For some weird reason, a person close to me called Latvia's Minister of Economics Krisjanis Karins "the widow's son" (atraitnes dēls), apparently with reference to an earnest, bright but somewhat underdog young man. I think it had to do with the way Karins looked and spoke on television. It has nothing to do with the real life story, as far as I know, of this American born, American well-educated and erudite man, who, before entering politics, started Lacu ledus (Bears' Ice or Ice for Bears, depending on how you want to understand the Latvian phrase). The company sold bagged ice cubes, an apparent no-brainer but brilliant if you are pounding a deep frozen ice-tray only to have this product of Hop Sing's Cheapo Plastic Tray and Chopstick Factory shatter into a mixture of ice fragments and plastic shards.
OK, so, the point being:
If the minister's view that Lattelekom should be sold to anyone but TeliaSonera prevails, it could be that this will make a "widow's son"of the company. The minister talks about promoting competition. The normal model of competition is that Cheapie arrives on the block, and everyone goes from Gougerphone to Cheapiefone. Sooner or later, Gougerphone cuts its tariffs. Then Skype arrives and kills everyone on stage, like the climax to Kill Bill Part I...
But that is not what is happening. Globally and in Latvia, people are leaving wireline Gougerphone in order to pay higher minute costs with Cheapo Mobile, or sometimes even with Premium Mobile because they have coverage in the local Great Swamp and roaming in the Gobi Desert. What is going on here is that folks are paying an ever-decreasing convenience premium (due to mobile market competition) for mobile voice services (in Latvia, around LVL 0.05 per minute compared to some Lattelekom local rates, taking the LVL 0.064 rate of the Hello pre-paid card as a benchmark).
New customers are going to mobile for voice first, and without the mobile connection that a TeliaSonera owned Lattelekom/Latvian Mobile Telephone (LMT) combination offers. Lattelekom, the widow's son, will suffer.
It ain't like Lattelekom isn't trying, they are flogging all sorts of calling plans for private customers and larger businesses can probably cut any deal they want. Even DSL is being offered starting at LVL 6.99. The next painful step may be to de-couple DSL from having to pay for a phone line subscription if one actually doesn't want a phone. Since wireless-within-the-home DSL is a desirable option, you can tune it to also serve hybrid GSM/UMTS/WiFi phones and offer a rock-bottom priced, medium-high quality VOIP service from this home network. If Lattelekom doesn't do it, someone else, like triple-player Baltkom just might.
So there are plenty of market incentives for Lattelekom to be competitive and allow others to be so also, especially if the regulator cracks the whip on interconnect charges. Further on down the line, interconnect may even fade from the scene, as VOIP takes over from circuit switched networks that need to tally up each other's minutes of network use.
I am not saying that the "widow's son" should not make a widow's son of Lattelekom if one takes the market dominance level of analysis as being the most important decision criterion. As has been pointed out before, this will significantly decrease any revenues from selling Lattelekom as a stand-alone, plus cause costs in time and money of resolving the whole right-of-first refusal issue with TeliaSonera. You have to either have 100 % of Lattelekom to sell free and clear, or you ask some other operator to slip into bed with TeliaSonera's 49 %. An unlikely scenario unless that same buyer is also buying out TeliaSonera. That takes us into a whole new scenario (mentioned earlier on this blog). It is pretty clear that the Swedes will settle for getting just LMT in a least-desirable-case scenario. They see owning 49 % of Lattelekom as a half-assed situation, especially if you are left with the smaller half of the ass..