Telia mulls 3G allies to make up for failed licence bid

Swedish telco Telia will have to become a service provider rather than network operator to succeed in Sweden's UMTS market, according to industry analysts.

Observers were shocked to find the incumbent telco had been denied a 3G licence in its home market. However, pundits predict that Telia will still be a major player in 3G services through strategic alliances with existing licence holders. Telia is considering making a structural deal with one of the successful operators. In a statement, the company said it is already contemplating becoming a service provider or a virtual network operator. Nigel Deighton, analyst at Gartner Group, applauded the strategy. He said: "Telia's only chance is for the company to make an adaptation to become a service company, otherwise it has serious problems. "Telia does not necessarily have to lose out on 3G because most of the revenues in this area come from services, not in being a byte carrier," he added. "If management can make this change then that's good. But if not, the company has a huge problem." However, he claimed the Swedish telco also has to keep its existing network to compete with 3G. Deighton said: "I think Telia has a lot of issues to look at, such as why they were not selected and how they can compete in data rates." Fulkum Meuller-Veerse, analyst at Meta Group, agreed that Telia must partner with a licence holder or lose its own customers. "Telia needs the spectrum and as it does not have its own licence, the only way to gain this is by partnering. It has a customer base that needs satisfying," he said.