UPDATE 2-Telecom competition in Norway to intensify after auction

Tue Dec 10, 2013 6:19am EST

* Newcomer TelcoData pays most in mobile broadband auction

* Tie-up between TelcoData and Tele2 seen as possible (Adds detail on Leonard Blavatnik)

By Joachim Dagenborg and Gwladys Fouche

OSLO, Dec 10 (Reuters) - Norway has raised $290 million in a mobile broadband auction expected to heighten competition with the arrival of newcomer TelcoData to challenge established players Telenor, TeliaSonera and Tele2 .

On Friday, TelcoData was announced as a surprise winner in the auction of frequencies for third and fourth-generation mobile services, while Sweden's Tele2 came away empty-handed.

At the time, the country's Post and Telecommunications Authority declined to say who was behind TelcoData. Since then, it has confirmed it is Access Industries, a holding company founded and chaired by Ukrainian-American billionaire Leonard Blavatnik.

Aside from TelcoData and mobile data and voice services provider Ice.net, Access Industries is not known to have other business interests in Norway.

"This will clearly contribute to reinforce competition," Torstein Olsen, head of the Post and Telecommunications Authority, said on Monday.

Access Industries controls Ice.net in Norway as well as Ice.net partner firms in Sweden and Denmark. The 56-year-old Blavatnik also has assets in chemicals, real estate and media including Warner Music.

He was part of the Russian AAR consortium which sold their half share of Anglo-Russian oil firm TNK-BP to Rosneft for $28 billion earlier this year, turning Rosneft into the world's largest listed oil firm by output.

TelcoData paid the most of all the winners in the auction, the authority said on Monday - 705 million Norwegian crowns ($115 million) - while TeliaSonera paid 627 million crowns and Telenor paid 453 million crowns. Norway is a key market both for Telenor and TeliaSonera.

One option for TelcoData is to team up with Sweden's Tele2, which failed to win new frequencies in the auction, sending its shares down 2.2 percent on Friday.

"While this increases the uncertainty tied to Telenor's largest market, we believe a structural solution between Tele2 and TelcoData is likely, which should mitigate the long-term margin implications," said Jon David Gjertsen, an analyst at Pareto Securities, in a note to clients.

Gjertsen said the outcome of the auction weakened Tele2's market position. He cut Pareto's target price for Tele2 to 75 Swedish crowns from 78 crowns earlier. ($1 = 6.1463 Norwegian kroner) (Editing by Mark Potter and Tom Pfeiffer)

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