Telenor will probably opt to exercise an option to sell its 49.5 per cent stake in Esat Digifone for $1.24 billion (#1.41 billion), the Norwegian firm's chief executive hinted yesterday. Mr Tormod Hermansen said no final decision had been taken but he would act in the best interests of the company's shareholders.

Asked if Telenor would opt for cash, he replied: "We will probably not make any surprises here."

Under the terms of BT's acquisition of Esat Telecom last February, Telenor has retained three options on its stake in Digifone. These are:

to choose to sell its stake for $1.24 billion;

to convert it into a 33 per cent stake in Esat Telecom;

to convert it into Esat shares and exercise an option to buy an additional 16.99 per cent of Esat Telecom at $624 million, raising its holding in the parent company to 49.99 per cent.

Earlier this month BT agreed to allow Telenor to postpone a decision on what to do with its 49.5 per cent stake in Esat Digifone until February 7th. Telenor had asked for the postponement because the firm's management had been busy preparing its partial flotation, which took place in Oslo last week. Mr Hermansen said he was disappointed with the lack of US investment in the offering although he was generally satisfied with the listing.

Telenor had interest bearing debts totalling $6.21 billion at the end of September. The proceeds from a sale of its stake in Digifone would probably go towards reducing this debt. The Norwegian firm has an option to sell its 10 per cent stake in German mobile phone operator Viag Interkom to BT for #1.61 billion until the end of the year. BT is trying to reduce its debt levels by $10 billion.