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Global Telecoms Business
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Telenor and Telia merger to create Nordic champion

01 September 1999

Pending EU approval, Telenor, the dominant provider of telecoms services in Norway, is set to merge with Telia, its Swedish counterpart. The merger, the first in Europe, would create an operator with significant mobile, Internet and media interests. Telenor's CEO Tormod Hermansen talks to Basil Ballhatchet about the main challenges that would face the merged entity.

Telenor, the Norwegian state-owned operator, expects to gain approval from the EU for its merger with Telia, its Swedish counterpart, in October. This would be the first time that two telco incumbents had been merged in Europe. According to the merger agreement, the Swedish state will hold 60% of the capital in the company and Norway 40%. However, both telcos are committed to a parity holding in the company, following an IPO, which would involve the sale of 33.2% to private investors. The new company would be listed in 2000. Tormod Hermansen, the CEO of Telenor, would be appointed new CEO of the merged entity.

Viking Kjellstrom, a telecoms equity analyst at HSBC, talks about the risks and benefits of the merger: "I think the real challenge is to integrate the companies and really bring out the synergies, which are significant. We expect merger synergies of Nkr5 billion ($608 million). When you...