Tele2, the Swedish telecoms group, on Wednesday raised its bid for Song Networks to SKr4.95bn ($673m) but also offered its rival, Danish operator TDC, a compromise solution in the battle for control of the internet access provider.

Tele2 is offering SKr85 per Song share, up from the SKr75 it bid last week and topping TDC's revised offer of SKr82.50 made by the Danish group on Tuesday. Tele2 said it currently owned shares equivalent to 18 per cent of the votes and 17 per cent of the capital of Song.

The Swedish company is determined to secure Song as it offers an entry into the fast expanding broadband market, where Tele2 has struggled to make an impact and lacks its own infrastructure.

Lars-Johan Jarnheimer, Tele2's chief executive, said he was confident the revised bid would succeed. However, few analysts expected TDC to walk away from the deal. Song's shares closed at SKr92.50 in Stockholm, underlining market expectations that the Danes will increase their offer.

Both groups were now racing to push their ownership above 50 per cent, analysts said. Unveiling its revised bid on Tuesday, TDC said it already owned 33 per cent of the votes in Song. ?We don't expect this to fail,? said Henning Dyremose, TDC's chief executive.

Mr Dyremose also ruled out suggestions that he might sell this bloc should Tele2 or another rival make a higher offer to shareholders: ?These are our shares. We own them and we don't intend to sell them under any circumstances,? he said.

On Wednesday Mr Jarnheimer said he welcomed TDC as a financial investor and offered co-operation with his Danish rival. ?We would be open to expanding our wholesale arrangements with them to accommodate some of the plans they may have in the region.? TDC forecast that the acquisition would generate annual costs savings of SKr250m and would create a significant pan-Nordic voice and data operator. Tele2 has said it will achieve synergies of SKr300m.

Tele2's offer represents a bid premium of 79 per cent based on Song's share price on the last day prior to the TDC bid.

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