* M&A hopes boost shares in Tele2 and Nordic peers
* Report says Hutchison in talks on Tele2 Swedish business
* Tele2 pledges solution to Norway uncertainty
* Tele2 sees flat 2014 earnings, less than analyst forecasts (Adds M&A report, CEO comment, analyst, share, detail)
By Sven Nordenstam
STOCKHOLM, Feb 7 (Reuters) - Shares in Nordic telecom operator Tele2 jumped as much as 8 percent on Friday on expectations of a bid for its business in Sweden that would bring about long-awaited consolidation of the country's telecoms sector.
Tele2's shares had fallen earlier in the day after the company's tepid 2014 forecast but they rose on a report in industry publication TMT Finance that said Hong-Kong's Hutchison Whampoa was in talks to buy Tele2's Swedish operations, its biggest business. (r.reuters.com/vav66v)
Tele2 and Nordic rivals Teliasonera and Telenor were among the biggest gainers in the STOXX Europe 600 telecom index.
Hutchison already owns 3 Sweden, the smallest of the country's four mobile operators and would be a natural player in any consolidation. 3 Sweden has a market share of around 11 percent, Tele2 is number two with a market share of 29 percent behind market leader Teliasonera.
TMT Finance also said Hutchison might buy TeliaSonera's business in Denmark.
Tele2's Chief Executive Mats Granryd declined to comment on the report but repeated that his firm sees itself as a buyer in the Swedish market should any consolidation happen.
"It feels very premature to be talking about that, but of course we are a buyer rather than a seller," Granryd told Reuters. Hutchison declined to comment.
There has already been speculation about consolidation in Sweden's telecoms sector as M&A is picking up in Europe. The European Commission is probing deals that would cut the number of operators in Germany and Ireland from four to three.
"Speculation around Tele2 and 3 merging in Sweden have been relatively common the last nine months," Swedbank analyst Sven Skold said. "I haven't believed in such rumours - if so, I have seen Tele2 as a buyer of 3 in Sweden with its own shares."
A senior banker said cost savings from merging Swedish mobile operators were likely to be less substantial than in other countries, as there are already network sharing agreements in place, adding 3 and Tele2 were already run very efficiently.
"Those who would gain from it are the operators who don't participate in the consolidation," the banker said, pointing to the cumbersome process of getting a deal approved by competition authorities and merging two groups, giving other carriers opportunity to woo their clients.
He said it would be costly to exit existing network sharing agreements and instead splice networks with a new partner. "The initial negative synergies are often rather large."
In Sweden, Tele2 and Teliasonera share a 3G network, as do 3 and Telenor outside the big cities. Teliasonera and 3 run their own 4G networks, whereas Telenor and Tele2 cooperate on 4G.
Shares in Teliasonera, Sweden's biggest operator, rose 2.7 percent and Norway's Telenor, number three in mobile in Sweden, was up 2.9 percent.
Tele2 shares, up 3.2 percent by 1426 GMT, had fallen as much as 3.7 percent earlier on Friday after the company gave a profit forecast for this year below analyst expectations and scrapped its outlook for next year.
Tele2 said it would clear up the uncertainty about its prospects and left all options on the table for Norway, its third biggest market.
"The situation in Norway will be addressed in a way that maximises value for shareholders," CEO Granryd said.
Tele2 is banking on Norway, the Netherlands and Kazakhstan for growth outside its home market but these plans were dealt a blow in December when Tele2 lost an auction in Norway for mobile spectrum it needed to expand its network.
Sources told Reuters this week that Tele2 is in talks to strike a deal for its Norway business with the winner of that auction, holding company Access Industries, owned by Ukrainian-American billionaire Len Blavatnik.
Granryd said Tele2 would continue to use its existing spectrum in Norway while taking advantage of roaming agreements to use competitors' spectrum. He played down the need for immediate action. "This base scenario will also be a profitable business," Granryd said. "We don't feel we are under pressure, and we have many alternatives."
Tele2 scrapped its previous financial guidance for 2015 due to uncertainty over Norway and said it expected earnings before interest, tax, depreciation and amortisation (EBITDA) of around 6.0 billion crowns ($924 million) in 2014, in line with 2013 and less than the average 6.3 billion forecast in a Reuters poll ahead of the report.
The firm reported fourth-quarter EBITDA earnings of 1.46 billion crowns compared with the 1.45 billion seen by analysts and 1.44 billion a year ago.