Sweden's largest telecoms operator Telia will, after all, be offering third-generation (3G) mobile phone services in its home country.

After its licence bid was surprisingly rejected, the former national telecoms monopoly has teamed up with local rival Netcom - one of four licence winners - in a 50:50 joint venture to build a 3G network.

In a statement, Netcom said Telia would have equal access to and ownership of the licence won by Netcom's wholly-owned subsidiary Tele2.

But it said the two companies - currently competitors in the mobile phone market - would offer their own, separate, 3G services

Brighter profitability prospects

"Together with Telia, we will create a jointly-owned mobile telephony network company. We shall, however, continue to compete for customers via new services and competitive prices," Netcom chief executive Lars-Johan Jarnheimer said.

The joint venture would allow the companies to cut costs and network construction time, thereby boosting profitability prospects, Netcom said.

The two firms will also investigate the possibility of similar cooperation in Norway, where Telia holds a 3G licence and Netcom does not.

Analysts said the deal should be good for both companies, as it returned Telia to a market it had embarrassingly fallen out of and allowed Netcom - a younger, smaller company - to reduce its risk in an area - 3G - where no proven business model yet exists.

Appeal goes on

Telia's appeal against the Post & Telecoms Authority decision to refuse it a licence is not affected by the arrangements with Netcom, the companies said.

The appeal was due to be filed with a county administrative court on Monday.

The three other groups awarded 3G licences in Sweden were: Vodafone's Europolitan; a consortium including France Telecom's Orange and cable provider NTL; and Hi3G Access, a venture of Hong Kong-based Hutchison Whampoa and Investor, the holding company of Sweden's prominent Wallenberg family.