Norwegian telecoms company Telenor is expected to announce before close of business tomorrow its plans for its 49.5 per cent stake in Esat Digifone.

Under the terms of an agreement made with British Telecom following the UK firm's acquisition of Esat last year, Telenor has three options.

It could choose to sell its stake in the mobile firm to British Telecom for a pre-arranged price of $1.24 billion (€1.32 billion) or convert it into a 33 per cent stake in Esat Telecom. A third option would be to convert its Digifone stake into Esat shares and exercise an option to buy an additional 16.99 per cent of Esat Telecom at $624 million, raising its holding to 49.99 per cent.

Telenor was due to make a decision last December but was granted a two-month extension until close of business on February 7th by BT. A Telenor spokesman would not comment yesterday on the firm's plans. Telecoms analysts, however, believe Telenor will opt to sell its stake in Digifone because the $1.24 billion price tag was set before a 15-20 per cent drop in the valuation of telecoms firms.

"Probably the best option for them is to realise the cash and use it to develop their third generation mobile presence in Norway," said Dr Chris Doyle, vice-president of Charles River Associates. A BT spokesman said yesterday the possibility of Telenor disposing of its Digifone stake had always been on BT's radar screens.