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Thursday, 16 December, 1999, 18:20 GMT
Nordic telecoms merger collapses

Oslo skyline The two companies couldn't agree on where they should be based


The troubled merger between Sweden and Norway's state-owned telecoms operators has collapsed after months of bitter negotiations.

Making the announcement, Sweden's Industry Minister Bjorn Rosengren said the two governments had agreed after three days of crisis talks to scupper plans for the merger.

In Oslo, Norway's Prime Minister Kjell Magne Bondevik also confirmed the deal was off after the failure of a proposal from Mr Rosengren aimed at resolving a boardroom row which erupted last week.

In a joint statement, the two governments said that neither side would demand compensation for the merger collapse, and would seek to unwind the ill-fated deal as quickly as possible.

Telecoms giant

Together, Sweden's Telia and Norway's Telenor would have created the sixth-largest telecoms operator in Europe, valued at some $50bn.

The two governments originally planned to privatise the new company next year, bringing in much-needed revenue, but negotiations have been dogged by nationalistic bickering.

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

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.

Senior Norwegian managers then said that if the Norwegian chief executive, Tormod Hermansen was forced to resign, the merger would be called off.

The dispute turned political when Telenor wrote to the Norwegian Prime Minister, Kjell Bondevik, for support.

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

The company would have been 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.

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See also:
21 Oct 99 |  The Company File
Troubled Scandanavian phone merger
21 Oct 99 |  Business Basics
The Telecom Revolution
15 Oct 99 |  The Economy
From alliances to mergers

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