The news that former monopolist Telenor had decided to sink 1.035 billion euros (USD 1.25 billion) into the Swedish arm of giant British mobile phone company Vodafone Group came just before the close of trading on the Oslo exchange on Monday, financial newspaper Dagens Næringsliv reports.

Monday was one of the company's best ever on the exchange, with a gain of over 7.5 percent but this was nearly wiped out after trading began on Tuesday and a range of brokerage houses downgraded Telenor on the grounds that too high a price was paid in Sweden.

Vodafone Sweden is not currently a money-earner and the company has obligations to develop the 3G network that can cost Telenor billions of crowns.

Telenor was clear about their reasons for the investment.

"It's important to strengthen our position in the Nordic region and for people to regard our home market as Scandinavia and not just Norway," Morten Karlsen Sørby, head of Telenor's Nordic operations, told Reuters.

Buying Vodafone in Sweden would increase its Scandinavian mobile customer base by 37 percent to 5.6 million subscribers, Telenor said.

The companies said they expected the deal to close by the end of 2005, subject to European Union regulatory approval.