But a new obstacle arose: a fourth application – from Vodafone in Britain.

Johansson knew this operator well from his time at ERA. In fact, in March 1990, Julian Horn-Smith had already offered to provide Vodafone’s expertise if the company could become one of the owners of Nordic Tel. Johansson had rejected the offer.

“Julian had at that time only been given the go-ahead to set up in Malta. It was naturally interesting for him to be able to join the gravy train of GSM candidates in Scandinavia. He knew and I knew that the value of Nordic Tel – and therefore the price for Vodafone’s buy-in – would be much higher the day we got a license. So his countermove was his letter to the ministry, which deadlocked the question of the third GSM license,” says Johansson.

This fourth application gave the government a legal dilemma. The Ministry of Communications announced that an inquiry would have to be held. What criteria could be used if a choice had to be made between the applicants? Legislation on these issues would delay progress by at least two or three years.

“This gave me an incentive to make a deal with Julian,” says Johansson. “In August 1990 I met him in London, had a slap-up dinner and offered Vodafone 10 percent ownership of Nordic Tel if he withdrew the application. This was accepted.”

Vodafone and Nordic Tel remained competitors, however, for a GSM license in Denmark, where Vodafone had allied itself with transport conglomerate AP Møller. “We had made the judgment that GN Store Nord was a politically stronger partner and had established a joint venture with Bell South as a third party,” Johansson says. 

That grouping also got a license in 1991 and established the operator Sonofon, 20 percent owned by Nordic Tel.

‘IT WORKS WITH THREE’

By the end of November 1990, Nordic Tel’s appeal against the frequency decision had reached the point where it was to be dealt with at a cabinet meeting. But the case was withdrawn the day before these discussions were to commence. The reason was that Televerket head Tony Hagström had been to see the minister, asking on his way out: “By the way, Nordic Tel’s plans won’t come to anything, will they?” When Hagström was told the minister’s intention, he informed him that Televerket, in its role as a public authority, had the right to submit an opinion on the issue.

Televerket submitted its document and Nordic Tel was given a month to respond. Televerket’s concisely worded opinion occupied half a page: it referred to a section of the GSM specification that stated that GSM was designed for only two operators and pointed out that two concessions had already been granted.

Ljunggren recalls: “I rang Roland Bodin at ERA, an incredibly intelligent person who knew the entire GSM specification by heart, and asked him if it really did provide scope for only two operators. ‘No,’ he said, ‘It works with three, but that can be difficult to understand if you do not read the specifications carefully’”.

Johansson adds: “Bodin knew what he was talking about. The section in question had a supplement with a subsection that made it clear that the GSM frequencies could be extended to several operators. In our response, therefore, we cited the same section as Televerket, which made any further referral to the authority unnecessary.”

On December 13, 1990, it was announced that Nordic Tel had been awarded the third license for GSM traffic in Sweden and the final third of the frequency band. Johansson and Ljunggren had already decided that if the decision was positive, Flemming Ørneholm would be asked to take on the demanding task of developing an operating company. Ljunggren called Ørneholm, who was celebrating the Swedish Saint Lucia feast day with the mobile phone division at Kumla; a few days later, he was appointed CEO for what was later to be called Europolitan.

Author: Svenolof Karlsson & Anders Lugn

ULF J. JOHANSSON, TONY HAGSTRÖM AND FLEMMING ØRNEHOLM

Nordic Tel had just got its license as a GSM operator and is preparing itself for competition with Televerket and others.

© Telefonaktiebolaget LM Ericsson and Centre for Business History

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