Tuesday, February 05, 2008

TeliaSonera may bid over USD 1 billion for Latvian telcos

TeliaSonera may bid substantially more than LVL 500 million, or well over USD 1 billion for 100 % control of both the Latvian mobile operator Latvian Mobile Telephone (LMT) and fixed network operator Lattelecom
Kenneth Karlberg, the TeliaSonera executive who will be negotiating with the Latvian government in Riga on February 6, declined to name a figure, but the sum of more than LVL 500  million is considered a reasonable "guesstimate" of what the Swedish group may be ready to pay.
Karlberg said he will present a written offer to Latvian prime minister Ivars Godmanis who has hitherto rejected an LVL 290 million management buy-out bid and has flatly refused to allow the Swedish group to own both Latvian telcos, citing competition fears.
Karlberg, speaking to Latvian journalists in Stockholm, said that economies of scale were the most important factor in the competitiveness of telecommunications companies. The larger the customer base, the more efficient and effective the use of investment capital and the greater the purchasing clout of the company on international telco equipment and IT systems markets.
The Swedish executive indirectly suggested that Lattelecom, with just over 600 000 customers, compared to more than 109 million for TeliaSonera and its subsidiares, could never achieve the same level of competitiveness and efficiency alone.
He also spoke of large telecommunications companies such as Vodafone and Orange, which have left the Nordic/Baltic region, selling out to Nordic operators, indirectly expressing skepticism about Latvia's plans to auction 51 % of Lattelecom to operators other than TeliaSonera.  

3 comments:

Gunars said...

Hi Juris, can you drop a comment - why LMT government share is not put on auction as well?

Juris Kaža said...

LMT is already controlled 60 % by TeliaSonera (49 % directly, plus just over 11 % through its 49 % of the 23 % of LMT that Lattelecom owns). Does that make sense?

Juris Kaža said...

LMT is already controlled 60 % by TeliaSonera (49 % directly, plus just over 11 % through its 49 % of the 23 % of LMT that Lattelecom owns). Does that make sense?