Thursday, May 04, 2006

More on the no sale of Lattelekom

This is what I believe the present Latvian government intends to happen if the government's plans to sell only Latvian Mobile Telephone (LMT) to Sweden's TeliaSonera are implemented.
Lattelekom, Latvia's fixed network operator, is going to be an arms-length, state-owned company for a few years, probably starting its own mobile operator before being prepared for an IPO on one of the bigger regional (Nordic) or European stock exchanges. The state will probably keep a small share when that happens to get a revenue stream from what Minister of Economics Aigars Stokenbergs believes will be a stronger, more diversified and profitable Lattelekom.
Lattelekom will become a small to medium-sized regional competitor to its former half-mother in some niches (such as data communications) a provider of services that TeliaSonera doesn't offer (business process outsourcing, even with TeliaSonera as a potential customer) and a player in entirely new services such as intelligent, application-aware networks (with some help from MicroLink, the IT integrator that it recently acquired).
What the latter means is that the fixed network operator will offer a new, very sophisticated VPN layer when it connects the network to certain business customers. In other words, it will attach the corporate users to, say their Oracle or SAP application suite and have the network recognize and route. say, all their order messages and other related data traffic in a particular manner. It could even error check and, say, bounce back an order with an improperly entered number or whatever.
Such a network could also, at the VPN (maybe I am getting this wrong) layer, handle and prioritize content and services from a content provider, interact with CRM, etc. This is all from Cisco honcho Kaan Terzioglu's recent presentation. So that means that Lattelekom in Latvia and regionally could provide the backbone and hosting for this kind of stuff, grabbing up enterprise customers almost end to end, in fact, installing customized intelligent network based applications instead of just running a phone, ISDN or internet line to the enterprise. And here lies, perhaps, a threat to TeliaSonera...
Some of my sources say that Lattelekom chafed a bit under the half-mother, saying she was a little slow and conservative. In fact, some Lattelekom execs had mixed-feelings about being wholly owned by the Swedes, or at least they saw a certain downside.
This is not to say that Lattelekom going it alone as a state-owned company is all roses. When I mentioned this to my colleagues at my sometimes maligned (in this blog) paper, there was derisive laughter. They are pretty sure that once the state gets 100 % of Lattelekom, politicians will, to put it bluntly, fuck up the company. There is some truth to this, or rather, much truth. The Minister of Economics isn't really a politician, more of a technocrat and one of the few politics-connected people in Latvia who passes my "Alfred E. Newman" test (Newman is that wacko looking guy in the American Mad Magazine, who has a caption under him Not Insane).
Minister Stokenbergs has, for Latvia, some pretty sane (therefore unacceptable or at least strange on an interplanetary level to the rest of the loonies in politics) ideas, such as 1) letting Lattelekom do its business 2) changing laws so that, for example, management can get performance-based incentives, including options ahead of or after the IPO, etc.
On the downside, Lattelekom could lose the economies of scale that it enjoyed co-purchasing equipment and services with TeliaSonera, though I am not sure how much of that has been going on. At the end of the day, the Swedes may even come to an independent Lattelekom to get things done -- like some of their billing, books, network management, whatever can be done remotely over the network from the Baltics.
There is also the issue of whether Lattelekom can successfully start a fifth mobile operator in our land of 2.2 million (and falling) souls. Here the weird idea of buying Bite creeps in, but that is perhaps because I am sipping whiskey in the middle of the night on Latvia's Independence 2.0 Day. I suspect Bite could be an expensive proposition, especially if Lattelekom has to go against, say, Elisa in Finland. But at least Bite would give Lattelekom a foothold of some, say., 100 000 mobile customers in Latvia and much more if the Lithuanian bee is also bought.
This is descending into rambling hallucinations.

Music played while writing: Rage Against the Machine, Maggie's Farm, U2, Vertigo, Rolling Stones, Brown Sugar, Bachman Turner Overdrive, Let It Ride, Grateful Dead, Sunshine Daydream (a download described as Fucking Awesome, but having no good grass/or any grass in the house, I can't say.. :) :). Oh yes, and Jimi Hendrix (Live at Winterland), Sunshine of Your Love, instrumental, definitely in the Fuckin' Awesome category by me...


Anonymous said...

You have mentioned application-aware VPN service. So far, Lattelekom was unable to offer that to business customers. I guess they are a little slow to come up with that in near terms.
I heard Telecentrs already offering application-aware VPN service through Alcatel equipment.

Anonymous said...

Juris, what do you mean by "Alfred Newman test"?

Juris Kaža said...

Since the 1950s, a satirical magazine called "Mad" (which in English can mean either angry or insane/crazy) has been published in the US (with versions later in other languages). One of the cartoon-style characters who always appears in the magazine is a funny looking little man called (for no reason) Alfred E Newman. There are, as I remember, two slogans that appear whenever Newman's portrait is published, one being "What, me worry?" and the other "Not Insane". It is the latter to which my Alfred E. Newman test applies. It means that people who pass it are "not insane".