Wednesday, October 27, 2004

Vodafone, Elisa, others show mild interest in Latvia's third 3G licence

Vodafone, French Bouygues, Canada's Bell Mobility, Finland's Elisa, Russia's MTS and Taiwan's J-TONG Telecom Inc all have shown mild interest in participating in a planned auction of Latvia's third GSM/UMTS mobile operator licence.
Among local companies, the cable TV and fixed-network telecoms operator Baltcom, which started and built up Baltcom GSM between 1997 and 2000 (when it was sold to Tele 2) may be ready to return to the mobile market, said director general Peteris Smidre. He confirmed that he had been interviewed by Ticon Latvia, a consultant hired by the Ministry of Transport to do a quick feasibility study.
A copy of the 17 page document was obtained by this blogger.
Smidre said that the LVL 500 000 starting price for a licence auction officially suggested by the Communications Department was acceptable, and that if the right conditions were offered to a third operator, including some protection from the market-dominant incumbents, low interconnect rates and incentives to cooperate on infrastructure (shared towers, initial domestic roaming, etc), Baltcom would make a try to return to the mobile market.
According to the report, the main risks seen by the foreign companies that agreed to be interviewed were in the smallness of the Latvian market (where there are already more than 1.2 million mobile users of a population of 2.4 million) and doubts about whether a combined operator (especially on the UMTS side) could make an adequate profit.
Also named among local companies was Canadian-affliated CSC Telecom, a so-called alternative service provider currently offering low-cost overseas calls, internet and other services to business and residential customers, and Latvenergo.
The Latvian national energy utility said, however, that it had apparently been misunderstood by the Ticon interviewers. The company has no plans to bid for the third licence but is interested, instead, in offering infrastructure and transmission capacity on its internal network.
One source told this blogger that the interest of local companies was mainly to partner with international operators on any bid. Only Baltcom has any experience of building a mobile network from scratch, and it was initially aided by its American shareholders (Western Wireless among others) and the fact that Smidre is a telecommunications engineer by training.
The Communications Department is urging the Public Utilities Regulatory Commission to arrange an auction by year-end. The regulator says it has to finish evaluating the Ticon report before it can say whether this is possible. Sources close to the regulator suggest privately that they don't want to rush any auction, especially in view of the fiasco with the last attempt in 2002. The Communication Department, however, insists that one needs merely to update the previous documentation in order to sell the licence by New Year's Eve.

No comments: