Telia-Sonera deal bodes well for cross-cultural mergers.

EUROPEMEDIA-(C)2002 Van Dusseldorp & Partners - http://www.vandusseldorp.com/

The announcement that Sweden?s Telia is buying out Sonera of Finland is a landmark in European telecoms ? it?s the first time two former monopoly operators have

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While this isn?t surprising in the current market environment, it answers a few key questions for European operators going forward, and bodes well for future deals.

This deal may tip the hands of many smaller European mobile carriers, as it can be viewed as a pretty defensive move. Sonera itself has acknowledged the fact that it is too small to continue rapid growth and even survive on its own. For Telia, the deal is a chance to ensure it remains the master of its own destiny for a while longer.

While the Swedish company was certainly looking to use its strong balance sheet as leverage in a deal that would help it expand in the Nordics, it was previously caught in a sort of telecoms "no-man?s-land," too small to withstand a takeover from a bigger industry rival, but big enough to give investors the expectation of continued sales growth.

But importantly, the deal shows the triumph of business sense over political grandstanding. With significant government ownership of both companies (70 percent of Telia and 53 of Sonera), and the two countries? left-wing leanings, neither would be too keen on a deal perceived to be a loss of face, given the two countries? history dating back to the 12th century.

Certainly in Finland, Sonera is seen as a public company ? not in the sense that its shares are publicly traded, but rather that it is owned by the public and owes something to the public. This view, coupled with Finland?s stifling regulatory environment, often served to stunt the company?s growth.

Refusing to let Sonera pursue fiscally preferable paths (such as a sale or merger) on the grounds of political pride wasn?t responsible, certainly not at the least to the Finnish people who own a large chunk of the company both privately and through the government.

But the deal has been structured in such a way that, although Telia is without a doubt the buyer, Sonera (and by extension, Finland) will maintain a significant say in the management of the company.

To see these political obstacles overcome in favor of the right business decision is heartening, and certainly bodes well for cross-cultural mergers across the continent. There?s a tendency for outsiders to lump the Nordics and Scandinavia into a ball and assume that since the people are predominantly blond and the weather predominantly cold, cultural differences are negligible.

But keep in mind that the area stretches east-to-west, the equivalent distance from the western edge of France all the way to Poland, and these countries? histories with each other are just as bloody and brutal as any on the continent. A Swedish-Finnish merger has just the same cachet for many people in the two countries as a French and German hookup.

But in the end, business sense can ? and must ? prevail for many small and mid-sized carriers to survive. Incumbents and other carriers must ? and will ? put away xenophobic and nationalistic tendencies to stay in business. ((Distributed via M2 Communications Ltd - http://www.m2.com))