Thursday, March 13, 2008

Lattelecom nationalization proposed

Minister of Transport Ainars Slesers has proposed the effective nationalization of Lattelecom by swapping the 49 % of Lattelecom shares held by TeliaSonera for the 23 % shares in mobile operator Latvian Mobile Telephone (LMT) held by the state-owned Latvian State Radio and Television Center (LVRTC).
The transaction would effectively make Lattelecom one of the few entirely state-owned telcos in Europe. Slesers said that he hoped that under state management Lattelecom could develop into a strong national company "like Nokia"(the maker of mobile telephone handsets and infrastructure equipment and software).
He didn't exclude selling off the LVRTC's 49 % of Lattelecom in a few years in an open auction he said would be attended by many investors, including telcos of the caliber of Deutsche Telekom, which he used as a hypothetical example.
The LVRTC currently operates the analog television broadcast network using a nationwide network of point-to-point wireless links, some optical fiber and cables. It carries some mobile telephone backhaul traffic from base stations that are located on some of its transmission and microwave link towers.
Lattelecom faces the pressing problem of providing mobile services in addition to its fixed network offering, and Lauris Dripe, the board chairman of the LVRTC, said this would be a priority if and when the deal went through. Slesers said that TeliaSonera had virtually agreed to the transaction but it needed full government approval.
Dripe hinted in a private conversation with this blogger that mobile WiMax tests being conducted in cooperation with Lattelecom could be one solution, as could buying another operator or cooperating with an incumbent. (This corrected to remove ambiguity about who spoke about mobile WiMax, it was not the minister)
Petras Kirdeika, the Tele2 CEO in Latvia, has said he was open to cooperation with Lattelecom by allowing the fixed line operator to buy capacity and start a virtual service on Tele2's network.

The political storm rises?

Roberts Zile, a European Parliament deputy and head of the government coalition party Fatherland & Freedom has accused Slesers of harming Latvia's international image by conducting negotiations on his own with TeliaSonera.
Minister of Economics Kaspars Gerhards, a member of Zile's party, has also distanced himself from Slesers' actions, calling them a "personal"initiative that did not represent the views of the government as a whole.
Slesers told journalists that he had had "support in concept" from Prime Minister Ivars Godmanis for the talks with the Swedish company and would be sending TeliaSonera a formal proposal shortly. He said the Swedes had agreed in principle to the transaction and claimed it was the first time that they had agreed readily to anything.
Slesers asserted that TeliaSonera had vehemently opposed the management-buy out advocated by Nils Melngailis, the outgoing CEO of Lattelecom. TeliaSonera, however, signed the letter of intent approving the deal last year.

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