TeliaSonera sent a letter to the Latvian government dated February 25 offering, yet again, to buy all remaining state shares in Lattelecom and mobile operator LMT for LVL 500 million, but promising to split the fixed network operator into a wholesale and a retail operation.
The wholesale operator would offer network services to all other operators, including LMT and the Lattelecom retailer, on equal terms under strict regulatory supervision. Telia, the Swedish unit of the group, earlier founded a seperate network wholesaler under the Skanova brand it used previously for selling such services.
The Swedish telecoms group apparently sweetened the deal in the letter by saying it would also base some of its research and development (R&D) operations in Latvia if the transaction went through. This blogger was allowed to read a copy of the letter by informed sources.
The letter, signed by Kenneth Karlberg, TeliaSonera's head of Mobility who has been conducting negotiations with the Latvian government for several years, also states that "selling our stake in Lattelecom is not a solution we prefer and if it is the only way we would appreciate your detailed suggestion on how such a transaction would be structured." This would be done in the context of getting 100 % control of Lattelecom, where TeliaSonera now directly or indirectly holds just over 60).
Karlberg also tries to sooth concerns by the Latvian government that ownership of both companies by TeliaSonera would dampen competition. "In all the markets where TeliaSonera is active, there is no evidence of lacking competition, " he writes, adding that telecommunications services prices offered by the Swedish group's subsidiaries were "among the lowest in Europe".
Lattelecom could be considered a company in crisis since its CEO, Nils Melngailis resigned under what was, in effect, political pressure. If acquired quickly by TeliaSonera, Lattelecom would probably get a new top manager appointed from Stockholm.