The two firms, among the few state-run telecommunications companies in Europe after a wave of privatisation, tried to merge last year but the talks collapsed in bitter recriminations. Nordic media say a new deal is ready.

Swedish trade minister Bjoern Rosengren and Norwegian communications minister Odd Einar Doerum called news conference for midday (1100 GMT) in Stockholm and Oslo.

The Norwegian statement said Doerum would talk about ``cooperation and the further development of Norwegian state-owned business activity within the telecoms sector.'' The Swedish statement talked of ``a major deal within the state corporate sector.''

Telia has 34,000 employees and annual turnover of about 44 billion Swedish crowns ($5.7 billion). Smaller Telenor has about 21,000 employees and 1997 turnover of 25.5 billion Norwegian crowns ($3.4billion).

Norwegian daily Verdens Gang said a merged company was likely to seek a stock market listing. Analysts say that both companies have been seeking partners to try to protect the former monopolies from mounting deregulation. Both are small compared to international telecoms giants.

Opposition right-wing parties in Norway's parliament welcomed the rumoured merger but some analysts expressed doubts about the idea of two state firms banding together.

Verdens Gang said Telenor chief Tormod Hermansen would be the chief executive of the new firm while the chairman would be Swedish. It said the new firm would probably be based in Stockholm.

The previous merger attempt collapsed in bitterness in February 1998 with the Norwegians accusing the Swedes of trying to secure too dominant a position.

Under Telia's original plan, its boss Lars Berg was to head the firm. Berg is due to to leave Telia in March to work as head of Germany's Mannesmann AG telecoms division, with Jan-Ake Kark taking over as chiefexecutive.

Norway, ruled by Sweden until full independence in 1905, is often touchy about suggestions of Swedish dominance, especially since booming oil production has bolstered the Norwegian economy in recent decades.