Sunday, December 05, 2004

New PM to review third licence auction terms

To catch up with some Latvian developments even as I write here on a sunny San Francisco morning, the new Prime Minister Aigars Kalvitis has said he wants to "review" the terms of the auction for Latvia's third GSM and UMTS mobile operator licence.
That auction was announced on November 23, the applications to be short-listed must be filed by December 21, and the auction itself will be held January 7. Applicants should be ready to bid starting at LVL 1.3 million and to invest at least EUR 150 million in a new, independent network.
All of which, as I wrote earlier, sounds suspiciously like the offer from International Telecommunications and Technology (IT&T), which appeared out of nowhere in early November. IT&T, contrary to my earlier remarks, appears to be a real company, some kind of international consortium. They have been planning to come into the Latvian market for about a year, aided by a local entrepreneur who, in the past, had done some deals in the real estate business with the current minister of transport, Ainars Slesers.
The Latvian Telecommunications Association has also demanded that the auction application deadline be extended by at least a month and that the requirement to invest a rather enormous minimal amount be striken.
All of this makes the new Prime Minister's willingness to review and perhaps modify the auction terms a reasonable gesture. The political nuance here is that even if Slesers and IT&T's local consultant had never done any business at all, the "review" amounts to questioning the judgement of the new/old minister of transport even before the ink on the new coalition government's policy declaration has dried.
That, of course, is a political, not a IT/telecoms issue, but it does not bode well for the stability of the coalition. The PM, by changing the terms of the auction would, in effect, be expressing diminished confidence in his minister of transport for something Slesers was working on in both the old and new governments. Indeed, those who actually drafted and signed the auction terms (Vilis Zvidrins of the Ministry of Transport Communications Department) seem to say the main reason the terms are as they are is that Slesers asked them to do it that way.
According to this blogger's sources, Communication Department head Raimonds Bergmanis was more than glad to be on vacation when the decision to call the auction was approved.
On the other hand, one can admire Slesers' "can do" approach to moving ahead quickly in developing a more competitive telecommunications market, just as he is understood to be behind the entry of Ryanair and Easyjet into Latvia's aviation market. But the downside of haste in getting a third (fourth, really, if you follow this blog) mobile operator up and running is that you may scare off the understandably cautious, internationally known majors such as Vodaphone or Bell Mobility (Canada) and even Latvia's Baltcom, where owner Peteris Smidre has never been known to shun risk. Then, when a little known company, which in all probablity is legitimate, comes in the way IT&T is doing it, you create a climate of suspicion of impropriety. Although, actually, such a climate is the prevailing weather system in Latvian politics...

No comments: