Swedish equipment vendor Ericsson revealed on Monday that it has made a public cash offer of SKr9.8bn (Eur1bn) for Norwegian IPTV firm Tandberg Television.

Ericsson said the potential acquisition would be part of its drive into the IPTV market, and would expand the vendor’s customer base to include cable and satellite operators as well as broadcasters.

Ericsson’s offer represents a premium of 18.2 per cent to Tandberg’s 90-day volume weighted average stock price and potentially shoulders cable equipment vendor Arris out of the deal.

Arris had made an offer for Tandberg in January, based on a premium of 10.4 per cent on the company’s weighted average stock price.

Carl-Henric Svanberg, president and CEO of Ericsson, said: “IPTV for cable and telecom operators is the biggest networked multimedia opportunity going forward. A large part of the expected traffic growth in the world’s mobile and fixed networks is expected to be generated by TV services.”

Tandberg focuses on encoding and compression technology, which is critical to maximising picture quality while minimising bandwidth in video applications. Tandberg is particularly strong in MPEG-4 which is critical for cost effective delivery of High Definition TV.