Telia of Sweden is now likely to dispose of its 8 per cent stake in Telecom Eireann, following final agreement on its merger with Telenor of Norway. Telenor is a major shareholder in Esat Digifone - where it will soon own 49 per cent - and the merged entity cannot hold on to this stake as well as Telia's shares in Telecom in the long term. KPN, Telecom's other joint venture partner, is seen as the likely purchaser of the Telia stake.

Under the merger agreement, the new entity will be owned 60 per cent by Sweden and 40 per cent by Norway. A partial privatisation - of 33.2 per cent of the group - is to follow.

The details of the merger were presented late yesterday by the Swedish industry ministry and the Norwegian transport and communication ministry.