One of Europe's biggest telecoms mergers is on the verge of collapse.

October's merger of Telenor and Telia, the Norwegian and Swedish telephone companies, created Europe's sixth largest telecoms giant, with a value of $50bn (£30bn).

The two governments had pledged to privatise the company next year.

Senior Norwegian managers are now saying that if the Norwegian chief executive, Tormod Hermansen, is forced to resign, then the merger is off. They have written to the Norwegian Prime Minister, Kjell Bondevik, for support.

The Swedes and Norwegians are also squabbling over where the headquarters of the group's mobile phone business should be located.

Last week the board of Telenor-Telia split along national lines on whether the new headquarters should be based in Stockholm, with the Swedish chairman, Jan-Ake Kark, using his casting vote.

But Mr Hermansen objected to the decision, on the grounds that all major moves require the approval of both governments - prompting calls from the Swedish board members, including deputy chief executive Marianne Nivert, for him to resign.

Mr Hermansen says he has no intention of resigning.

"I will now calm down the situation as well as I can in order, if possible, to save the merger," he said.

Governments to meet

Now Sweden's industry minister, Bjorn Rosengren, is holding emergency talks with Norwegian communications minister Dag Jostein Fjaervoll to try to resolve the situation.

Telenor executives said the talks would be "decisive" as to whether the merger continued. "This is about the fundamental prerequisites for a merger," one was reported to have said.

The dispute could threaten the minority government of Mr Bondevik, and the Norwegians are planning to get tough.

They are expected to put demands to the Swedes that it cannot accept.

The collapse of the merger would be a serious blow to both governments who have invested prestige and two years of effort in trying to fashion Europe's biggest cross-border telecoms merger.

The dispute also threatens the planned flotation of 20% of the company on the stock market in April, which could raise much needed funds for both governments.

Bankers believe the dispute has damaged the company's credibility and valuation.

Troubled history

It is not the first time the merger has been in trouble.

Frictions over the role of the Swedish chairman and the Norwegian chief executive threatened to derail the agreement earlier, with the Swedish press making personal attacks on Mr Hermansen.

The question of the size of the ownership share between the Norwegian and Swedish governments also caused tensions.

The company, if it is floated, would be Scandinavia's largest.

With mobile phone ownership rates among the highest in the world, it has an attractive business base which could prove highly profitable.

The combined companies have a workforce of 55,000 and sales of $16bn (£10bn)