TeliaSonera honcho: it looks like a deal!

Despite a loony-tunes document by the Ministry of Economics that seemed to say all deals surrounding the privatization of Lattelecom and Latvian Mobile Telephone were off, it looks like the deals are going ahead and will be sealed as early as September 12, with closing before the end of the year. Those were the signals coming out after a meeting between TeliaSonera honcho Kenneth Karlberg (who has been at this for around four years or more) and representatives of the Latvian government. I got to sit down and talk to Kenneth after the meeting. Here is my videoblog:

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Government waffles again on telecom privatization

LJust when it seemed that agreement had been reached in principle to sell the remaining state holdings in Latvian Mobile Telephone (LMT) to TeliaSonera and to let Lattelecom be privatized by a management/staff buyout, the Latvian government decided July 24 to extend the deadline for preparation of privatization rules for LMT to October 1.

The real shocker is in an explanatory document appended to the decision:

"As, for the time being, no agreement has been reached by the parties involved concerning the future disposition of the state holdings in ...Lattelecom and ...Latvian Mobile Telephone, the draft protocol decision foresees extending the deadline for completing the task to October 1 of this year." (Emphasis mine).

What this seems to say is that all deals are off, or at least it could be understood that way. In fact, both the government and the half-mother TeliaSonera had indicated agreement in principle to a scheme that has been discussed for more than a year, namely, that the Swedes get LMT, and someone else gets Lattelecom (in the latest alternative, the management and staff). The half mother has also given a nod to the management buyout, though it may have hinted at a last minute higher offer for the whole package (TeliaSonera has always wanted to buy 100 % of both Lattelecom and LMT, but given an unavoidable choice, it would take LMT alone).

The whole bizarrely ambiguous statement comes two days before TeliaSonera honcho Kenneth Karlberg is due in Riga for talks with the government. Presumably these would have been about choreographing the deal -- waiving first refusals, detaching the state and half-mother's indirect shares of LMT held by Lattelecom, finalizing the price of everything. In this sense, there was no formal, written agreement -- work should be starting toward this, but certainly there was agreement in the common-sense understanding of the concept.

Certainly, the half-mother has reason to worry -- the half-mother's , as it turned out, half-blood press honcho called me and asked for a copy of the Latvian language documents so he could show them to his mother. This seemed very strange for a man called Niklas Henricson, until it turned out that Niklas' mother is Latvian. That is just a curious aside and a warning -- we are everywhere :). Niklas, alas, has not grown up in Sweden learning Latvian.

Anyway, one way or another, the latest and strangest from the Latvian government should be on Kenneth Karlberg's laptop at his vacation residence pretty soon.

And--one more thing... The Latvian government has ordered a tender for another appraisal of Lattelecom and LMT, even though Minister of Economics Jurijs Strods says he is sure the value of Lattelecom has not diminished. Since both companies are not traded, appraisals, such as were made last year by two different firms, Ernst & Young and Carnegie, are expensive educated guesses at best. Well, it has been a good year for the appraisal business in Latvia, that's for sure.

Whatever is really going on, the whole privatization process has, yet again, been destabilized and dragged on, probably well into 2008, even as Nils Melngailis, Lattelecom's CEO, looks to put together a consortium to finance the MBO (assisted by Lazard). That leaves Lattelecom adrift with, as Bob Dylan said, "no direction home" for at least a year, nor even any idea who home" is or will be.

airBaltic offers pre-paid mobile phone services

air Baltic, the Latvian carrier partly owned by SAS, has quietly started offering prepaid mobile phone cards, including a SIM card and number, to travelers abroad. The service offers free incoming calls from Latvia in 19 countries (including Ireland) and discounted calls from abroad to Latvia.
The service is run for the airline by SIA Telecom Discount, a small alternative Latvian telco. Just how they do it -- whose network is used-- I have still to find out (I want to get this news out ahead of anyone else, as air Baltic hasn't announced this to the press, only put it in a customer newsletter).
Since I don't think I want to get a new mobile number to use just for a weekend in, say Stockholm, mainly because I don't want to SMS like 150+ contacts and get everyone confused, I think this card is mainly aimed at the Latvians in Ireland and UK market. Think about it -- when you let everyone know you are off to O'Leary's mushroom farm, you also announce your airBaltic number and get incoming calls for free.
My sources say that the next step could be the sale of cheap (subsidized) phones by Telecom Discount bundled with the air Baltic card, so that emigrants could have a "call and be called from Latvia" phone when they hit the ground in Ireland or wherever. Sounds like a reasonable business model.

Endgame for the half-mother

A delegation from TeliaSonera, the half-mother of Lattelecom, will meet with the Latvian government on July 26 to, in all likelihood, start working out the details of the management/staff buyout of the Latvian fixed-network operator.
The delegation will be headed by Kenneth Karlberg, currently head of TeliaSonera's Mobility business area, but formerly (before the switch from regional to services-based organization) in charge of business in the Baltics. For Kenneth, it will be the beginning of the end of a seemingly neverending story that started in 2003, when TeliaSonera first declared its interest in buying all of Lattelecom and Latvian Mobile Telephone (LMT). Now, as a corollary to the Lattelecom MBO, Kenneth will be getting 100 % of LMT. LMT will be integrated into TeliaSonera's regional mobile strategy, but there are some things to learn from the Latvian subsidiary, which was first to launch HSDPA mobile broadband, something even Telia Mobil still doesn't offer (?).
The July 26 meeting, presumably, will be to discuss the choreography of how each partner will waive first refusal rights on the other's holdings in Lattelecom and LMT, as well as on how to divest the 23 % of LMT formally owned by Lattelecom.
At the same time, people from Lazard Freres are busily doing due diligence at Lattelecom so as to present the company to potential financiers of the MBO. CEO Nils Melngailis is in London talking to banks and private equity companies.
Look for Lattelecom to strengthen its senior staff in the next few weeks as the company prepares to become a small independent player, without the backing of its ex-half mother. I will mourn having to discard that favorite bizarre term:).

Bite Group honcho speaks

Kenneth Campbell, the new CEO of the Bite Group talked to journalists in Riga on July 4 after a couple of months easing into his new job. I did the usual videoblog (see below), but some stuff was said off camera that is noteworthy.
1) Bite Group expects Latvia to be its fast growth, high opportunity market (Lithuania is mature and steady).
2) Bite will try to push the pace of network build-out in Latvia beyond the present 10 base stations/towers per month.
3) In the medium term, there will be more bundled services (XYZ minutes included in the basic fees) and a drift toward flat rate for everything as HSDPA mobile internet and its next generations become ubiquitous.
4) Mid Europa, the private equity company that bought Bite has an investment horizon of five years plus (remember, they are not a telco seeking to permanently have a network presence in Latvia).

My own guess -- no one told me this -- is that Bite is being fattened for a friendly sale to Vodafone in 6 to 8 years. It makes sense and Bite has had a favorable roaming and data roaming deal with Vodafone.

Here is the video, this time from YouTube. BlipTV was OK for a while, it took some longer videos but now screwed up, refusing to open a page where I can copy paste the code for putting a video window on the page, as I have done in some earlier posts.

Tele2 to expand 3G/HSDPA coverage in Latvia

Tele2 is going to expand 3G and HSDPA mobile broadband coverage to the towns of Liepaja and Daugavpils by fall, according to the company's chief honcho Petras Kirdeika. He talks about this and other matters, including the new "slant" on the corporate logo, in this video:

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A Swedish student networking presentation in Riga

I recently went to an event sponsored by the local affiliate of the Connect network, a non-profit organization that brings together internet and high-related startups (or just innovators with ideas) to face a panel of potential early stage investors and industry experts.  Here is a short video of a Connect event in Riga, where some Swedish entrepreneurs came over to present a student interaction and job-seeking platform, AcademiaLive (Swedish only).

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