Wednesday, July 18, 2007

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:).


Bleveland said...

OK, right LMT might have been first to launch HSDPA just to piss their main competitor (Bite) off. A publicity thing. Since the day they did that the further deployment went on, but with a very low speed or did I miss something? True, Some new UMTS base stations have been added, but I doubt if those actually support HSDPA already. In addition HSDPA is excessively expensive so far. So what the Swedes should learn from that? Possibly that there is a need to kick some fat butts at LMT, but hardly that this strategy should be followed.

Remember that the scenarios are very different. Where Latvia was by the time of HSDPA launch till a neglectable 3G country (I guess it still is), 3G in Sweden was already widely deployed and USED. When Telia Sweden introduced their 384 kbps data connection at a very moderate fee their network got heavily congested and they even recommended their customers to force their modems into GPRS mode in order to get out some data at all. Killed by its own success in other words. Not a very good sign, but it illustrates the scenario Telia is facing in Sweden. Enabling HSPA features at that time would have put even higher requirements on the network in terms of network capacity and to some extend even coverage. Hardly a concern in Latvia at that moment of time. I would guess that you were one of the say 5 users on the single HSDPA base station in Latvia the day you got the opportunity to test it Juris :)

Anyway, TeliaSonera Sweden has deployed and now also enabled HSPA in large parts of their UMTS network as well as Edge in their GSM network (their competitors have shown the way and went ahead of them): (sorry folks; Swedish only).

How does HSDPA work? Well to my experience, close to a base station in an outdoor environment, it works just fine with nice speeds on your downlink. As soon as you move to an indoor environment speeds drop rapidly due to high penetration loss at these frequencies and in no time you are back to UMTS speeds that are in the range of 200-300 Kbps. If even a high number of users is taken into account it has another (great, but negative) impact on the obtainable download speeds.

For the time being I guess I stay with my Triatel EV-DO prepaid solution. If promises are kept, next year might be the right time to move towards HSPA in one of the other networks. I have to admit that given the fact that so much happened in this area during 2005/2006 in Latvia I expected we would already be there.

Juris Kaža said...

A useful and informative comment. Thanks!