BT is poised to strike back in Scandinavia following confirmation of a planned merger between Sweden and Norway's state owned telcos.
Sweden's Telia and Norway's Telenor this week signed a letter of intent to merge their operations and sell shares in approximately a third of the new venture.
But while BT, at one point considered a potential investor in Telenor, has been beaten to the punch by Telia's move, it is now in a good position to take majority ownership of Telia's Swedish rival Telenordia.
BT and Telenor are two of three equal shareholders in Telenordia, alongside Danish operator Tele Danmark. If the Telia-Telenor merger is completed, Telenor would have to sell its stake in Telenordia, potentially to BT, giving it a firm Scandinavian foothold.
BT said it was too early to say what it might do if the Telenor stake became available. But it did confirm that it has no plans to buy into the merged Telia-Telenor. Telenor is also a distributor of BT's Concert services, but the company said it didn't see this relationship being affected.
Analysts said that the advanced nature of the Scandinavian telecoms market - its high phone penetration and enthusiastic adoption of IP telephony and the Internet - makes it an attractive market for BT.
"It is great learning ground if nothing else. In terms of usage and communications services, Scandinavia is a great melting pot for Europe," said Chris Lewis, an analyst at the Yankee Group Europe, "It would be good for BT to learn what's going on up there."
Last February, merger talks between Telia and Telenor broke down twice after the companies failed to agree on terms. This time, the threat of growing competition made a merger more acceptable, the companies said.
"Both companies had come to a point where it was natural to assess their future position in a market with steadily growing competition," the companies said in a joint statement.
The new Stockholm based company will be 60 per cent owned by the Swedish government and 40 per cent owned by the Norwegian government. Both governments said they would reduce their stakes to around 33.4 per cent through an IPO to be held, "as soon as possible."
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