(Adds detail, share prices)
OSLO, Feb 5 (Reuters) - Norway's Competition Authority will allow Sweden's TeliaSonera to buy the Norwegian unit of Tele2, reversing its preliminary decision to block the deal, the authority said on Thursday.
To win approval, TeliaSonera has agreed to sell some Norwegian assets, paving the way for a new network operator to launch services alongside the Swedish company and market leader Telenor, the authority said.
"The deal we've said yes to gives a real possibility for a third player to establish itself and compete for Norwegian mobile customers," it said.
TeliaSonera and Tele2 said the price of the transaction had been cut by 11.8 percent to 4.5 billion Swedish crowns ($544.58 million) as a result of the remedies they were forced to accept.
On Dec 1, the authority said it intended to block the merger, but TeliaSonera later offered concessions that allowed the deal to go through.
"We will be a stronger and more credible alternative to Telenor in their home market. We will now further accelerate the roll-out of mobile internet," TeliaSonera Chief Executive Johan Dennelind said.
Under the agreement, TeliaSonera will sell a mobile network and the Network Norway subsidiary to mobile broadband company ICE and will also enter into a roaming deal.
ICE is a unit of Access Industries, a holding company founded by Ukrainian-American billionaire Leonard Blavatnik. The company was the surprise winner of a Norwegian mobile frequency auction in 2013.
Tele2 said it would pay out the 4.5 billion crowns as an extraordinary dividend to its shareholders.
The company's shares were up by 5.2 percent at 0849 GMT, while TeliaSonera was up by 0.2 percent. Telenor traded 0.7 percent higher.
$1 = 8.2632 Swedish crowns Reporting by Terje Solsvik; Editing by Balazs Koranyi and Jason Neely