Friday, April 28, 2006

Lattelekom, Triatel to sign agreement

A "marriage" at last. Lattelekom has announced it will sign a formal deal with cdma 450 operator Triatel on May 3 for the mobile/fixed wireless operator to assist in finishing the digitization /modernization of the network where use of non-wireless technologies is prohibitively expensive and, also, probably, to connect new customers in rural and remote areas.
This is nothing new for this blog. In March, I wrote:

Lattelekom + Triatel = True!

"Or thats what it says on the ladies' bathroom wall, where ( I am guessing, being male) messages of affectionate relationships are scribbled.
The "love story" is one that was hinted at a long time ago on this blog. Namely, Lattelekom and cdma 450 operator Triatel have been running a pilot project to "digitalize" certain rural areas using Triatel's fixed wireless technology rather than running fiber or cable to shacks in the woods. Over the past six months, several hundred phone lines have been installed in this way -- officially by Lattelekom, but with the network capacity and perhaps the phones provided by Triatel. Look for this to be officially sealed and announced in the next few months."

And back in September, 2004 when this blog was launched, one of the earliest posts said:

"Triatel's chief Mihail Zotov told this blogger in an informal conversation that CDMA 450 would be an excellent, relatively low cost technology for Lattelekom to bring both voice and high-speed internet to remote rural areas. In the Czech Republic, mobile operator Eurotel sold the technology as a kind of wireless DSL. CDMA has relatively wide signal propagation and, if old LMT NMT towers were used, the cost of bringing digital services to the rural dweller would be limited to the cost of the base station."

It is nice to be ahead of the curve. Remember you read it here first :)

Tuesday, April 25, 2006

Not a chance, half-mommy!

The news agency BNS reports Latvian prime minister Aigars Kalvitis as saying that "nothing has moved forward" in talks between TeliaSonera (the 49 % half-mother of Lattelekom and a 60 % indirect owner of Latvian Mobile Telephone/LMT) concerning the purchase of the remaining stakes in these Latvian assets.
BNS has it slightly wrong, a colleague who was there says Kalvitis merely said he thought nothing had happened and was waiting for Minister of Economics Aigars Stokenbergs to report when he gets back from accompanying the president on a visit to Finland. But the essence of what Kalvitis meant is true -- almost a year has passed and the only clear statements have been to the effect that Latvia will NEVER sell Lattelekom to TeliaSonera, no matter what arguments one makes about the far better viability of a company that combines fixed and mobile services. Lattelekom, at the end of the day, if this government has its way, will be effectively nationalized and put on the shelf waiting for a buyer. Its top management may then leave, plans for expanding the fixed network company into a broadband, IT, voice and data networks services provider and a major business process nearshore/outsourcing company will stagnate and the state will find itself owning an unsellable stranded asset. That, I am afraid, is the gameplan in a worst case scenario.
I still believe that TDC, who I have seen as a potential buyer, will retreat rather than advance in the Baltics. A sell off of the Bite assets may be premature, but analysts expect it to happen.
So there is no white knight out there for Lattelekom.

Digging the grave of classic telecoms?

I am posting briefly via WiFi from a Cisco conference in Riga, where I have just seen a demo of how, using IP phones and dual-mode (WiFi and GSM) mobiles, plus video calling, one can completely get around the classic switched telephony network. As I watched, I flashed back to the presentation of Lattelekom's first WiFi hotspot at a cafe in Riga a couple of years ago. The Cisco guy, Vladimir (also hosting today's event) made an IP call to Finland as part of the demo, which was like saying, this is digging the grave of classic telecoms. I thought it was a piece of unintended black humor, showing Lattelekom how it would be killed. Now some of this (Skype, SIP, other IP telephony technologies) is a significant reality.

Monday, April 24, 2006

Time will tell..and with bees you never know!

Well, I raised a bit of an uproar reporting in my newspaper the rumor that Denmark's TDC was going to sell Bite GSM (Lithuania) and Bite Latvija to the Finnish Elisa group. Everyone denied this, as one does a) if it is not true and b) if you are keeping your mouth shut as you should. Only the analysts seemed to believe the rumor would come true sooner or later. It was one of those believable things. And as one says in Latvia, with bees, you never know. You hear the rumor on this blog first!

Tuesday, April 18, 2006

Bees in the wind that whispers Elisa...?

Bite means bee in Lithuanian and Latvian and now the wind that often blows the bees about has brought an interesting whisper. Here it is.
Danish TDC, the owner of the Bite Group (which includes the mobile operator Bite Latvija in Latvia and Bite in Lithuania) is in talks to possibly sell both mobile assets to Elisa, the Finnish mobile operator which already has an operation in Estonia.
The private equity owners of TDC have apparently decided that the company should shed, or at least explore shedding some "marginal" operations such as the Baltic mobile operators to have a leaner, more Nordic focused operation.
The Nordic investment bankers Carnegie are said to be advising TDC on the possible sale of both Bites. They advised the sale of TDC to its current private equity owners.
Meanwhile, Elisa gets pan-Baltic mobile coverage. The company has been shopping recently with its aquisition of Finnish (virtual)mobile operator Saunalahti, a deal where Carnegie was also involved, advising the seller, Novator.
If what the wind whispers proves true (it may take weeks, anyone involved who confirms this on record to a bloggerist /blogger -journalist/ will get bigger stripes on his/her suit if the matter involves any stock exchanges :) ), then my theory of TDC as a possible buyer of Lattelekom falls apart and Lattelekom looks more and more like an aging orphan princess that will be taken out on a sled to the woods and left for the wolves by its (then) sole owners, the state. But that is another story.

Thursday, April 13, 2006

Ministers change, Satan remains Satan

Two out of three ministers in the "troika" that has been pondering the sale of Latvian Mobile Telephone (LMT) and Lattelekom to TeliaSonera are gone (Minister of Transport Ainars Slesers fired, Minister of Economics Krisjanis Karins resigned), but the reshuffled government still seems to regard TeliaSonera as "the Nordic Great Satan" who will never, never, never get both LMT and Lattelekom.
The new Minister of Economics Aigars Stokenbergs has declared that Lattelekom will not be sold to TeliaSonera. Period. It will be nationalized instead, at least temporarily. So writes the news agency BNS.
Strangely, the Nordic Satan's top honchos are the last to get the message. I seriously think they believe they have a shot at Lattelekom. Now is the time to push for a deal to get LMT completely under its wing and shake the company up a bit out of its self-satisfaction at being the biggest earner in Latvian history. As for Lattelekom, forget it...
The same goes for the company's eventual fate --"forget it", since a state-owned fixed network operator is the last thing anyone wants to buy (at least at a price the state would find interesting). Look for many of the present management to leave rather than be under 100 % state ownership, even for a short time (and short could be a couple of years).
About the only ray of hope that some insiders in Lattelekom are clinging to is that Danish TDC, now owned by a private-equity consortium, may buy Lattelekom and combine it with Bite Latvija to create the seamless fixed and wireless offering that customers expect (this was the point with having LMT and Lattelekom together under TeliaSonera). For TDC, Lattelekom would offer its Baltic data transmission network (with a POP in Sweden) to complement TDC's asset Song, as well as its business process outsourcing unit C1, network builder Citrus Solution, the data link (POP) in Moscow, IPTV and a lot of other stuff. However, for this to work, all parties have to move quickly.
As it seems now, the statement by Stokenbergs is yet another nail in the coffin of Lattelekom's corporate value.

Wednesday, April 12, 2006

Bite Latvija inks deal with Vodafone

Bite Latvija has signed a cooperation agreement with Vodafone. Details were not given in an official announcement.
In all likelihood, it will be similar to the arrangement that Bite GSM has in Lithuania, were Bite users can roam in Europe and internationally on the simplified "Vodafone World" tariff scheme. When Bite came into Latvia, the relationship with Vodafone was presented as one of the advantages it would offer to frequent and business travelers.
Just how much of an "edge" the lower Vodafone rates will offer in terms of competition is under some doubt in the medium term, since the European Union is putting huge pressure on companies to lower their roaming rates. So at the end of a hypothetical "week" (avoiding "at the end of the day") the difference between roaming on Vodafone and anyone else may be marginal. The attraction may be in how billing is presented (I see all my Vodafone roaming calls in, say, Germany, in detail).

MTS GSM, ho hum...
In other news, Master Telecom, previewed on this blog some months ago, has finally announced its MTS GSM service, not to be confused with MTS, the unrelated Russian operator. If you ask my opinion, Master Telecom's "problem" is that they are launching with a very unspectacular and hazy brand. Compare to Toxic, Amigo, Hallo! and Ura, the other (though pre-paid) services aiming clearly at a youth/teen/older child and low income, no frills markets. These are the segments where people still do not have mobile services, so you can get new customers. MTS GSM is not a brand you want to dance to...
Having said that, I should note that the company expects to get around 2 % of the Latvian market, maybe 20 000 users. Enough? We shall see...

Friday, April 07, 2006

IZZI aims to pull ahead of Baltcom

IZZI, the cable television, internet and mobile telephony service provider, has boosted its cable TV subscribers to 100 000 by acquiring FAO, a cable TV and internet company operating in several Riga suburbs. IZZI executives say they aim to surpass Baltcom (with around 130 000 subscribers) and become the largest cable operator in Latvia. More acquisitions of smaller operators are planned.
By throwing down the gauntlet to Baltcom, IZZI is also starting a contest of two different technology and program packaging mixes. Baltcom is offering a large number of digital cable channels (0ver 100) for a monthly price of LVL 10 to 15 (there are various mixes in various parts of the Baltcom network). Many of these channels are (for me) obscure Russian language or narrow interest (Wine Channel). Baltcom's digital TV offering is often promoted as best purchased as part of a triple-play package combining internet and fixed network telephony (where available). Baltcom uses its optical network (which it is apparently building out) and MMDS (a terrestrial digital broadcast technology that requires special equipment, usually to capture the signal for an apartment building with an internal cable net).
IZZI is distributing its digital TV in smaller, well defined packages grouped by interest (news, sports, music, Russian, film, etc.) with the basic service costing LVL 4 per month and the interest packages LVL 1.50. It offers, in effect, a menu-type service -- add whatever you want to the basics. The more interesting aspect is that IZZI is able to deliver its TV offering as IPTV, which can be carried as a service by other cable TV/Ethernet based internet and cable TV operators. This means that IZZI can capture subscribers by partnering with smaller and regional cable operators across the country. All it needs to do is deliver the IPTV «master» signal to the local network, which then resells it. No special, proprietary technologies (such as MMDS) are involved.
In my view, IZZI has a very flexible approach to expansion. It can expand by acquisition, as it has with FAO, or it can expand its subscriber base by partnering with other operators, be they cable TV or «pure» ISPs (with sufficient bandwidth) by offering to deliver IPTV down a backbone. The Latvian network solutions company Santa Monica Networks is rumored to be building such a backbone for IZZI that will link it to at least one other operator in a town outside of Riga, where the local ISP will then be able to deliver IZZI's IPTV.
The development is also a signal that Latvia's smaller cable operators, ranging from those with a few thousand subscribers to small, community or building -based networks, are starting to consolidate and many will eventually be bought by larger players. It remains to be seen what moves Baltcom will make. There is nothing to stop them from expanding by acquisitions as well.

Wish the all could be California Ferengi

Someone asked for a picture of my activities in California. Here it is.
You meet a lot of strange people there...

Thursday, April 06, 2006

The half-mother a desirable acquisition?

The Swedish business newspaper Dagens industri published a list of Swedish companies it thinks are likely to be candidates for acquisitions (friendly or otherwise). Among them is TeliaSonera, the half-mother of Lattelekom and 60% plus holder of Latvian Mobile Telephone (LMT) . Also mentioned is Tele2, the owner of (big surprise) Tele2. Regarding TeliaSonera, the newspaper says it is ripe for acqusition because «has too much money, too little growth and fast-growing companies in which it has an interest. All the ingredients are in place for a change, but also in place are the Swedish state and the Finnish state.»
Readers of this blog will recall that we have, several times, floated the idea that TeliaSonera could end up as part of a greater European or global organization, pretty much for the reasons mentioned by Dagens industri.
I will blog something later on the IZZI acquisition of FAO, a Riga cable TV company, and on the post-paid virtual mobile operator Master Telecom, launching services next week.

Wednesday, April 05, 2006


The cable TV and telecoms company IZZI will report its 2005 financials on April 6 and probably also announce the acquisition of another cable TV company and/or ISP. Rumor has it that it may be a company outside of Riga, although one source close to IZZI says this isn't so. Another source says that IZZI has been working with a networking company to transmit its IPTV service to a smaller city somewhere in Latvia, apparently for redistribution by a local ISP.
This rumor came up in connection with talk that some ISPs (internet service providers, about time I explained that) were dissatisfied with the internet exchange LIX, which is owned by Lattelekom, Telia, Latnet, and MicroLink (now part of Lattelekom, although it was supposed to sell its physical network assets). Apparently, there is unhappiness with the fees charged and also with the quality of service (there were supposed to have been incidents while I was away). A Latvian networking company, Santa Monica, is reportedly organizing an alternative internet exchange that would run on the same physical network as LIX, but with better (they say) routers and network management software. It would be an interesting case of one layer on the network cannibalizing another.
More on that, perhaps, next week. I may get some information when I talk to one of the Santa Monica honchos at the end of the week.

Saturday, April 01, 2006

More remarks from afar

I am back in reality from Las Vegas and also back in the land of "free" high-speed internet (free as included in the price of the hotel). The only good news I have picked up from Latvia is that Lattelekom is offering 1 Mbps download, 512 Kbps upload HomeDSL for an extra LVL 1.99 per month, with the first month free to those who requested it by March 27. The only bad news is that I could not access the page to get my free month, presumably because I was outside of Latvia and the HomeDSL network. Oh well.
In Las Vegas, you have to be pretty far off the strip to get free internet, otherwise it is USD 10 for 24 hours, as it was at the ridiculous Luxor where we stayed (not my idea). So anyone travelling to Las Vegas, Google for free internet, plus a free shuttle to the main attractions, and you will get a far better deal. Plus make sure your friends and family in Latvia get Skype on their home/work computers, so you can make computer-to-computer calls for free. SkypeOut, the service that allows you to call ordinary phones, will eat up EUR 0.20 per minute to Latvia, so calling on a phone card may be cheaper.
One major "problem" here on the West Coast is that one is -10 hours from Latvia, making it impossible to overlap business days. Right now (before the US goes to Daylight Savings Time) it is 20:15 here, but 7:15 AM on a Saturday in Latvia. I spend the first week of my vacation sending SMS to all kinds of unanswered calls that I got at 1:30 AM local (California) time, telling the callers that I was in the US. So if you are expecting calls on your roaming LMT/Tele2 or Bite phone, turn the phone to silent and then SMS your callers. With free internet, it should not be hard to keep up with any e-mail.
As for Vegas, I will diverge from telecoms simply to say it is the world's biggest balagāns. I don't want to explain that Latvian term, so if you don't know what it means, ask your nearest neighborhood Latvian.