia's business is in fixed telephony which is not growing as fast as mobile," the broker said.

Late last year, Telia's merger plans with Norway's Telenor broke down.

Together, they would have created the sixth-largest telecoms operator in Europe, valued at some $50bn.

The companies failed to agree on the terms of the merger, in particular where to base their joint mobile phone operation.

Scandanavia has the highest rate of mobile phone ownership in Europe, and Telia is eager to expand into partnerships overseas.