Minister of Transport Ainars Slesers has asked the government to extend by two months the deadlines for the third GSM and UMTS licence auctions. The government (Cabinet of Ministers) will meet Monday, December 20, just one day ahead of the old deadline for application to be pre-selected for the auction. Slesers has asked that a decision on the extension be placed at the top of the agenda of the extraordinary Cabinet meeting, originally called to discuss budget matters.
The Minister of Transport is apparently responding to harsh criticism of the short deadlines and other terms of the auction. Delna, Latvia's branch of the anti-corruption organization Transparency International, has said the auction should be investigated by the anti-corruption authorities because it looks like blatant state capture on behalf of one company (the elusive, Middle East based International Telecommunications and Technologies, or IT&T). Also, a parliamentary anti-corruption commission will discuss the matter at a meeting on December 21.
IT&T is the only potential applicant and bidder, although Slesers and Ministry of Transport Deputy State Secretary Guntis Macs said there were at least four contenders. It was not clear whether these four contenders would have applied for the Dec 21 deadline, or whether (more likely) they would consider applying under the extended deadline. International analysts, such as EMC's Kester Mann, have been unable to find any traces of IT&T's activities in their extensive data bases.
Both Denmark's TDC (through its Lithuanian Bite GSM subsidiary) and Latvia's Baltcom have indicated the short deadline and other terms of the auction meant they would not apply by Dec 21.
Slesers said he would not remove the mandatory minimum investment of 150 million euros, but demand, instead, that applicants supply a detailed investment plan that could be scrutinized by auditors to make sure it was not spending for the sake of spending. Analysts have said that the requirement goes completely against the grain of trends in Europe, where operators building 3G networks try to share resources even while competing on end-user pricing and services.
Slesers insists that the high level of investment will ensure that the third operator makes a long-term committment and, by cutting tariffs sharply (the minister expects a third operator to cut mobile costs by 50 %), to start recovering one's investment only after several years.
Meanwhile, sources have told this blogger that at least ten contenders have expressed interest in setting up virtual mobile operations in Latvia. Currently there is only one mobile virtual network operator (MVNO? do I have that right?), Zetcom, which sells Amigo cards and runs on Latvian Mobile Telephone's (LMT's) network. Amigo has been growing rapidly in its niche of youth-oriented pre-paid cards, a signal that it is possible to compete on the existing network. LMT has apparently decided that it is more rational to lease capacity for running several tens of thousands of lines and take a wholesale revenue stream rather than carry the cost of marketing and administering the same number of post-paid lines.
The 150 million euro investment floor is privately regarded as a crackpot scheme with little rational basis even by Latvian telecommunications officials. One wonders where the 150 million euro investment scheme will fit in with the Ministry of Transport's other scheme to build yet another independent network by merging the infrastructure assets of Latvenergo, Latvian Railways and other state companies and agencies - the Alliance described earlier in this blog? Such a small country, so many networks, so many schemes...
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