Swedish telecommunications company Telia yesterday ruled out bidding for Esat against its former partner Telenor, saying that it had "no interest" in the Irish company. Shares in Esat rose again yesterday, with some investors clearly taking the view that Telenor would again raise its offer.

In an interview in yesterday's business daily Finanstidningen, Telia's acting chief executive Mr Stig-Arne Larsson denied that Telia was still interested in bidding for Esat, the Republic's second-largest telecoms group.

The initial bid for Esat was made jointly by Telia and Telenor, but the Swedish firm signed over the offer entirely to the Norwegian outfit when the two Nordic governments decided to abandon a €47 billion merger.

"We have totally handed over Esat to Telenor. We have no interest in the company any longer," said Mr Larsson.

Last week, Telenor lifted its bid for Esat to $1.9 billion (€1.9 billion), or $85 a share, from $1.6 billion, or $72 a share.

Esat, which regards the bid as hostile, has asked shareholders to take no action. In a statement, the board said it could confirm that the company was in "ongoing discussions with third parties with respect to alternative offers" for Esat.

Telenor has said it sees no reason to raise its offer.

"As long as we don't see any (counter) offer, we call this rumours and speculation in the market," said Mr Morten Karlsen Soerby, Telenor's international managing director.

Esat shares rose by €1.40 to €28 on the Dublin stock exchange yesterday following the news. In New York, the shares closed at $95.62 1/2 (€95.16), up $3.50. . Analysts said this showed investors were confident that either Telenor would raise its bid, or a "white knight" offer would emerge.

Telia also confirmed that, although its merger with Telenor was over and it was therefore no longer obliged to sell its 14 per cent stake in Eircom, it would do so anyway.

"My view is that we've already got the most out of this investment. The money could be used better elsewhere," Mr Larsson said.

Telia said it wanted to strengthen its capital base by 40 billion to 50 billion Swedish krona (€4.7 to €5.8 billion) in the next year to gain the financial muscle needed in the changing telecoms sector.

Mr Larsson said Telia needed extra funds for its strategy to be an independent operator following the collapse the merger.

"In total, we are planning to invest about 100 billion Swedish krona in the next two to three years," he said.

He said Telia, the 10th largest telecoms company in Europe with 1998 sales of SKr1.2 billion, could raise about SKr40 billion to SKr50 billion through selling some units and through loans, but needed to find the rest externally.

As well as its Eircom stake, Telia could raise SKr15 billion to SKr20 billion by selling its lucrative cable television network and a further SKr4 billion from various Asian investments.

Mr Larsson said the question of capital would be given top priority as the telecoms sector was changing fast and investments needed to be made quickly to secure market position.

The company was eyeing investments to expand in the Nordic and Baltic regions, make inroads into Germany, France and Britain, buy into a US mobile operator, buy into or co-operate with a strategic business consultancy, and build up a broadband network in Sweden.

Since the Telia-Telenor merger and a planned joint float collapsed, Telia will now also be competing with Telenor to lure investors in the Nordic market, especially with both governments preparing to at least partly privatise the two companies.

Telenor's acting chief executive officer Mr Peter Pay has flagged a possible listing on the stock exchange by next autumn.

Telia has not been so forthcoming about its sale plans, with Swedish industry minister Mr Bjorn Rosengren saying there was no need to rush.

"It will take three to six months to prepare Telia for a bourse introduction. If Swedish politicians did decide that they wanted a fast sale, we would in practice be able to go to the bourse by next May," Mr Larsson said.

But he said he saw no need to race Telenor to the stock exchange.

"The Nordic region is interesting enough as an investment area for telecoms, mobile and the Internet. The capital market can certainly swallow both, even if we were sold at the same time in the autumn," he said.