Telia management and unions welcome end of merger with Telenor

On 16 December 1999, the merger between the state-owned telecommunications companies Telia (Sweden) and Telenor (Norway) ended after only two months. The Swedish reaction was relief from both management and trade unions at Telia.

On 20 January 1999, the Swedish and Norwegian governments announced an intended merger between their respective state-owned telecommunications firms, Telia and Telenor. After nine months of lively discussions between the parties, and following confirmation by the European Commission, the merger agreement was concluded on 19 October 1999. However, on 16 December, after less than two months of operation, it was announced that the merger had ended

Two issues made the merger impossible, stated the Swedish Minister of Industry, Employment and Communications, Björn Rosengren- the interpretation of the ownership agreement and whether the headquarters of the merged group's mobile telephones business should be situated in Norway or in Sweden.

Possibly for the first time in the rather turbulent merger, the Norwegians and the Swedes were united in their opinion about the termination of the arrangement. The Norwegian Prime Minister Kjell-Magne Bondevik and the Swedish Prime Minister Göran Persson issued a joint statement announcing the breakdown, which had been decided by both governments in consultation with each other. The two Prime Ministers stated that even if the merger had been the right move from industrial and economic policy perspectives, developments during recent months has sadly shown that there were difficulties in carrying out the merger in the way it had been intended.

The winding-up of the merger will occur quick as possible and will be governed by an agreement between the parties. Mr Rosengren will be responsible for this, along with his Norwegian counterpart, the Minister of Communications, Dag Jostein Fjaervoll. None of the owners or companies will claim any damages because of the failed merger, the parties also declared.

There had been many smaller disputes and controversial interventions from both sides in the merger process, with many, though perhaps not all, of the disputes being made public. The disputes continued after the merger, with the final straw coming when the chair of the Telenor/Telia board, the Swede Jan-Åke Kark, used his casting vote to push through a decision that the headquarters for the mobile telephones business should be situated in Stockholm, and not in Oslo as the Norwegians wished. According to the provisions of the Telenor/Telia ownership agreement, at least one member of the board from each country should vote in favour of certain important decisions. The Norwegian interpretation of the rules was that the location of the mobile phones headquarters was such a decision. The Norwegian managing director of Telia/Telenor, Tormod Hermansen, stated that the decision was thus taken incorrectly and was therefore not valid.

All the local trade unions at Telia in Sweden agreed, unanimously and with apparent deep relief, with the decision to split from Telenor. Spokespersons for the Union for Technical and Clerical Employees (Svenska Industritjänstemannaförbundet, SIF), with 9,000 members at Telia, and the Swedish Confederation of Professional Associations (Sveriges Akademikers Centralorganisation, SACO), with 3,000 members, stated that they were happy that the troubled affair was finally over. However, a spokesperson for the Union for Service and Communication (SEKO), with 14,000 members at Telia, said that he regretted that the merger could not be carried out, as it was strategically justifiable. The estimated costs of the merger and its breakdown will, according to Telia, add up to between SEK 200 million and SEK 250 million.