French-owned mobile operator Orange is ditching its ambitions to run a third-generation mobile service in Sweden, at a cost of 234 jobs.

The company has for months been trying to persuade the government in Stockholm to lift some of the requirements of its licence, allowing it to delay the rollout of its network and save money.

But the government refused, and now Orange says the strict licence conditions - as well as the tough mobile market generally - mean it can no longer afford its Swedish operations.

"We are not closing the door forever, but at the moment we are in a position where we have to withdraw," a company spokeswoman said.

Orange's staff will not be leaving quite yet, since Swedish law ensures that companies laying off staff ensure a proper redundancy programme after negotiations with unions.

Cash needs

Orange's parent, France Telecom, is bowed down by billions of euros in debt.

The company's once-mighty 3G ambitions have been comprehensively scaled back across Europe, with the intention of delaying investment and thus freeing up cashflow.

Britain is the exception, partly because the licence requirements are less onerous than in countries like Sweden.

But because Sweden's licences were assigned in a beauty contest rather than the multi-billion-euro auctions used in Germany and the UK, the Swedish Government has imposed tighter rules.

It wants operators to make sure their 3G networks cover 99.98% of the inhabitants of this thinly-populated country by the end of 2003.

Turned down

Earlier this year Orange had its request for a three-year delay and a reduction in coverage turned down.

The company wanted to reduce its coverage to 8.3 million people from 8.86 million - a 6% cut, but one which might well have cut off coverage to large swathes of rural Sweden.

Orange's withdrawal could still have implications for its erstwhile rivals, Vodafone Sweden and Hi3G Access.

The three had agreed to share rural infrastructure.