Latvia's acting minister of economics and minister of justice in the lame-duck government Gaidis Berzins has said that Sweden's
TeliaSonera might still have a chance at acquiring
Lattelecom, the fixed line operator, where it is presently a 49 %
half-mother. Berzins said this in a radio interview on December 11, according to media reports.
Berzins said the next Latvian government (most likely a mash-up of the present, departing one) would have to decide on whether to go ahead with a management and employee buy-out (MEBO, if you wish) proposed by
Lattelecom managing director Nils Melngailis, who has essentially been fired as chairman of the
Lattelecom management board.
This can only be seen as yet another bizarre twist in the saga of
Lattelecom. A proposal by
TeliaSonera to buy both companies --
Lattelecom and the mobile operator
Latvian Mobile Telephone (
LMT) has been on the table for several years and has been delayed and muddled by the Latvian government ever since.
Last year, the government told
TeliaSonera that it would not be allowed to buy
Lattelecom, so the Swedish group proposed swapping its shares of
Lattelecom for the remaining shares in
LMT and setting a final price for the whole deal after independently valuating both companies. This was done last year, but the government muddled away its chance to nationalize
Lattelecom and get some cash for
LMT as well.
Now Berzins and the
Latvian Privatization Agency (which formally holds the state's 51 % share of
Lattelecom) have essentially torpedoed the MEBO and pushed Melngailis toward inevitable resignation from
Lattelecom.
As things now stand,
Lattelecom, at best, is a
gefundenes Fressen (a meal discovered lying around for those who don't know German) for
TeliaSonera, which had, essentially, written off the idea of owning any fixed-network assets in Latvia and was preparing to concentrate its efforts on
LMT as a full-spectrum service wireless company once the MEBO went through.
In my view:
1)
TeliaSonera should ask for a new valuation of
Lattelecom (minus Melngailis) and then decide whether it wants to buy.
2) Maybe it should press the government to nationalize
Lattelecom so as to hasten its acquisition of 100 % of
LMT. That is, it should put up its 49 % for sale triggering the state's right of first refusal so the government either puts up or shuts up.
3) It should not, at the end of the day, rely on any promises or representations by the Latvian government and perhaps consider some form of legal action to force a decision. I think nothing else will work for the foreseeable future.