Crisis talks to avert a collapse of the $50 billion (€49.39 billion) merger between Telia and Telenor, the Scandinavian state-owned telecommunications groups, were underway in Stockholm last night.
The discussions between Mr Bjorn Rosengren, Swedish industry minister, and Mr Dag Jostein Fjaervoll, Norway's minister for transport and communications, came as nationalistic feuding between the Norwegian and Swedish sides continued.
Under the name Newtel, Telia and Telenor are bidding for Esat Telecom, but the doubts over the merger between the two has now put a question mark over whether the bid will go ahead.
Separately, Esat Telcom confirmed yesterday that since the Newtel bid "it has received a number of approaches from third parties."
The announcement gave no further indication of the identity of the third parties, understood to be international telecommunications groups interested in launching a counter-bid. There has been speculation that British Telecommunications may be interested, but it continued to refuse to comment yesterday. The extent of traffic between Britain and Ireland would provide an attraction for a link between BT and Esat, while the strong growth in the Irish market might prove attractive to the British player. However BT already operates Ocean in the Irish telecommunications market in a joint venture with the ESB.
Esat Telecom is now thought likely to publish its defence document, giving reasons why it believes its shareholders should not accept the Newtel bid, within the next two days. It is likely to argue strongly that the Newtel bid of $72 for each Esat ADS under values Esat Telecom substantially. However it remains to be seen whether the Newtel bid will go ahead.
The latest crisis in the Telia/ Telenor talks was triggered by last week's decision to place the combined group's mobile division in Stockholm - against the wishes of the Norwegian members of the company's board. The decision was carried only when Jan-Ake Kark, the Swedish chairman, used his casting vote.
Mr Kjell Magne Bondevik, the Norwegian prime minister, insisted yesterday the decision was "invalid" under the terms of the merger agreement. Sweden disputes this, citing Swedish law.
Mr Petter Pay, acting head of Telenor, said: "Such are the conditions at the moment, it is doubtful that the merger should go through."
Mr Tormod Hermansen, the embattled Norwegian chief executive of the group, said he would not resign, despite a call for his departure.
Mr Hermansen said the company's future was in the hands of its owners, and they needed to act urgently. The group is 60 per cent Swedish-owned, and 40 per cent Norwegian.
Bankers suggested yesterday that the least that would be required to save the deal was extensive blood-letting at executive and board level.
Non-stop rows between the Swedes and Norwegians heading a newly merged Nordic telecoms group have destroyed confidence in the group, threatening to lower its value and hinder expansion, analysts said on Monday.
Nationalist bickering has dogged the marriage of Sweden and Norway's state-owned telecoms operators, Telia and Telenor, with the latest row over the siting of the prized mobile phone unit bringing the deal to the brink of collapse.
Politicians were joining the affray, some calling for the merger to be abandoned, others for a quick solution.
The merger of Telia and Telenor, signed in October and effective from January 1st, 2000, is intended to create Europe's sixth largest telecoms operator, worth an estimated 400 billion Swedish crowns ($47 billion) with Sweden owning 60 per cent and Norway 40 per cent.
The company, known initially as Newtel, planned a partial sale next April, floating 20 per cent of its shares in the Nordic region's largest initial public offering .
However the ongoing rows over who will lead the company, its name, and now the location of its 12 business units has shaken confidence in the group and could delay the float.
