Telenor announced this morning that it will merge its operations in Denmark with TeliaSonera's own business in the country.
The move will create a joint, 50-50 venture run by the two companies. The merged business will have approximately 3.5 million mobile subscribers, which amounts to about 40 per cent of the market in Denmark.
The new company will have annual revenue in excess of DKK 9bn (€1.21bn), and together with TDC and 3 will be one of the three largest mobile operators in Denmark.
"The Danish telecom market has been in need of consolidation for a while, as revenues and profitability have been under pressure, limiting the room for investments and innovation in this market," Telenor said in a statement.
Telenor and TeliaSonera are aiming for annual efficiency gains of more than DKK 800m (€107m) by 2019. The largest synergies will come from distribution, sales and marketing, call centres, and general administration.
The merger is a logical consequence of fierce competition in the Danish mobile market, and telecom market analysts have been predicting a union between the country's second and third largest mobile operators for some time.
The country's geography and topology makes it very easy to for operators to cover, and it already contains four independent physical networks. In 2012, Telenor and TeliaSonera established a common infrastructure company, effectively merging their network infrastructure.
This has led to intense competition and pricing pressure in Denmark, where costs to consumers are almost half that in Norway. For example, in Denmark, Telenor offers a monthly plan covering unlimited voice calls, SMS, and MMS, as well as 20GB of mobile data for DKK 299 (€40). In Norway, unlimited telephony, SMS and MMS, and 10GB data per month costs NOK 599 (€69). According to Telenor's third quarter financial results, average revenue per user was €16 in Denmark and nearly €37 in Norway.
The merger is pending approval from the European Commission.