Telecom Eireann, or its rival Esat, is set to lose a partner in its mobile phone operations. It follows confirmation that merger proposals between Swedish telecom operator Telia and Norwegian operator Telenor are now complete.
Telia is a 10 per cent partner in Telecom, while Telenor is a 45 per cent shareholder in Esat Digifone, which is Telecom's competitor in the mobile phone business. Industry sources maintain that it would be impossible for the two Scandinavian operators to retain stakes in the Irish companies following a merger.
The Swedish financial daily Dagens Industri reported yesterday that proposals on the Telia Telenor merger will be presented to their owners, the Swedish and Norwegian governments. Digifone chief executive Mr Barry Maloney said last night that as of now "it is business as usual". He said Telecom Eireann would face the same issue as Digifone - whether the shareholder would stay in the company.
Another source said the newlymerged group would probably opt to stay in Telecom, because they were all state companies and such companies tend to stick together.
Telenor set up the Digifone mobile phone system with Esat Telecom, but it is understood that none of its personnel are currently working in the Irish company.
If Telenor sells its Digifone stake, Esat Telecom will be faced with two choices - either to purchase the stake itself, or sell it on the market. Esat Telecom owns 45 per cent of the mobile phone company and Mr Dermot Desmond's IIU owns the remaining 10 per cent.
A possible bidder for the Telenor stake could be British Telecom which has linked up with the ESB to offer alternative fixed line services. According to newspaper reports, the new company will have its headquarters in Stockholm.
The new company will employ 55,000 people and have sales of around 60-70 billion Swedish kronor (£6.3 billion) per year. Telia and Telenor announced in last month that they had been in merger talks for six months.
The talks were then halted owing to opposition from Norway's minority centrist coalition government, but then resumed after criticism in parliament forced the government to back down. One industry source said last night that the proposed merger had got as far as heads of agreement.
