Tuesday, October 04, 2005

Strange, but uncontested ruling on MicroLink purchase

The Latvian Competition Council's (CC) fears of market domination by Lattelekom if it were to keep intended acquisition object MicroLink's data transmission network seem based on the IT company's ownership of a citywide network in Riga called Metro. Most of the rest of the company's data network seems to be leased lines from other operators such as Latvenergo or even Lattelekom itself. It is just in Riga that we see a lot of competition, with parallel optical and other cabling by Telia MultiCom (a cable TV and internet company that no longer has any ties to TeliaSonera), Baltcom TV and other, local companies. This makes it hard to understand what the problem perceived by the CC was. In any case, Lattelekom isn't contesting the issue and there are potential buyers for the MicroLink network, including Telia MultiCom. The reason – anyone would want some of the mid-sized businesses that have become customers of MicroLink. The potential buyers are out after the customers, not the fiber (which there is plenty of). Thanks for the business opportunity, CC.

12 comments:

Anonymous said...

clearly, the issue that the CC folks don't seem to understand is that when fiber switches hands the market does not stretch and the clients are nowhere near being better off...

Anonymous said...

well, there has been a considerable pressure on the CC lately in relation to the gasoline prices. anyhow, that's a weak excuse for uneducated decisions ;)

Anonymous said...

As I understand the CC asks to sell only the physical network infrastructure, the customers will anyway stay with MicroLink/Lattelekom.

Juris Kaža said...

This is the risk. You end up with 150 km of "fishing line" next to Lattelekom's and Baltcom's (and Telia MultiCom's own) fishing line and no customers.

Anonymous said...

I guess that Latverergo might get this network...

Juris Kaža said...

Latvenergo? Makes sense. They have a partial nationwide network and international links, the Metro physical net would give them a kind of "local loop" in Riga, plus any clients who stayed on. The CC, even if it's decision makes little sense, has created an interesting business opportunity for all concerned.

Anonymous said...

12:30 PM cont:
I would see this for Latvenergo as a logical option. (When processing this deal, do not forget to send over my 3% of value, account number available via [dimanti@gmail.com])

CC MUST do something@the end of the day against incumbant-ism and showing how tough we are here.
The only doubt lies in Latvenergo, they are in some management/political crisis at the moment, so they might miss that.:)

Juris Kaža said...

This will not be the first or last time that a state-owned company has lost opportunities because of a political "bardaks" (assuming, anon, that you are Latvian :) )

Diamonds are f. said...

'bardaks' could be the brand name for most of official institutions- buy domain name bardaks.gov.lv and bardaks.eu as well.

Back to Telekom, I suspect, that this CC decision will turn the company very huge mess, despite of their current optimism in PR.

Juris Kaža said...

ROFLMAO*
*(rolling on the floor laughing my ass off :) :) :) )

Diamonds are f. said...

Welcome :) Since I am so f/up (or bored) by this mess, then laughing is best option.

konrads said...

Me and my friends are still trying to come with a reasonable excuse for such ruling. We still can't. LTK is in a very volatile position - the demand for fixed voice communications is unlikeley to grow significantly, It seems that LTK is loosing its stake in LMT, which it didn't exploit activley anyway. Besides, government must keep a state influenced, if not ran telco to cover the regions which bring only loss. On the other hand, LTK value is shrinking so from pure business point of view, one must sell as much of it as he can and FAST.
LTK could probably survive if it is partitioned and remains only as a fixed line operator just to cover its social obligations. Rest should be sold. So yeah, virtual operators :)