Latvian Prime Minister Indulis Emsis said there will be an auction for a licence for Latvia's third GSM/UMTS licence, which will clear the way for entry by a defacto fourth mobile operator. Emsis said the auction was needed to spur competition and lower telecommunications costs to the consumer and that revenues from the sale were of secondary importance.
Emsis made the announcement several days ahead of the planned report by a consulting firm commissioned to study the practicanility of holding a license auction once the moratorium set after a failed 2002 auction ends this fall.
He was commenting on an item in the 2005 draft budget that forecast income of LVL 1.136 million from a UMTS licence.
Strangely, none of the government agencies connected with telecommunications could give a clear explanation as to what this item meant. Raimonds Bergmanis, head of the Communications Department of the Ministry of Transport said it looked like the deferred payments being made by both incumbents for their 2002 UMTS licences.
An advisor to Transport Minister Ainars Slesers said no such amount had been included by the Ministry, and the Ministry of Finance said the source of the figures was the Public Utilities Regulation Commission.
However, Mats Tilly, director of Swedish owned Tele2, Latvia's second incumbent mobile operator which, like Latvian Mobile Telephone (LMT), paid LVL 5.8 million for its UMTS licence, said his company would consider legal action if the conditions of the new licence were substantially different from those imposed on the incumbents, both in terms of payment and execution.
Under their licences, LMT and Tele2 must start commercial UMTS operations by the end of this year, but none have done any marketing, unlike CDMA 450 operator Triatel, which paid around LVL 200 for its telecommunucations operator licences and which has been advertising its coming 3G services in the press. The company expects to start offering voice (with interconnects to LMT, Tele2, Lattelekom's and other networks) and high speed data services (initially around 153kbps, but possibly 1 Mb quite soon) by the end of October.
The 2002 GSM/UMTS licence auction was a failure, even though Radiolinja (Finland/Estonia) and Lithuania's Bite showed some initial interest in the Latvian licence. Analysts here say the real value in the licence, if any, is a shot at the GSM market, which, even with 1.2 million users on both networks, is not seen as saturated. Latvia's population is 2.4 million.