Doubts about the Nordic region's biggest merger deepened last night when it emerged that Norway's Telenor had frozen preparations for the deal with Swedish telecommunications operator Telia.

The negotiations are being closely watched here as Telia had been expected to dispose of its 14 per cent shareholding in Eircom on completion of the merger. This is because Telenor owns 49.5 per cent of Esat Digifone, the mobile phone company which competes with Eircom's Eircell subsidiary in the Irish market. Dutch company KPN had been expected to buy some of Telia's shares and the rest were expected to be placed in the market, but this is now in doubt.

Telenor's management decided on Monday to put on hold until Friday all work towards building what would be one of the Nordic region's biggest companies, valued at about 400 billion Swedish krona ($45.80 billion). The reason given was the failure of the owners of the two companies - the Swedish and Norwegian governments - to reply by last Friday's deadline to competition concerns raised by the European Commission.

Sweden and Norway have a new deadline this Friday, but have so far failed to agree on how to deal with Brussels' concerns.