Friday, August 31, 2007

Lattelecom & wireless broadband, HP in NYC

Once the management/staff buyout (MBO) is complete, one of Lattelecom's priorities will be to expand its broadband coverage. CEO Nils Melngailis has said as much. More than 100,000 of Lattelecom's more than 600 000 wireline customers already have DSL, and the aim is clearly to get almost everyone aboard. That includes customers beyond the reach of the present network in rural towns and outlying areas.
Another priority is to move into mobile services. In this regard, I have mentioned a number of options, with the most likely one being a virtual operator (MVNO) on the Bite network, where all paying customers are welcome. Another option would be to experiment with mobile WIMAX (something not likely to be viable until the middle of 2008). I have also mentioned that Lattelecom could forge closer ties, perhaps even buy Triatel, which runs a non-standard (for Europe) CDMA mobile phone and data network, plus an EV DO wireless broadband network (satisfactory at my country cottage 35 km outside Riga). Triatel is already cooperating with Lattelecom for installing fixed wireless telephony and landed an EU and government-financed rural broadband project.
After a bit of chatting with sources, it looks like the best fit between Lattelecom and Triatel could be in the wireless broadband space, or so some think. Triatel appears ready to be persuaded into some kind of broader, more permanent deal. The question is, how much infrastructure overlap there may be and is this not at odds with the rather strange rural wireless broadband project backed by the government? The basic idea of that project, rather than helping spread "last mile" solutions (which Triatel is) was to establish parallel wholesale infrastructure and hope that resellers would appear in the poor rural areas and have a choice of wholesalers whose internet connection they could then distribute to the rural farmsteads, huts and hovels in the forest.
Meanwhile, earlier this summer, Lattelecom announced it was buying a bunch of Alcatel point to point high capacity microwave links in order to extend its broadband reach beyond the optical and wire network. That sounds like extending infrastructure to me. Still, the last mile could be set up and sold by Triatel, especially if it was part of the Lattelecom fold. Watch these developments...:)

HP in New York

I'm off to New York on September 4 for some kind of Hewlett-Packard (HP) all day event on September 5. Piecing together some sparse e-mails from the local organizers, it will be a series of break out events on various gadgets and issues. There has not exactly been a flood of information as to what, when (and just some bios of who), but it will held at some posh hotel (the Ritz) on the Battery, far from the delights of the rest of Manhattan. Or so the month old e-mails claim. But hey, I already have my electronic ticket (in French) from HP, so thanks!
Many of the discernable events are of interest, and, hopefully, I will be able to blog and videoblog from there, both here and for my Latvian employer. I notice blogger has added a "add video"function, which means I may be able to bypass the sometime slow(to post uploads) and (therefore) dubious YouTube and the quicker alternative, Anyway, I will give it a test. After that, I will be off to Boston to see family and back in Latvia on September 11

Wednesday, August 22, 2007

Soft launch for Baltkom's mobile service

Baltkom, the cable TV and telephony company that launched, developed and sold the Latvian mobile operator now known as Tele2, will re-enter the mobile market with a soft launch of its virtual services on the Bite network during the fall.
Tariffs on the new service will closely match those offered by Bite and will include mobile internet (HSDPA), which the Bite network offers in Riga and several other Latvian cities.
The new service, which will be part of a Quattro package (cable TV, cable internet, fixed and mobile telephone) or sold seperately, will start without any fanfare, probably as an offer to existing Baltkom customers (there are more the 170 000 cable TV subscribers). Once the services are accepted and proven to work for existing customers, a wider marketing campaign and announcement will be made.
This, according to my source.

Monday, August 20, 2007

Lattelecom, LMT privatization memo finally signed

I now see that the Latvian government, TeliaSonera and Lattelecom have finally signed a memo of understanding on the privatization of Lattelecom and Latvian Mobile Telephone (LMT). The memo assumes that a final agreement will be signed on September 24, not September 12 as assumed earlier (the delay is due to scheduling considerations and vacations). This is yet another step toward the management buy-out (for around LVL 290 million) of Lattelecom and the sale of the remaining government stake in LMT to TeliaSonera.
This blog prematurely reported the signing of a memo last week :), but I was on the right track.

Thursday, August 16, 2007

Latvian government offers TeliaSonera a privatization memo


The Latvian government has presented a memorandum of undertstanding on the privatization of Latvian Mobile Telephone (LMT) and Lattelecom that it is ready to sign. A spokesman for TeliaSonera said, however, that negotiations were still continuing.
TeliaSonera, which now directly and indirectly controls just over 60 % of LMT would get 100 % control, while Lattelecom will be sold by both shareholders (TeliaSonera 49 %, the government - 51 %) to the management and staff of Lattelecom in a management buy-out. The latter is valued at around LVL 290 million.

More later, time allowing....

Monday, August 13, 2007

Previews of coming attractions--the Lattelecom MBO

Here is a likely timeline for the Lattelecom employee and management buy-out (MBO).

September 1 -- the consortium to finance the LVL 290 million deal should be in place and consist of one private equity partner and a small consortium of banks. There will be covenants with the private equity partner limiting the sale of shares and retaining critical strategic and budget decisions in the hands of Lattelecom management,

September 12 -- there might be a formal signing or initialing of the deal to transfer 100 % of Lattelecom to the MBO consortiium while the remaining state shares in Latvian Mobile Telephone (LMT) go to TeliaSonera.

End 2007 -- the deal is closed.
Early 2008 - Lattelecom grants, free of charge, a certain number of shares to every employee, regardless of seniority or position. It also offers a limited number of shares to employees and managers for cash.

2009 -? Lattelecom, based on financial performance, grants options/profit sharing shares to employees and managers. Most staffers have the option to take cash or shares (buy out their options) but many middle and all higher level managers will have a substantial part of their remuneration in share options.

Lattelecom will also start actively looking for corporate acquisitions in the region -- neighboring Estonia and Lithuania, possibly Scandinavia. During 2008, it will have entered the mobile market, most probably as a virtual operator with Bite as its partner.

2010-2012: Look for a share issue and stock exchange listing of Lattelecom once it has shown substantial revenue growth (while sustaining or increasing profitability). The listing will allow some employee-management shareholders to cash in (out?) upon retirement or leaving the company and give all a market-based indicator of the value of their holdings.

Wednesday, August 01, 2007

Tele2 Latvia honcho on Q2 results

Tele2 Latvia board chairman Petras Kirdeika talks about Q2 and first half results, with revenue up 17 % to LVL 60.51 million (in the first half of 2007) and EBITDA up 13 % to LVL 28.1 million (Petras doesn't mention the figures in the video). Tele2 is the largest operator in Latvia by number of users -- over 1.1 million, but still trails rival Latvian Mobile Telephone (LMT) in terms of revenues. Petras also said at a press breakfast that he was getting good growth of business customers and postpaids (around 70 % of Tele2 customers are prepaid).