The Swedish and Norwegian governments have signed an agreement to merge the state-owned telecoms operators Telia and Telenor, overcoming an 11th-hour hitch to a deal stalled by national hostilities. The merger means that Telia is now likely to proceed to sell its 14 per cent stake in Eircom.

The agreement was finally signed by Sweden's industry minister, Mr Bjorn Rosengren, and Norway's communications minister, Mr Dag Jostein Fjaervoll, early yesterday morning after all-night negotiations to seal the $47 billion deal, which creates Europe's sixth largest telecoms group. The group is likely to sell its Eircom shares because it also owns a 49.5 per cant in East Digifone, which competes with Eircom's subsidiary, Eircell, in the mobile phone market.

The two sides confirmed that Telia chairman Mr Jan-Ake Kark would not be full-time as Telia/Telenor chairman and his adviser role would be solely to Telia.