TALLINN — The Estonian government has announced that it would sell its remaining shares in Eesti Telekom to Swedish telecommunications company TeliaSonera for 5.1 billion krooni (€327 million) in a bid to cover state debts.

Estonia and TeliaSonera reached an agreement that the government will accept the cash offer for the shares of Eesti Telekom after having agreed with TeliaSonera on the payment of an extra dividend from Eesti Telekom this year and a dividend policy for the coming three years.

“Having additional dividends distributed from the retained earnings for 2008 and a dividend policy in place for coming years will both underline the attractiveness of the ongoing cash offer and create clarity about Eesti Telekom’s future dividend payments,” Per-Arne Blomquist, Executive Vice President and CFO of TeliaSonera said in a press release.

Estonian Finance Minister Jürgen Ligi confirmed to local media that the government would sell its 27 percent stake in the company for 93 Estonian krooni per share.

“The state has no strategic interest in having a holding in one of the telecommunications companies, in fact the holding is at odds with the role of the government as a regulator and supervisor of fair competition,” Ligi said in a press release.

Proceeds from the sale of shares were needed to help balance the national government’s budget deficit in Estonia. The sale will generate over 4 billion krooni.

TeliaSonera previously owned 60.98 percent of Eesti Telekom shares. It offered to buy the remaining shares on Aug. 24.