Sonera boss resigns

Sonera: Reported to be in takeover talks with Swedish rival

Sonera, Finland's leading telecoms operator, has unexpectedly lost its chief executive and president, Kaj-Erik Relander.

Sonera is a leading developer of mobile e-commerce applications, and dominates the sector in a country with one of the highest rates of mobile phone usage.

The announcement came days after reports that Swedish rival Telia was close to taking over the company in an estimated 6.8bn euro ($5.8bn; £4.2bn) deal.

Sonera said Mr Relander's resignation would not affect its strategy or business targets, but investors were jolted, marking the company's shares down 7.6% to 9.91 euros in trading in Helsinki.

Relander: 'Surprising' departure

Sonera chairman Tapio Hintikka said: "Mr Relander's decision was a surprise to me. Personally, I would have hoped him to continue."

Difficult decision

Sonera said Mr Relander had accepted a position as a partner at Accel Partners Venture Capital and would lead investment strategy for the firm's global wireless business.

"Personally the decision has been a difficult one for me, because the businesses of Sonera are in the most interesting and strongly developing stage," said Mr Relander.

Mr Hintikka said the next step for Sonera was to find a new president and chief executive, who would be recruited from outside the company.

Aimo Eloholma will become acting president and chief executive from 1 August - the date scheduled for Mr Relander's departure.

Both Sonera and Telia have so far declined to comment on reports of takeover talks between them.

Nationalistic bickering

Major players in Nordic telecoms have long eyed tie-ups. But most merger talks have fallen apart, partly through nationalistic bickering.

Talks between Telia and Norway's Telenor collapsed in 1999, while last month Telenor failed in attempts to buy a 42% stake in TeleDanmark from SBC Communications of the US.

Industry sources said Telia had since indicated its interest in the SBC's TeleDanmark stake although these talks were now taking a backseat to the possible Sonera deal.

Analysts have said that completion of either deal would put pressure on Telenor on expand.

Possible acquisition targets have recently been reported to include Sweden's number two and three operators Tele2 and Europolitan.

Parliamentary approval

The string of merger plans has been complicated by the fact that Nordic governments retain large stakes in the operators and, in most cases, require parliamentary approval to reduce them.

The Finnish government owns 53% of Sonera while Sweden's parliament is due to vote later this month on a proposal to allow the state to cut its stake in Telia to less than 51% from 70% now.

Last year, other suitors for Sonera were said to include Spain's Telefonica, Deutsche Telekom and France Telecom's Orange.

Sonera, Finland's biggest telecoms operator, had 2.3 million mobile phone subscribers and 742,000 fixed-line customers as of the end of September 2000.

The mobile business provided 54% of total revenue in 2000.