Latvian-American Nils Melngailis, a former executive with IBM's business intelligence unit and before that, a manager at Coopers & Lybrand in Latvia (I may have skipped some parts of his CV) looks like he will be moving and shaking things as the new managing director at Lattelekom, Latvia's fixed network operator.
The company showed a 37 % jump in first half earnings to just over LVL 17 million despite a 3 % drop in revenues and a continuing decline in the number of line subscriptions (though these results were partly attained before Melngailis came on deck in the spring). The higher earnings only partly reflected Lattelekom's 23 % share of "cousin" Latvian Mobile Telephones record dividends. Lattelekom has been slashing costs and reducing staff.
Melngailis has already declared to this blogger (in my capacity as a reporter with the Latvian language business daily Dienas bizness) that he wants to steer Lattelekom into such new waters as digital cable television, WiMax and content provision over the internet and for mobile phones.
Regarding mobiles, look for faster movement toward real cooperation with LMT, which in the past has been aloof from its fixed line cousin. TeliaSonera's Kenneth Karlberg has said to this blogger that cooperation between fixed and mobile operators within the same corporate group is a given. Look for Lattelekom/LMT to start offering integrated solutions to business, including broadband, corporate networks, and mobile phones and WiFi cards for all the road warriors. Interestingly, in Sweden, TeliaSonera has switched entirely to mobile for voice, with workers answering their "land line" numbers as part of a "home cell" to which their calls are directed when they are in the office.
In the consumer market, look for a slow but deliberate move to broadband as being the basic fixed line service in the home, with voice as one of its many functions. Presently, Lattelekom's "City Internet", though offering a slow 128 kbps line, costs around LVL 9.95 per month, or only a small premium above the LVL 5.00 or that Lattelekom regards as a fair price for a cost-based monthly line subscription (the actual price paid is lower due to regulatory issues). A 256 kbps HomeDSL service runs just over LVL 15 per month.
Internally, look for Melngailis to streamline the decision making process within the company, significantly reducing the "lines" reporting to him from a number in the teens to around five. More non-core functions may be spun off in addition to the publically announced plans to set up a network maintenance subsidiary (selling this service to Scandinavia, Vattenfall has been mentioned as a potential customer) and to spin off the call-center business. Incidentally, Baiba Paegle, a key executive at Lattelekom recently returned from helping set up a call center operation in (South?) Africa. This is a signal that Lattelekom is going global in selling its know-how, experience and the services of its knowledge workers.