Swedish telecommunications equipment company Ericsson has offered a ten per cent premium on a previously accepted bid from American broadband company Arris Group for Norwegian video compression specialists Tandberg Television.

Ericsson announced a cash offer of around 9.8 billion Swedish Kronor — over £700 million — to acquire Tandberg Television, in which it has already gained an 11.7% share, with agreements to acquire a further 13 per cent.

The Swedish company says the acquisition of Tandberg TV would be a significant step toward a world leadership position in broadband video, expanding its customer based to include cable and satellite operators as well as broadcasters. It anticipates that much of the growth in traffic in mobile and fixed networks is expected to be generated by television services.

Carl-Henric Svanberg, the president and chief executive of Ericsson, sees a major opportunity in internet protocol television. “IPTV for cable and telecom operators is the biggest networked multimedia opportunity going forward,” he said. “Ericsson and Tandberg Television is a strong combination with a unique ability to offer complete IPTV solutions.” He said that the acquisition of Tandberg TV would “create a leading player in networked media solutions for telecom, cable and satellite operators as well as media companies.”

The Tandberg board said that it would provide its shareholders with a recommendation upon receipt of a formal offer.

Shares in Arris fell on the announcement. The company said in a statement it was assessing its position. Arris stands to receive a £9 million termination fee if Tandberg accepts another offer.

The telecommunications equipment industry is undergoing significant consolidation as a result of the convergence of communications technologies.

Alcatel recently merged with Lucent to become the largest telecommunications equipment provider. Siemens is in the process of combining its networking division with Nokia. Meanwhile Cisco, which acquired Scientific-Atlanta, has been developing its broadband video strategy.

Ericsson previously purchased Marconi and recently completed the acquisition of Redback Networks, a provider of broadband networking equipment. Ericsson has been building its presence in the emerging market for delivering television and video services over fixed and mobile telecommunications networks.