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By Tony Hallett, 14 December 1999 00:25

NEWS The Scandinavian mega-merger between Telenor and Telia is in danger of falling apart, after a weekend of arguments and brinkmanship on the part of the group's executives. The latest twists could yet topple a Norwegian government that has staked its reputation on the outcome to the negotiations, according to reports in the Swedish press. Both Telenor and Telia are state-owned, although there are plans for a partial flotation next spring. The road to a full merger has been a rocky one. Norwegian group chief executive, Tormod Hermansen, has been frequently ridiculed in the Swedish press, and the Norwegians have been quick to protest what they see as Sweden trying to dominate the partnership. Sweden's Telia is slated to own 60 per cent of the combined group, and the latest row erupted after a vote on where to locate the combined mobile phone business. After the board was split the group's chairman - a Swede - cast a deciding vote in favour of Stockholm rather than near Oslo. Hermansen called the ruling invalid as no Norwegians had backed the move, and now there have been calls for his resignation. Talks to avert a messy marriage annulment are ongoing. Elsewhere, France Telecom (FT) has been dealt another blow. After its well-publicised split with Deutsche Telekom, it thought it had found a way in to the German mobile market. But its plan to control third-placed player E-Plus has been scuppered by BellSouth. The US Baby Bell, in cahoots with Dutch KPN Telecom, has said it will exercise its right - as an original stakeholder - to buy the stakes in E-Plus which Vodafone, RWE and Veba are relinquishing. Now FT has said it is investigating the legality of BellSouth's actions. Separately, Vodafone AirTouch is expected to submit its official tender offer for Mannesmann next week. The move would mean an intensification of the takeover battle for a 28-60 day period during which - under German rules - Vodafone would be able to increase its all-stock offer. It has said that won't happen.