Analysts said the Swedish telecom authorities' decision - announced on Saturday - had left Telia's regional strategy in tatters.
Telia president Marianne Nivert denounced the rejection of its bid as "completely inexplicable" and said the company would appeal the decision not to award it a third-generation licence.
The setback was the latest of several for Telia, whose plans to merge with Norway's Telenor had collapsed last year. Telia is also without a permanent chief executive after the departure of Jan-Ake Kark two months ago.
The shares had dropped 17% to a new lifetime low at Monday's opening but recovered slightly to be 14% down at 51 krona by 1112 GMT.
Before Monday, Telia shares had already lost 30% since being floated in June.
'Considerable' shortcomings
In deciding not to award Telia a licence, Post & Telecom Authority director general Nils Gunnar Billinger had referred to the "considerable" shortcomings of its bid, particularly in terms of geographical coverage.
He said Telia would have needed to increase three-fold the number of base stations it had planned to build.
Analysts said Telia had apparently underestimated the opposition and it was difficult to see how an appeal might succeed.
The tender process had been a transparent one, with the decisions for rejecting candidates clearly stated, they said.
No more spectrum
If an appeal did succeed, an additional problem would be created - one of the four licences awarded would have to be removed from its holder and reallocated to Telia, as no further spectrum is immediately available.
This would almost certainly prompt legal challenges.
Telia's other options included becoming a service provider, by buying capacity in another player's network, or buying part or all of one of the winning consortia, analysts said.
Although Telia was the most striking casualty of Sweden's mobile licence tender, several other international telecoms heavyweights also came up empty handed, including Deutsche Telekom and Telefonica of Spain.
The four successful bidders were:
"Within three years, 99.98% of Sweden will have... [3G] coverage," Industry Minister Mona Sahlin had said.
The licences were awarded after examination of criteria including bidders' financial strength, technical feasibility, roll-out speed and commitment to geographical coverage.
The 3G licence holders will be charged a nominal fee of 100,000 Swedish krona ($10,373) each plus 0.15% of annual turnover.
This compared with auctions in Germany and the UK that had raised an average of 8.4bn euros ($7.7bn) and £4.5bn ($7.1bn) per licence.