In what could be a case of the hitherto invisible pot calling the kettle black, International Telecommunications and Technologies (IT&T), one of two announced potential bidders for in Latvia's third (now extended) mobile operator licence auction, has accused the other bidder, cable-tv and telecoms enterepreneur Peteris Smidre's Alina, of having murky ties to the Swedish Tele2 group.
IT&T's representative in Latvia, Edgars Zakrizevkis told local media he would challenge any bid by Alina based on alleged ties to Tele2 as well as a lack of international experience and insufficient financing to meet the minimal requirements of the auction (guarantees that the company can put up at least EUR 25 million). Smidre, who started and built up Baltcom GSM (later sold and its name changed to Tele2), dismissed the allegations as nonsense. He said that his only direct ties to Tele2 – non-competition agreements signed when Baltcom GSM was sold - had lapsed. As for international experience, this blogger has pointed out that IT&T has never been heard of by a number of international telecoms analysts. The IT&T representative claims that Alina will be bidding as a straw man for Tele2 with the purpose of blocking competition. Interestingly, Minister of Transport Ainars Slesers also mentioned the possibility that existing operators Latvian Mobile Telephone (LMT) and Tele2 could launch a straw man operation to buy the licence (and then spend EUR 150 million on what – or lose it?)
Zakrizevskis says that the reason for IT&T being unknown ist that it is not really in the telecoms business directly, but actually a financing consortium. He says details of exactly who is behind IT&T will be disclosed when the pre-selection applications are file on February 25 (under the extended deadline). He did hint, however, that private equity funds were behind IT&T.
Smidre, regarded as an independently wealthy man in Latvia after selling his holdings in Baltcom GSM to Tele2 (he got a slice of the more than USD 200 million deal), told this blogger that he gets many offers from private equity outfits, but would never put his money in a deal that involved spending EUR 150 million to capture, at best, some 200 - 300 000 new customers (plus some churn from existing operators) in Latvia.
This blogger has suggested that the next step in the ongoing "fix the engines while flying" approach to the Latvian auction may be to change the minimum investment requirement. Good news for the Financial Times, which is now running ads changing the deadlines for the auction announced in earlier ads.