Country profile — Norway
By Stephanie Heney, SMi Publishing Ltd.
Table of contents
Stock market listing delays
Merger woes
Regulation
Telenor
NetCom
ElTele
Enitel
Tele1 Europe Holding
Acknowledgement
The Norwegian government has been proposing to list Telenor for the longest time now. A minority stake in the company was intended to be sold in November 1999, but this was put on hold when Telenor attempted a merger with Swedish Telia. In April this year, the company announced it was planning to take out loans of up to $3.5 billion in order to kick-start international growth prior to an ‘autumn listing.' Telenor urgently needs cash to help fund a recent spending spree that has recently seen foreign investments in countries ranging from Thailand to Denmark. Telenor has admitted that its net interest-bearing debts totaled 51.7 billion crowns at the end of last month.
Stock market listing delays (Back to top)
In May, Norway's Labor government officially announced a partial sale and stock market listing for Telenor in what is to be the country's biggest privatization. By this stage, the deadline was set for "at the earliest in the autumn of 2000, but in any case before the end of 2001," according to Terje Moe Gustavsen, Norway's transport and communications minister. He said that Telenor should be 51% retained by the state, with its stake being cut by 15-25% in a first round. It is likely that the privatization will take place via a combination of an issue of new shares and a sale of existing shares by the ministry.
In August, the listing was delayed again and will probably now happen in December. The government said that the timetable was subject to "market conditions" and will happen in any case before the end of 2001 "at the latest." Norway will be the last Scandinavian country to sell a stake in its telephone monopoly. At the time of writing, Telenor is embarking on pre-marketing activities for the IPO, and Goldman Sachs and DnB Markets of Norway are acting as joint global coordinators for the offering.
In March 1998, Telenor Nextel, the ISP unit of the state telco, was one of the first companies to adopt Internet telephony with an offering of voice, multimedia, and video conferencing via IP. In December the same year, the world's first Internet telephony service—Interfon PC—to be allocated a national code was launched by Telenor Nextel. High-usage customers were given individual IP phone numbers based on the "850" code issued by the Norwegian regulator.
In June 1999, Norway awarded one-year trial UMTS licenses to Telenor and privately held Teletopia. Teletopia was given permission to install three base stations in Oslo, and Telenor was allowed to establish as many as 30 in Oslo and Lillehammer. Teletopia has plans to offer services by roaming on other networks, such as Telenor's, rather than build its own network.
In the same month, Telenor became the first Scandinavian telecom operator to offer the new terrestrial broadband ADSL service. To begin with, it was made available in the central regions of Oslo, Baerum and Tromsø to business users.
Merger woes (Back to top)
As early as February 1998, Sweden's Telia and Telenor were abandoning talks to merge their companies due to an inability to agree on how much influence each company would have over the joint creation. Perhaps they should have let things lie at that. However, what ensued over the next year was one of the most futile business mergers that recent telecoms news has known. After much more talking and negotiating, the two companies finally merged on October 19, 1999. Even then the signs were not looking too good as events were halted at the eleventh hour when Telenor failed to show up at the signing, due to ‘serious last minute concerns about the structure of the agreement.'
The appointment of Sweden's Jan-Ake Kark as chief corporate advisor was seen as a challenge to the group's new chief executive, Tormod Hermansen. After more, very public, wrangling and crisis talks, the whole thing was dissolved at the end of the year, and a statement from Sweden's Industry Minister Bjorn Rosengren said, "We have not succeeded in completing the merger between Telia and Telenor." The talks had dissolved into nationalistic squabbling, and the government had been called in to attempt a settlement.
In March this year, Telenor announced the unbundling of its local loop. It had been an EU requirement of the merger, but despite its dissolution, the opening up of the local loop was to go ahead. The move was met with disapproval from Tele2, a new entrant in Norway, which claimed that it was merely a PR exercise, and that tariffs were so high, that alternative operators would be discouraged.
In May this year, Norwegian telecoms company NetCom sought help from a ‘white knight' after having been approached with a hostile takeover bid from Tele Danmark. Claiming that the Danish bid had under-valued NetCom, the company eventually sold a 98% stake to Telia, valuing the company at $2.48 billion. Tele Danmark's offer had valued it at only $1.62 billion.
In June, Telenor won the race for a market share in Denmark by acquiring a majority holding in Sonofon, the second largest Danish mobile phone operator. Eager bidders for the 5% stake had included Telia and Sonera.
Also in May, the Norwegian government announced that it hoped to raise NKr400 million from the sale of four UMTS licenses in the country. In August a list of seven applicants was finalized including Broadband Mobile ASA, NetCom, Tele2 Norge, Orange Norge, Telenor, BusinessNet, and a local consortium. The licenses will be awarded via a beauty contest.
Regulation (Back to top)
The Norwegian Post and Telecommunications Authority (PT), is an independent body, but one that also reports to the Ministry of Transport and Communication (MTC), a government department. PT was established in 1987 along with de-regulation. Over the years, the PT has taken on more responsibility and evolved from its original administrative role. Today, the PT's scope covers:
- Monitoring of compliance with the legislation, regulations, and license requirements
- Supervising of telecommunications and postal services providers
- Maintaining a register of telecommunications and postal services providers
- Preparing regulations
- Granting authorizations
- Product testing and approval
- Control of telecommunications terminals on the market
- Standardization of telecommunications services
- Radio frequency management
- Number management
- International collaboration
- Advising the Ministry of Transport and Communications
The PT is currently preparing an invitation for bids for UMTS licenses. The actual awards will be made by the Ministry of Transport and Communications later this year.
Last year, a research and advisory department was added to the organizational structure of PT. The dedicated unit will focus on convergence, IP telephony, Internet broadcasting, security and EU regulation compliance.
Telenor (Back to top)
Telenor still leads the way in Norway with 2.5 million fixed phone lines. The monopoly-holder has more than 2 million mobile customers in its homeland and owns a stake in 16 mobile operators internationally, with more than 8 million subscribers. Telenor offers both free and fee-based Internet access for more than 500,000 Norwegian subscribers and operates an ISP in eight other countries. Telenor has fully digitized its network and now offers services including ISDN, broadband ATM and SDH transmission. Telenor is making a mark in rival Telia's Sweden through Telenordia, which is a joint venture between Telenor, BT and Tele Danmark, created in 1995.
NetCom (Back to top)
NetCom is a serious competitor to Telenor in Norway and is a subsidiary of large Swedish company NetCom Systems. NetCom has acquired Société Européene de Communication SA (SEC). Through this acquisition NetCom operates in 20 European countries. The company's Tele2 divisions offer fixed-line telephony services to around 1.8 million users and Internet access to nearly 1.2 million in Denmark, Norway, and Sweden. NetCom also has about 1.9 million mobile customers in Sweden, Norway, Estonia, and Lithuania via the brands of Tele2Mobil, Comviq, and Ritabell. In August this year, Telia acquired a 98% stake in NetCom.
ElTele (Back to top)
A Norwegian electricity provider, ElTele entered the Norwegian telecoms market in 1994. With more than 500km of fiber-optic network infrastructure, the company is able to offer broadband services. In April of 1998, France Telecom acquired 38% of one of the five regional divisions of ElTele, which operates in Oslo - ElTele Øst.
Enitel (Back to top)
Another electricity company, Enitel, was set up in 1996 to build a broadband network for telephony/data communications in Norway. Around 50 Norwegian power companies got together for the creation of Enitel to make their infrastructure available for fiber optic cables. Eventually, the network will carry more than 6,500km of cables. By the end of this year, Enitel will link 60 towns and cities across Norway. Enitel also offers transmission links to the rest of the world via Sweden and the UK, and offers the only direct telephony/data communications link between Norway and the UK, a 1,000km broadband cable connecting Kårstø and Lowestoft.
At the end of 1999, Telia/Telenor sold Telia's former Norwegian subsidiary, Telia Norge, to Enitel as one of the conditions of the would-be merger. Despite the collapse of the merger, the sale went ahead, effectively leaving Telia without a Norwegian presence. Telia Norge offers telephony, data transmission and Internet services to both corporate and domestic users. It was the acquisition of Telia Norge that confirmed Enitel's place as the second national network in Norway. Enitel and Finnish Sonera have jointly formed the Norwegian company Broadband Mobile ASA, which has submitted an application for UMTS license in the country. According to rollout plans, Broadband Mobile will cover 80% of the Norwegian population with its UMTS service within four years.
Tele1 Europe Holding (Back to top)
This CLEC (competitive local exchange carrier) has a presence in Sweden, Norway, Denmark, and Finland. Founded in 1995, Tele1 provides telephony, Internet service, data transmission and web hosting and the company has nearly 8,000 customers. Tele1 also specializes in the outsourced management of telecoms services for clients.
Acknowledgement (Back to top)
This article appears courtesy of European Telecoms Intelligence Bulletin, SMi Publishing Ltd; 1 New Concordia Wharf, Mill St., London SE1 2BB UK. Phone: +44 (0) 207 827 6110. Fax: +44 (0) 207 827 6111. Email: bscanlon@smi-online.co.uk