Pat Russo's keynote, other stuff from Alcatel-Lucent Enterprise Forum 2008

First some tidbits of local news from the Alcatel Lucent Enterprise Forum 2008 where I just spent a couple of days (strangely springlike Paris, daffodils blooming!). The interesting rumor is that TeliaSonera may be among a number of Nordic mobile operators looking at Alcatel Lucent's OmniAccess 3500 Laptop Guardian, which has now been launched in a European version (it operates on GSM/UMTS networks).
The idea of the gadget is that it remotely updates, monitors and protects corporate laptops, even if they are turned off. If stolen, the laptop can be encrypted rendering any confidential data useless to thieves. The Laptop Guardian is also a 3G/HSPDA modem. The gadgets can be installed and managed by a large corporation's IT department or sold as a service by mobile operators, opening it to a broader range of users.
However, that is not the story for me-- if TeliaSonera is testing this as a service (one way it can be used by small and medium businesses) it is also in the pipeline for all of the TeliaSonera owned Baltic operators, including Latvian Mobile Telephone (LMT). This would be a nice complement to its iBirojs (iOffice) HSDPA service. It would also allow TeliaSonera to deploy and support the service regionally.

Not to deceive with the headline, I also include my video excerpt (sorry about the occasional camera drift) of Alcatel Lucent CEO Pat Russo's keynote at the Enterprise Forum:

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Lattelecom to offer mobile e-signature

Lattelecom Technology is offering a mobile e-signature that may finally get this dead horse of a e-government/e-services project going at last. In order to use their mobiles as e-signature devices, users will pay around LVL 5 to have the specialized program burned into a new SIM card for their mobile phones. It should work on most phones available on the market. It will also function on all of Latvia's mobile phone networks.
According to a spokesman for Lattelecom Technology, the mobile e-signature will allow secure identification of users of online government services, internet banks, e-mailed documents and the like. It may even enable card-free use of ATMs (bankomats) such as is said to be possible in Turkey. The mobile user will send an SMS to the bankomat and recieve cash without needing to insert a card and punch in a PIN code (forget it, and your card is often swallowed).
Lattelecom Technology helped to develop Latvia's e-signature, which has hitherto been distributed to several thousand government and municipal officials (at government expense). Uptake of the service (a gadget one attached to a PC, if I am not mistaken) by the private sector has been rather limited, perhaps a few thousand users (because of the expense). It has also been sold mainly through Latvia's shambolic (LV readers, think bardaks) postal service.
The mobile offering may finally make a widely-used product of the e-signature, which is actually a rather progressive and convenient way of secure dealing with government and private service providers.

The "bee"stings with a shorter stinger..

Bite (bee in Latvian) has cut its previously "privileged" interconnect tariff in order to prod the two major operators, Latvian Mobile Telephone (LMT) and Tele2 into cutting what it considers excessive charges for calls from the other networks to Bite numbers.
Fred Hrenchuk, the chief honcho of Bite Latvija, says that the 0.08 LVL interconnect tariff Bite has been charging will be cut to 0.062 LVL (what the incumbents charge each other) to remove any basis for arguing that calls to Bite "cost more". He says that LMT and Tele2 have been overcharging their own customer for call to Bite by up to 0.09 LVL per minute compared to the charge for a call to either Tele2 or LMT. Bite was granted a higher interconnect in 2005 as a third, "underdog"entrant to the market.
Tele2 has recently (consciously or not) pre-empted Bite's move in its ZZ Postpaid tariff plan, where calls to all other operators, including Bite, are charged at 0.15 LVL per minute. In othe Tele2 plans, there is still a differential of several santims between calls to LMT and Bite.
Hrenchuk explained that the two incumbents have been making money from calls to Bite in two ways -- the net amount Bite pays on interconnect clearing (more calls are made by Bite customers to the incumbents than from LMT and Tele2 to Bite) and the excessive charge for calls to Bite compared to calls to other operators. Thus an operator whose customers make 100 000 minutes of calls to Bite and take 150 000 minutes from Bite would be owed (by netting out or clearing) around 3100 LVL (at the new lower rate) from Bite. However, assuming that calls to Bite cost an average LVL 0.06 more per minute, the calling volume would also generate 6000 LVL in extra revenue compared to what calls to other operators generate.
Bite Latvija hopes cutting the interconnect charges and publicizing the tariff differentials will prod or shame the major operators into bringing tariffs for calls to Bite in line with other tariffs. A letter urging such steps has been sent to Tele2, LMT and Lattelecom.

Rumors of LBS and an unhappy "bee"

This from the rumor circuit - Latvian Mobile Telephone (LMT) is getting closer to launching location-based services (LBS). At least some of them would be based on Google Maps - showing mobile phone users nearby shops, restaurants and the like.

All mobile operators in Latvia have to do some degree of locating in order to meet EU requirements for emergency calls, but LMT appears to be the first to be developing a commercial platform.  The business model is that LMT will set up the necessary IT infrastructure and then partner with location-related third-party content providers on some kind of revenue-sharing basis.

While location for emergency purposes is compulsory, any commercial LBS will be by consent, although it is likely that LMT and other operators will market these rather aggressively, stressing that one or the other has the "locally-smartest"  phone.

LBS gaming may be another feature of the LMT offering, but just what that is I am unsure :).

Bite rebrands

Meanwhile Bite presented its rebranded image -- springlike colors, a different logo (a leaf? a balloon?) minus the weird Lithuanian ė -- as well as the abolition of one-off call connection charges, so-called asterisked (*) clauses and fine print as well as charges for switching or turning on and off of certain services (incoming call numbers, etc.). All of this is based on some intensive customer surveys, focus groups, etc. and one can reasonably say it is what most or many customers want. It is something that Bite hopes will increase customer loyalty more than it will have folks stampeding from other operators.

Peeved about charges

Bite is also upset that Tele2 and LMT seem to be charging their customers more for calls to Bite numbers than for calls to each other and related pre-paid services. Bite will probably make a public issue of this, although the wholesale tariff structure (so-called termination charges which operators clear with each other) and its relationship to the tariffs customers pay is somewhat complex and non-obvious. More, perhaps, on this later.  

In bed with the loonies?

Lattelecom management as represented by CEO Nils Melngailis and The Blackstone Group have officially expressed their interest in buying 49 % of Lattelecom from Sweden's TeliaSonera. This comes on the heels of a USD 1 billion bid by TeliaSonera to buy 100 % of both Latvian telcos (Lattelecom and Latvian Mobile Telephone/LMT).

The Latvian government has already repeatedly declared that it will not let the Swedish group own both companies, citing competition worries.

If Melngailis proposal is accepted, it would leave TeliaSonera free to execute its "Plan B", to acquire 100% of LMT and develop it as a full-spectrum operator (wireless & fixed wireless voice, wireless broadband, maybe even TV). Against this, Lattelecom will have to compete (despite any formal agreements on management and strategic decision making) with one arm tied behind its back. 

Over the next three years, Latvia faces both municipal and national parliamentary elections in a time of political turbulence and the possible rise of new populist political movements. One can hardly expect to have the government as a rational partner. Already, the government has changed its mind several times in the last couple of months about what to do with Lattelecom -- sell, keep, sell again, auction, etc...

All I can say is -- good luck!

Bedding down with da Latvian guvmint??!

I was in Stockholm at a seminar for a couple of days, listening to some well-reasoned arguments as to why TeliaSonera would be a great owner (100%) for both Lattelecom and LMT. I missed covering the meeting between TeliaSonera's Kenneth Karlberg (who gave the presentation in Stockholm and went to Riga the next day). But the Latvian media are reporting that:

Lattelecom CEO Nils Melngailis and The Blackstone Group are willing to buy 49 % of Lattelecom from the Swedes for a proportionate share of the LVL 290 million that the original MBO consortium (including four banks putting up LVL 200 million) were willing to pay for all of Lattelecom.
I am still trying to get details, but this looks a little wacko at first glance. The questions I have are:

1) Are the banks out of the picture and Blackstone is willing to up its stake to just over LVL 142 million? I would think the banks breathed a sigh of relief once the prime minister torpedoed the MBO and they could redraw their credit budgets for the year.

2) Is Blackstone crazy? Do they have any idea what presenting business plans, etc. to the largely (and understandably) ignorant-on-these-matters Latvian government means? Do they know what will happen if all state procurement procedures are applied to Lattelecom for any and all major investments? It seems they may have some management independence agreement in mind, but still...
Latvian governments have been twisting and turning around the issue of privatization of Lattelecom since 1998. There is no reason why they can't continue for another 10 years. A new spasm of what has been called (in Latvian) "the wandering of cattle" has started in Latvian politics, two parties, one in the government, one in opposition, are cracking apart, and at least two new political organizations/parties are being formed, one of them by the former minister (Aigars Stokenbergs) who told TeliaSonera in 2006 that they would never get to buy Lattelecom. My old friend and neighbor from when I lived in Stockholm, Atis Lejins of the Latvian Foreign Policy Institute says he will drag the splintered and damaged Latvian Social Democratic Workers' Party back from the political Phantom Zone (where evil superheros were banished in the Superman comic?). Do I hear the bellowing of the baboons and the w00-haahaahaahaa of the toucan down at the zoo (which is, I kid you not, where they picked the current president of Latvia, at a cafe in the Riga Zoo). There is going to be a political zoo in this country, so let the politicians control 51 % of Lattelecom??

3) Do management and staff get anything out of this? I suppose it would have to be approved by both shareholders. Even under 100 % TeliaSonera ownership, at least some of management might be able to participate in group level share options.

If this proposal succeeds, then at least TeliaSonera comes out with some folding money and the ability to work on their self-admitted plan B, to make the mobile operator LMT a strong competitor to all other service providers, expanding into mobile broadband, fixed wireless business and home services, even TV .

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.  

Melngailis last stand - why?

Why is Lattelecom CEO Nils Melngailis, whose MBO plan was rejected by the government and who was removed (for no clear reasons) as board chairman, still hanging on?
One explanation is precisely that -- no clear reasons for him to "take the hint" and resign. Lattelecom has performed well in its financial indicators, and proposing an MBO that was initially accepted by both shareholders is not a a breach of trust as some Latvian commentators have suggested. Were this so, there would be very few MBOs in the world, as any management member proposing one would face dismissal for disloyalty, breach of trust and the like.
It is clear, however, that the Latvian government does not want Melngailis running Lattelecom, and TeliaSonera, the other owner, is probably not completely at ease with him. However, neither side can really show cause for his dismissal, so that it is an issue of honor for Nils not to resign "under a cloud" that has nothing of substance in it. Indeed, to propose the MBO and to get so far as to have The Blackstone Group and a bank consortium assembled, ready to execute, was a high risk move, showing entrepreneurial courage. It should, in proper context, be a significant merit on Nils CV even though it was ultimately torpedoed by the Latvian government.
Melngailis was recruited and hired to lead Lattelecom, to be a strategist (coming from IBM's Business Intelligence unit), not as a hard-charging, win-at-all-costs dealmaker. That he got as far as he did with the MBO is remarkable, given that, on the government side, we are dealing with capricious and irrational decision-makers.
Which brings us to the next question: WTF are Blackstone still doing here? If they want to buy 49 % of Lattelecom and share it indefinitely with the loonie-tunes 51 % government owner, there is a bridge that many Blackstone execs cross every day that may be for sale...
Here, again, the reason may be Blackstone's reputation as hard bargainers -- bulldogs, as one source put it. So they are playing out the bulldog role until -- I think quite soon -- they will drop their end of the bone.
An interesting question -- what about the four banks who are putting up LVL 200 million of the LVL 290 million deal. How long can they provisionally budget significant funds (around LVL 50 million from each) that will never be lent. Isn't it time to write off this deal and rebudget the lending plan for 2008?
My prediction -- the whole thing will be dead by Easter, Blackstone gone and Nils heading for a continued international career in a less irrational business environment. The next confrontation may well be TeliaSonera against the government's efforts to force it to sell out. A straight deal, Lattelecom shares plus cash for Latvian Mobile Telephone (LMT) and basta was also ignored by the government. They are the wavering, paranoid (everyone will sue us), hallucinating (many will come to an auction of Lattelecom), insecure and blatantly ignorant (of international business practices) villain (or simply idiot) in this whole game.

What sucks? Yahoo? Dulles Airport WiFi??

Another Foxtrot, Foxtrot Sierra* moment as I cannot get into my Yahoo e-mail (I am logged in, just doesn't click through to my mail) here at Dulles International waiting to fly back to Latvia via Frankfurt (I was at Lotusphere 2008 in Orlando). Is it Yahoo (time to switch completely to Gmail???) or the Dulles Wifi? Dumbassedness seems to be abundant here, I can hardly see what I am writing while sitting in a waiting area seat (ok, I could move...) because the bozo architect who did the terminal (a huge indoor hiking area) apparent;y wasn't taught about the sun (as in low winter sun shining blindingly through the windows). Hello! Photosensitive awnings?

*for fuck's sake!

Mike Rhodin's keynote at Lotusphere 2008

Here is part of a keynote speech by Mike Rhodin, general manager of Lotus Software/IBM. It was very difficult getting this to you. The Disney Swan & Dolphin Resort  internet connection (both Ethernet and WiFi, including the free Lotusphere WiFi)  is simply abysmal or, to put a better spin on it, a trip back to DialUp Land. This has also seriously hindered me in doing videoblogs for my day job at LETA. 

Some of the good news for the Baltics is that Lotus/IBM will be focussing more on small and medium businesses with its announcement of Lotus Foundations (much of the Lotus collaboration suite prepackaged on a server) and of the Bluehouse software as a service project, which will have an increasing spectrum of Lotus functionalities and will be resold through various channels. This is not in the video, however. 

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Dialup nostalgia at Lotusphere 2008

Remember dialup upload speeds? Remember small town America? Once you could experience th latter at a Disneyland Main Street, but now you get the former as well. I am at Lotusphere 2008, the big IBM event in Orlando While my main purpose is to blog and gather information for a magazine article for my day job at LETA, I did some English language video interviews that I thought of sharing with the readers of this blog. Unfortunately, all internet connections (Lotusphere WiFi, paid hotel Ethernet and WiFi)at the Swan and Dolphin Disney resort seem to work at dialup upload speeds of around 5 - 10 kilobytes.  So this stuff will have to wait :(. 

Lattelecom CEO comments MBO rejection

Lattelecom CEO Nils Melngailis comments the rejection of the MBO proposal (would have been the largest transaction in Latvia to date). I filmed this while Nils was speaking to a journalist from Bloomberg News.

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My personal view: It is time for Nils to move on in his career. There is no point in being a masochist in a business environment (Lattelecom's state owner) that is more like a monkey house or an insane asylum that a place where rational choices are made.

Latvian government kills Lattelecom MBO

The Latvian government has rejected the LVL 290 million management and staff buyout proposed by Lattelecom CEO Nils Melngailis and financed by The Blackstone Group and a consortium of banks.
Prime Minister Ivars Godmanis proposed, instead, that TeliaSonera sell its 49 % holding in Lattelecom to Blackstone or someone else, getting a chance to buy mobile operator LMT in return. At some undefined time in the future, the government will then auction its 51 % share of Lattelecom to a select shortlist of serious European Economic Space (European Union plus Switzerland and Norway) companies but NOT TeliaSonera.

First impression-- I was right that this deal would be effectively killed by the government.
The government's scheme is, to say the least, bizarre. It rejects the only "serious EU telco"that has been trying to buy Lattelecom for the past five years on specious anti-monopoly grounds. There is no one I can imagine who would bid for Lattelecom, a fixed-network only company 49 % owned by god-knows-who (if Blackstone, as one would expect, politely declines to buy in and have to deal with these lunatics).

Look for Blackstone and Nils Melngailis to bow out soon. TeliaSonera may make one last bid, but probably write off its holdings in Lattelecom as a stranded investment.
The company will flounder for a while, no one will come to the auction, and the state will have effectively screwed up a potentially powerful Latvian company.

I am somewhat saddened to have been right...

Another day, another idea...

So now it seems the Latvian government, having defacto rejected the management and staff buy-out of Lattelecom (the new government has not even set a date for talking to CEO Nils Melngailis about it, a subtle way of showing the middle finger to him and his ideas on top of the previous government stripping the man of his Lattelecom chairmanship), and having dismissed a proposal to privatize Lattelecom through the Riga Stock Exchange, then having said it wants to keep the status quo and hope TeliaSonera finds someone to buy its 49 %, now says it wants to talk to TeliaSonera again.
Well, Foxtrot Foxtrot Sierra*, where was the Latvian government in 2004, when TeliaSonera offered to pay something like SEK 9 million (or maybe it was USD) just for starting talks with the Swedes by the end of that year?? Nothing happened. Nor did anyone hold any kind of talks until 2006, when the sides agreed to do separate valuations of Lattelecom and mobile operator LMT in order to go ahead with a swap of TeliaSonera's holdings in Lattelecom for the rest of the state's share in LMT. Then that deal was never done. Then came the MBO proposal, also effectively dismissed.

So now what?

1) Nils should seriously consider working for someone who is not majority owned by a wacko banana republic loonoid government.
2) TeliaSonera should write off its 49 % in Lattelecom as a stranded investment that may yield a few more dividends.
3) TeliaSonera should focus on making LMT a full spectrum, mostly wireless electronic communication service provider, including fixed wireless phones, high speed wireless internet (HSDP, WiMax), wireless cable TV, and wireline broadband (fiber to the home) where possible

*for fuck's sake

A half-mother forever?

The latest twist in the Lattelecom saga that I can discern from where I am -- vacationing in Orlando, Florida-- is that the government of Prime Minister Ivars Godmanis wants to keep the state's 51 % share of Lattelecom and let TeliaSonera do as it pleases with its 49 % -- preferably sell it.
What this means is that the Latvian government -- seriously -- is telling the Swedes to find someone to pay for sharing a bed with a proven capricious majority owner. Under Latvian law, the government has the right of first refusal, which takes us back to the situation before the MBO proposal, when TeliaSonera offered, in effect, to let Lattelecom be nationalized in return for getting 100 % of Latvian Mobile Telephone and even paying cash to the government. 

Latvia has a new goverment, but the muddling, bumbling and equivocating on the privatization of Lattelecom has not stopped. 

Is there a serious private investor -- a mutual fund, whatever-- never mind a telecoms operator, who would share owning and running a fixed-network only company with this kind of co-owner? Unlikely.  You have something that looks very much like a stranded investment, TeliaSonera. 

Back to the Bourse for Lattelecom?

The Riga Stock Exchange (owned by Sweden's OMX) has proposed organizing an auction of stakes in Lattelecom as an alternative to the MBO proposed by CEO Nils Melngailis. This has been proposed earlier by the RSE in somewhat different form. It is a plan that passes the Alfred E. Newman test "not insane". It will end up giving Lattelecom to TeliaSonera and a few other bidders, probably at a lower price, if the Swedes can be persuaded to divest and buy back their 49 % stake.
I am in the US at a borrowed computer, hence writing this in a somewhat different style.
Whatever happens, I am still convinced that the Latvian government will "sink" the MBO, get rid of Melngailis and effectively slash the price of Lattelecom for some future sale process, be it an auction or something else.

Merry Christmas and all other seasonal holidays!

 A Merry Christmas to all my readers who celebrate the holiday. I have apparently missed Hannukah (it only sometimes falls on the same dates as Christmas, but I do hope that any Jewish readers celebrated it well).  And yes, a Happy Kwanza, to any African-American readers who follow this tradition (around Christmas time, if I am not mistaken) as well as, I suppose, any Africans. Maybe I should stick to Season's Greetings and stop struggling to do the ethno-politically correct thing for everyone? :)  

Oh yes, and a Happy Solstice (Saulgrieži) to any and all Latvian Keepers of the Diety (Dievturi).

Did I miss anyone?

Blackstone honcho outlines what could be

I had an opportunity to do a phone interview on December 20 with Walid Kamhavi, a Blackstone managing director (they have many) connected with the foundering management buy-out of Lattelecom. 

The odd part is that I published a complete translated transcript of the interview on my Latvian-language blog(can be found through www.nozare.lv  almost immediately --I simultaneously translated and transcribed. But I am not really up for listening to the whole thing again (unfortunately, I leapfrogged to videoblogging, skipping podcasting along the way).

So here are the main points:

--Blackstone can offer many synergies to Lattelecom, since it hold stakes in several telecoms companies (Deutsche Telekom, TDC) and telecoms related companies (some wireless and cable outfits listed on their home page). It can also offer economies of scale in certain kinds of purchasing and sophisticated financial advice and contacts should Lattelecom or any of its subsidiaries want to tap the capital markets. 

--Blackstone is partnering with the present management of Lattelecom (Nils Melngailis) and any change would mean a review of their commitment.

--at some point, the passage of time will erode the anticipated benefits to all parties to the proposed deal (a nice way of saying -- delay long enough, and the thing will fall apart, which I believe is exactly what the Latvian government wants to happen).

--should the deal go through, Blackstone does have an exit strategy, but this is a long-term project that would involve growing the value of Lattelecom with the engagement described above. The eventual divestment could be within the telco industry, as a merger or consolidation (again, presumably in telecoms), or to new financial investors (another Blackstone-type outfit).

All in all, it was a fair view and shows that contrary to the hallucinations of some Latvian commentators, Walid and his team are not George Soros' handpuppets nor mere speculators tossing their telecom roulette chips on the table and standing back to wait for a win. 

Alas, I view Hell as a place where journalists spend eternity transcribing interview recordings, so I probably won't do the English-original version unless the Christmas spirit and long Christmas holidays take their toll. 

The reason I rushed to do the Latvian-translated version was that I saw the Dienas bizness (my former workplace) journalist come in after me (at the Lattelecom office) to do her phone interview and presumed they would put something on their website immediately. They did, but it was a rehash of my Latvian blog. The article with some different nuances, was published the next day.

Another death knell rings for the Lattelecom MBO

Sorry, folks, for being a bit behind on this, but the outgoing Latvian government on December 18 decided not to extent the memorandum of understanding with Lattelecom, The Blackstone Group and the bank consortium and TeliaSonera regarding the management and staff buy-out proposed by Lattelecom CEO Nils Melngailis.
The issue will be decided by "the next government", in effect, the present government 2.0 (shaken and stirred a bit), where attitudes and opinions are unlikely to change.
My call -- the whole thing will be muddled around until 1) Blackstone backs off and the consortium falls apart 2) Melngailis resigns. At the end of a day lasting 2-3 years, we may see TeliaSonera at last collecting what it has been waiting for -- both Latvian Mobile Telephone (LMT) and whatever is left of Lattelecom.
An outside chance is that the new government will organize (after a decent interval) some kind of MBO or sell-off 2.0 that will have the "right" bidders, including local interests. Though it is strange to bleed something half to death just to get your claws into it...

PM nominee hopes for decision on Lattelecom

Ivars Godmanis, nominated by Latvia's president Valdis Zatlers to form a new government, has said he hopes to settled the issue of Lattelecom privatization, either by going through with the management and staff buy-out proposed by partly-deposed Lattelecom honcho Nils Melngailis, or by selling the company (along with the remaining state holdings in Latvian Mobile Telephone/LMT) to TeliaSonera.
Unfortunately, Godmanis (of the Latvian First Party/Latvian Way merged entity) has to deal with his future coalition partners, where the nationalist Fatherland & Freedom has opposed the MBO, with the positions of the others unclear (even though the same political salad backed the MBO deal in principle during the summer). My prediction -- more muddle well into the next year and Melngailis and Blackstone leaving the scene still very likely.
This presents both an opportunity and a problem for TeliaSonera, the only realistic potential buyer of Lattelecom (regardless of whether it is sold by open auction or as an item hanging inside the coat of a shady street peddlar). If the government abandons the MBO but nationalizes Lattelecom (and lets the Swedes buy LMT), TeliaSonera ends up holding two contradictory means of payment. One is the shares in Lattelecom, whose relative value will plunge(simply on uncertainty) once the MBO crashes , and the other is cash, which will have to be paid for LMT anyway above and beyond the share swap. In other words, the whole thing will cost more cash.
If TeliaSonera buys both companies, then, of course, the total cost will be less because of the diminished value of a leaderless Lattelecom (after the deal, of course, it will be run by a CEO sent by Stockholm to run the company as a division of TeliaSonera responsible for the Latvian market)

Two, three, many MBOs spooked TeliaSonera?

One of my sources tossed out this interesting theory of why TeliaSonera, while it agreed to the Lattelecom MBO, was also disturbed by it.
"They were thinking if Lattelecom can do it, so can other non-wholly-owned subsidiaries,"the source said. The Swedish company was worried that Elion and Estonian Mobile Telephone (EMT) (which it owns 59 % each) and TEO, the Lithuanian fixed-network and broadband operator, owned 60 % by TeliaSonera, could get subversive ideas.
I have never heard any such rumors from Estonia or Lithuania, but it is an interesting thought experiment. All four Elion, EMT, TEO break free and then join up in one pan-Baltic company, putting Humpty-MicroLink back together again in the process and making a small IT/nearshoring and data transmission powerhouse to sell services to eastern and western markets.
Would The Blackstone Group, in the process of being burned by the Latvian government, be interested in financing such a coup? After 6-8 years, a Balttelecom with customers in the Nordic countries, Russia, Ukraine and Belarus might fetch a good price should Blackstone or some other private equity consortium then want to exit.
Sorry, TeliaSonera, I didn't scare you for Halloween, so I'm doing it now :).

Lattelecom honcho's next-to-last letter

Nils Melngailis, the deposed board chairman but still managing director of Lattelecom has written a letter to the company's owners (Latvian government 51 %, TeliaSonera 49 %) stating that the present state of affairs presents commercial and legal risks. Lattelecom does not have a fully functional management structure in the absence of a permanent board chairman. The government has not named anyone despite effectively firing Melngailis.
As I see it, this letter is the next to last before Nils resigns and the MBO collapses. The government will then get letters from The Blackstone Group and the bank consortium stating that they have withdrawn as financiers of the deal. That will be the end of it.
What the government does afterwards is hard to predict, except that whoever replaces Nils will face all the same problems exacerbated by almost a year of indecision. Put simply, the mobile operators are capable of starting to eat Lattelecom's lunch by offering flat rate deals and quality of service guaranteed wireless broadband (at least at select locations) that is as fast as Lattelecom's DSL (10 Mbps).
Until a final resolution of Lattelecom's ownership is reached (this may take a few more years, seriously! ) the new CEO will face the same issues as Melngailis -- limited opportunities to expand outside of Latvia and no possibility to go into mobile services.
It may all end in 2010 with TeliaSonera or TeleNordica (TeliaSonera + Telenor) or Telefonica Norte or whatever buying Lattelecom at a firesale and making it the fixed network internet and IP TV division of Latvian Mobile Telephone (LMT).

Kenneth Karlberg (TeliaSonera) talks about data roaming

Kenneth Karlberg, head of Mobility Services at TeliaSonera, speaks about mobile data roaming and the advantages the Baltic countries have over countries with legacy-bound mobile services. This was filmed after a seminar in Stockholm on December 10.

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A last chance for the half-mother? Or sue the bastards?

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.

Lattelecom CEO fired, essentially...

The shareholders of Lattelecom (Latvian government 51 %, TeliaSonera 49 %) declined to extent the mandate of Nils Melngailis as managing board chairman of the company. He will continue as managing director, but the move is seen as a clear expression of no-confidence in his plans for a management and employee buy-out of Lattelecom. The decision also effectively torpedos the 300 million LVL deal which depended on Melngailis and his team continuing to run the company. Among the intended investors in the MBO was The Blackstone Group of the US, one of the world's largest private equity companies.

Lattelecom CEO out, but not...?

The Supervisory Council of Lattelecom has decided on December 6 not to recommend the extension of Nils Melngailis mandate as a member (and chairman) of the Lattelecom Managing Board while recommending to shareholders the re-election of two other board members whose terms expire in a few days.
The stakeholders (Latvian government 51 % and TeliaSonera 49%) are holding an electronic meeting on December 7 to vote on these recommendations.
The council's actions amount to a defacto dismissal of Melngailis, but no replacement candidate has been recommended. Supervisory Council chairman Gundars Strautmanis predicts that despite the Council's recommendations, Melngailis will be re-elected and also continue to work as managing director (CEO) of the company, a position theoretically unaffected by his loss of a board seat.
Meanwhile, lame-duck prime minister (his government resigned on December 5) Aigars Kalvitis says this is the best time to privatize Lattelecom (!?), a surprising reversal of the government's defacto rejection by delay of the MBO offered by Melngailis with a consortium including several banks and The Blackstone Group to finance the deal. The fact that the government has apparently voted against recommending re-election of Melngailis also amounts to a rejection of the MBO, even though some officials say this is not so.
My interpretation -- make things such a murky mess that the MBO consortium, especially Blackstone, will go away all by themselves. Then, perhaps, the carcass can be divided among local vultures...:)

Nokia's mobile journalism solution

qwdzbHere is a video of a rather chaotic talk with a Nokia person about Nokia's mobile journalism solution (an experiment) for Reuters. The press room situation has improved slightly, it seems you click on downloading the Boingo app but them (and no one tells unless you ask) you get offered free WiFi for the Nokia event. I have actually managed to get a LAN wire and a mooch socket (to recharge/run my MacBook) but earlier it would have been impossible. There were people sitting along the walls in this press room. The pressure is off a little.
The event has been interesting, for example, Chris Anderson of WIRED (on how more and more stuff and services will be " free" ) and others talking about (Joseph Paradiso of MIT) talking about ubiquitious sensors and Google for Reality (finds your sensor-traceable possessions) and other rather far out stuff.

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NokiaWorld-- the good news :)

There is lots of good news from Nokia World, some interesting presentations (Chris Anderson, editor of WIRED, among others) and the stunning announcement that Nokia would be giving away downloads of all of Universal Music's collection for one year with the purchase of any music-capable phone. Also Nokia internet radio sounds interesting, I could listen to Boston's WZLX anywhere on my phone. Just wonder what it would cost in terms of connection fees - data transmission charges and the like.  I hope to upload a video interview with a Nokia guy on their mobile journalism project, but the press room facilities are still crowded and barely adequate (did get the deceptive free WiFi to work after being told the non-obvious way to start it up, 

Clusterfuck award 2007 -- the Nokia World Press Room

Sometimes going to international events, I make a bet with myself that something may happen to justify the use of the term clusterfuck. It happened at 3GSM World in Barcelona in 2006, where the Qualcomm sponsored press room went down-- no power, no internet, almost nothing. It did get fixed later.
This year's clusterfuck award goes to the Nokia World press room in Amsterdam, which promises free WiFi but actually tries to drag you into a Boingo subscription through a one week free trial with software that can only be downloaded for a PC (I have a Mac) or a Nokia phone. In addition, there are almost no power outlets for one's own laptop in the press room, just lots of IBM think pads or some other faceless laptop chained to the table and attached to a LAN. I am not happy unplugging these or mooching the LAN, but I will do that. What else can I do.

Oh yes, and the press work room is severely overcrowded. No place to sit, no place to mooch a LAN cable. No internet connection unless you join BoingoWorld. Doesn't anyone arranging these events ever learn that it is bad to fuck with the press?

Good news-- OVI, the Nokia WebNG (as in next generation) application/platform will be available for Mac. Well, as the Swedes say – good morning axe handle at last! Also, all Universal Music's songs will be available for free download for a year on any new Nokia music capable phone. Great news for kids and 20 somethings and yes, I have an iPod and an N95 too!

More later. Gotta write for my Latvian blog who is paying salary for me to be here.

Melngailis kicked -- it's semioffical

Acting Latvian economics minister (and Minister of Justice) Gaidis Berzins told journalists he saw no legal or economic reason to extend the tenure of Lattelecom CEO Nils Melngailis. Berzins qualified the statement by saying it was his personal view, but the ministry he heads (after the resignation of Minister of Economics Jurijs Strods) is the holder of the state's 51 % share in Lattelecom. This effectively torpedos the LVL 290 million management-employee buy-out that Melngailis had proposed as a way of breaking the defacto deadlock and uncertainty the company faced because of its unresolved ownership issues. TeliaSonera, which owns 49 % of Lattelecom was told that the government would not sell it the rest of the company. The Swedish group has been asking for years to get 100 % or at least a majority in both Lattelecom and Latvian Mobile Telephone (LMT), where it currently indirectly (through a proportional share of Lattelecom's 23 % of LMT ) holds a majority. It appears the Latvian government, which will resign on December 5, will not do....whatever...

Report: Government effectively fires Lattelecom CEO

The Latvian daily Diena reports that Nils Melngailis, CEO of Lattelecom, has been effectively fired by the Latvian government. Minister of Justice and acting Minister of Economics Gaidis Berzins reportedly told Melngailis that the government, which owns 51 % of Lattelecom, would not extent his tenure as chairman of the management board.
The newspaper points to Melngailis support of a management-employee buy-out of Lattelecom as the reason for the government's step. Reported Baiba Rulle suggests that former prime minister and founder of the ruling People's Party, the so-called oligarch Andris Skele may be behind the effort to unseat Melngailis.
She earlier wrote that Melngailis brought the large US private equity group Blackstone into the MBO deal in order to checkmate efforts by Skele to get a piece of Lattelecom. Skele has been known for making extremely complex and byzantine arrangements to take an almost untraceable interest in major projects. He allegedly backed the discredited Latvian TV digitization project through several layers of offshore companies.

Lattelecom CEO's fate in the balance

The owners of Lattelecom, TeliaSonera (49%) and the Latvian government (51%) were discussing on November 30 the fate of CEO Nils Melngailis and two other executives whose mandates expire December 10. A decision, based on the recommendations of the owners, will come next week (after December 3) at the earliest.
According to my sources, the Swedes, by not objecting to Melngailis plans for a management and staff buy-out of Lattelecom have indirectly declared that they want to keep Melngailis as CEO and not upset the status quo. TeliaSonera can only gain by getting out of its nearly-stranded investment in the fixed-line operator and getting a full 100% of Latvian Mobile Telephone (LMT) The government, however, seems to be considering dumping Melngailis, possibly as a way to back out of the MBO for reasons, so to speak, that lie beyond conventional reasoning.
The deal has already been shaky since the Latvian government's present crisis (prime minister Aigars Kalvitis has set an on-again, maybe off-again resignation date of December 5), which arose for reasons unrelated to the Lattelecom deal. If it goes down (rather than goes down :) ), Melngailis would resign anyway.
As to what happens next - I would say -- Nils gets an international position somewhere, with the usual hassles of moving residence and family, while Lattelecom faces the consequences of what can only be described as a typical, but in this case, very large-scale Latvian clusterfuck. TeliaSonera continues to sing the role of the half-mother Agonistes in this increasingly bizarre telco opera.

Alcatel-Lucent presents its WiMax solution

I just spent a day (as in get up at 5 AM, fly to Paris, watch a couple of hours of presentations, get back home just before midnight) at an Alcatel-Lucent WiMax event. It was on short notice and felt a bit improvised, but apparently the Alcatel-Lucent people wanted to make that everything was running as it should. The only thing they forgot was the "Don't try this at home" signs for the young man and woman who took turns riding around on a Segway while using a mobile WiMax terminal (a subcompact laptop with a camera).
On the way down, I went through Copenhagen Airport, which is rapidly developing the status of a monster airport, soon to challenge Frankfurt (as I remember it, last transit there was to Australia in 2003). Try kilometer walks between connecting flights. The airport has grown from being comfortable to a monstrosity that it takes, perhaps, 30 minutes to cross on foot in a rush, ignoring all the shops, restaurants, etc. etc.

I only have one thing to say about Paris Charles De Gaulle: the use of bad hallucinogenic drugs by French architects in the 1970s (or whenever the wacko thing was built). Also, the brilliant idea of separating the public toilets from the waiting area with the security checkpoint in Satellite 7 (WTF is a satellite, some mushroom munching froggie's cool idea while the other guy at the architect's office has left his drawing board and is giggling and shaving the office cat?)

OK, here is a video of my chat with Hyam Bolande, the American marketing director for Alcatel-Lucent's marketing director for its wireless business group. It will also be posted on my Latvian-language blog:

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Cisco's Kaan Terzioglu visits Latvia

Cisco honcho Kaan Terzioglu (vice president Central & Eastern Europe) visited Latvia and sat down for a talk with this blogger (also for my Latvian-language blog). We discussed Cisco's new program to invest in high-tech companies in the region as well as e-government solutions and the future of the internet. Here is the video:



Yes, I know he has the kid's arms coming out of his head :). Videoblogging is a learning process.

TeliaSonera's broadband honcho speaks

While in Stockholm on Friday, November 16, I had an opportunity to interview Erik Hallberg, TeliaSonera's head of Broadband services. He has a few interesting things to say about HDTV, the rising demand for bandwidth, fiber to the home, and whether telecoms operators will become media companies. And, oh yes, some remarks about the relationship between content providers and operators increasingly selling flat-rate commodity services.

Here is the video:

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TeliaSonera Mobility honcho speaks

Lars Klasson, CTO and Vice-President of TeliaSonera Mobility Services talked to this blogger in Stockholm recently about mobile broadband and other issues. Here is the video:

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Fuckwit packaging designers at Phillips

The reason the US troops in Iraq don't have enough armor is simple-- some kind of transparent Kevlar is now being used for packaging most small computer or electronic accessories. To open any of these things requires serious, heavy duty shears and practically cutting the stiff plastic package to ribbons. What fuckwit designed these packages? I understand we want to protect, say, that flash drive that will be obsolete in three months (when 16 GB cost what 4 GB do now) or to encase some other gadget worth under USD 100. But we are not, for fuck's sake, going to submit any of these products to re-entry from orbit or a shotgun blast. 

 I am surprised that consumer electronics stores are not selling some kind of superscissors for cutting open these packages, where it can take 20 minutes just to get at your headphones or USD 20 flash drive.

I just bought a LVL 7.99 set of headphones made by Philips, which, while it hadn't sealed them for eternity behind transparent Kevlar armor, had looped the wires around the inner cardboard packaging forcing me to rip the whole thing to shreds. Dutch ingenuity? Fuck yeah! Try to open the box and get your item out in a rational way!

Best English Bookstore in the Nordic region?

This may seem like an offtopic, but it isn't.  While reading the most recent edition of WIRED magazine, I found myself eyeing the latest Sony reading gadget. A bit expensive at USD 299, plus there is the Amazon Kindle, just announced (even more expensive at USD 399), but that probably doesn't work for downloading reading material outside the US. 

I experimented with an early electronic book some years ago, the Nuevomedia RocketBook, I think, which was a flop with little to download. Anyway, I the technofreak find that I still prefer (or have to settle for) the physical book. Or to be more precise, I buy the physical book through Amazon.com and, living in Latvia, rarely see a good English-language bookstore. Certainly none in Riga.

Thus I was pleasantly surprised to have a few hours to kill in downtown Stockholm, where I rediscovered Hedengren's Bookstore on Stureplan in the Sturegallerian shopping center. This is less a Swedish than a remarkable multi-lingual bookstore with a vast and often fascinatingly obscure collection of English-language books. Lots of weird popular science titles on physics and cosmology, history and military history, walls of literature and science fiction. A great way to browse, tons of books stuffing shelves, remind me of Foyle's in London, the shelves a bit crowded. Unfortunately, Swedish prices for foreign language books are a bit steep, but it is a good place to examine a title before ordering it from Amazon in the US (even with delivery in Latvia (usually via a warehouse inside the EU).

So if in Sweden and pining for a good browse of English books (yes, there are even comfortable chairs here and there, you can sit and leaf through a volume, no one says anything, there are nice books of art and photography), do try Hedengren's . 

Any yes, by the way, I do believe that electronic books, using thin electronic paper and an open universal method of accessing downloads (WiFi or wireless internet) have a future. I look forward to them, but for now, I am, alas, sticking to the paper kind. 

Mika Sarhimaa on HP's challenges in the Baltics

Mika Sarhimaa, the new managing director of Hewlett-Packard Oy, which also covers the three Baltic States, talks about the challenges and opportunities of working in these markets. The interview was conducted during an HP event in Riga at the Radisson SAS Daugava hotel on November 13. Here is the video:

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Alex Sozonoff of HP discusses Web 2.0

Alex Sozonoff, a retired Hewlett-Packard executive and chairman of HP Finland & Baltics, sat down with this blogger to talk about Web. 2.0 and its impact on business and business IT. Here is the video:

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No chance of a Lattelecom deal in 2007

Latvia's acting minister of Economics and Justice Minister Gaidis Berzins (Fatherland &Freedom) has said there is no chance the present (disintegrating--JK) government will approve the Lattelecom management and employee buyout (MEBO).
The government is expected to resign on December 5, the same day that beleaguered Prime Minister Aigars Kalvitis has said he will step down. Kalvitis was under pressure to resign because of a number of political scandals and controversies unrelated to telecommunications privatization.
Lattelecom management led by CEO Nils Melngailis had hoped to seal the LVL 300 million deal involving The Blackstone Group as a equity partner by year's end. It now looks like Latvia could be under a caretaker government or facing political turmoil, perhaps including dismissal of the national legislature, the 100-member Saeima, well into 2008.
The political situation along with increasing uncertainly on financial markets around the world increases the liklihood that the Lattelecom MEBO will simply be muddled to death. See my earlier posts.

Tele2 open to Lattelecom on its network

Tele2 in Latvia is open to the idea of Lattelecom starting a virtual mobile operator on its network, Tele2 Latvia CEO Petras Kirdeika told this blogger.

Kirdeika said Tele2 would consider a commercially viable proposal from Lattelecom or any other operator wishing to lease part of Tele2's mobile network.

He said that the company would also be ready to negotiate a co-financing agreement if Lattelecom's (or another operator's) needs required the building of additional network capacity.

In reporting its third-quarter results, Tele2 said it had built a record 50 base stations across the country during the period.

Lattelecom CEO Nils Melngailis has said that if the company succeeds with its MBO, it will have to move quickly to offer mobile services in addition to fixed line telephony and internet. Bite Latvija, which has hitherto been open to virtual operators, effectively declared a moratorium on new actors on its network after being purchased by  Mid Europa Partners, a private equity company. Kenneth Campbell, CEO of the Bite Group, told this blogger (as reported in the magazine Kapitāls), that Bite's priority was to strengthen its own brand. 

He let it be understood that Lattelecom was such potentially strong brand that it could not be allowed to cannibalize Bite's potential and existing customers.

Tele2 Latvia's CEO on 3rd quarter results

Petras Kirdeika, CEO of Tele2 in Latvia, talks about third quarter results. Last year (2006), Tele2 was ranked as the most profitable company in Latvia. Here is the video:

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Lattelecom MBO not on the agenda

The proposed management and staff buyout of Lattelecom is not on the agenda of the November 6 meeting of the Latvian Cabinet of Ministers and it looks like this matter will be delayed indefinitely. Despite two valuations made by Ernst & Young and the Swedish-based investment bank Carnegie, the acting Minister of Economics Gaidis Berzins says that no official valuation of Lattelecom and Latvian Mobile Telephone (LMT) has been made (according to lengthy official tender proceedings to find the valuator, etc. etc.).

Berzins' Fatherland & Freedom Party has expressed serious reservations bordering on outright opposition to the MBO, as has the party's Member of the European Parliament Inese Vaidere, writing several opinion pieces in the Latvian media.

The postponement of the decision on the MBO is,  I think, the beginning of the end for this attempt to privatize Lattelecom. The matter will be dragged long into 2008, debated in a fog of bizarre conspiracy theories and wacko economics, and finally muddled to death. 

Lattelecom MBO prospects darken

With the Latvian government falling apart for reasons unrelated to the Lattelecom MBO proposal, and with the remains of the government apparently split on whether to approve the deal on November 6, I see the prospects for the deal going through darkening.
It now looks like the government may disintegrate without deciding, or put off a decision beyond its own rapidly diminishing shelf-life. I was on a very popular TV talk show here with a number of people speaking out on what would be Latvia's largest privatization deal hitherto, including Lattelecom CEO Nils Melngailis and two persons who were actually three government ministers (Ina Gudele as herself, the Special Assignments Minister for E-government and Gaidis Berzins, Minister of Justice and acting Minister of Economics). Ina clearly signaled that she was leaning toward approving the deal, while the two-in one Berzins tilted toward reservations and hesitation. Ina said she had not read the latest government documentation on the MBO and Berzins said it was confidential, but basically dealt with "principles" rather than a yes or no to the current proposal.
Aivars Tabuns, a mildly suborbital sociologist then mocked the confidentiality as if we were addressing a terrorism case, not a business deal and I could largely agree. But then Tabuns insisted that the price of Lattelecom had to be calculated on all the money spent on network investments (more that LVL 500 million) and the market value of all the real estate owned by Lattelecom (as if we were preparing for an asset strip, not a privatization). Peteris Smidre of arch-rival Baltkom, a cable TV and telecommunications group that has clashed with Lattelecom in the past on interconnect and other issues, also said that the only business case he could see at the time is an MBO. Smidre had also indicated his interest in a Lattelecom privatization. In terms of getting a substantial part of the company, were that option open, Baltkom would also have to go to the banks and to private equity, perhaps for a "management buy-in"(if Peteris wanted to exercise some board/managerial control in the deal).
Latvian speakers might be able to watch the show through this link.
A couple of additional considerations have come to my attention:

--The Blackstone Group probably won't wait more than three months, six maximum, for the deal to be approved. Then it will walk away.
--Should the deal fall through, Nils Melngailis will resign as Lattelecom CEO. If it is delayed beyond November 6, Nils will hang on to the bitter end or close to it, but the word is that some of his key staff may be handing in resignations and seeking other work as early as next week if the MBO isn't approved. However, one doesn't know how much job churn there would be anyway.

--according to a valuation of Lattelecom made for the magazine Kapitāls (I write for them as part of my job at LETA) , the company is worth around LVL 300 million as it is now (with a 23 % stake in Latvian Mobile Telephone/LMT), but only around LVL 175 million when the stake is taken out. Although Lattelecom is not traded and all valuations are educated guesses, Nils said on TV that he believed the value of the company had declined somewhat since the MBO proposal was made in the spring.

It looks to me like the muddle scenario is the most likely one. If Nils goes, then I see TeliaSonera getting Lattelecom at the end of a long and rocky road ahead (perhaps a desperately organized public auction in mid-2009) and getting it, probably, on the cheap. This is not the worst case scenario, but neither is it the best. As I think I said on TV, the whole process has been dictated by the government's clear decision not to sell Lattelecom to the Swedes and subsequent refusal (by delay) to do a deal that would have given them 100 % of Lattelecom plus cash for 100 % of LMT ending up in Swedish hands.

Lattelecom future in a muddle

First, sorry for the silence on this blog, I was in the US (Boston and Las Vegas, the IBM Information on Demand conference in the latter) and had little time to attend to this. With the uproar surrounding the Latvian government, it now looks like all options for the future ownership of Lattelecom will simply be put off and muddled away (how do you translate the wonderful Latvian expression nomuļļāts?).
As I wrote in my Latvian language blog, the current proposal for the MBO is threatened by ignorance, muddle(by the government, been at it since 2003 or so on these issues) and hounding (as close a translation of noriešana -- literally, to bark to death). At the moment, it looks like muddle will trump all other cards. However, the hounding has already started (several articles expressing suspicion, questioning the motives of the Blackstone Group, etc.).
One of the strongest critics has been Latvian MEP (member of the European Parliament)Inese Vaidere, allegedly representing right of center nationalist party, but proposing, instead of the MBO, a dirigist arrangement where Lattelecom remains majority owned by the state and is governed by a special law. Vaidere points out that the value of future dividends to the state is, in her opinion, higher than the LVL 300 million that will be paid for the company through the MBO. By this argument, some enterprises should be nationalized to provide revenues for the state instead of paying taxes. Classic socialism.
In a worst case scenario (though not "worst"for those who think a government that finds excuses for firing the head of the anti-corruption agency for minor violations should be dismissed along with the parliament backing it), the Saeima (Latvia's parliament) could be dissolved and new elections called following a referendum on the dissolution. This could drag well into 2008. At present, the government is in disarray, there is no Minister of Economics and even without the president dissolving parliament, the government may yet fall. Deciding the future of Lattelecom is the least of the government's worries.

So what will happen? The muddle will drag on to where the terms of the deal may have to be changed because of unstable financial markets globally and in Latvia (the inevitable crash of the real estate market must come soon). Then the possibly weakened or reshuffled (or caretaker) government will have to decide again. The clamor for a public auction of Lattelecom will increase, but such an event, I believe, will simply lead to it being purchased by TeliaSonera on the open market.

The MBO is not a bad idea, it has been tested with mixed, generally positive results in Europe and the USA, but don't hold your breath that it will go through in Latvia for Lattelecom.

A Swedish touch phone - iPhone challenger?

Sweden's NeoNode will be launching (in Sweden) its very small touch interface phone. I met them last week in Stockholm, but have only gotten around to editing and posting the videoblog today. Judge for yourselves whether we will have an iPhone challenger here:

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One more thing: If you are interested in any of the ads appearing here, please CLICK. I might make some money :)

XBox 360 Live -- A nightmare for parents and children

We bought an XBox360 for my 12-year old son' s birthday (in Sweden, Latvian prices were outrageous by comparison). We also picked up some games. The latest Halo 3 game (also bought in Sweden) came with a free 48 hour Xbox Live trial. The procedure for setting up an account in this service is one of the most time consuming, onerous, fucked-up experiences I have had with any online service -- and I go back to things like The Source in the 1980s. There are layer upon layer of data entry screens, all of which can only be operated by the Xbox360 controller, click and push  A, click and push A for endless repetitions. The code for a free trial of Xbox Live for 48 hours makes nuclear launch procedures child's play by comparison. Every possible piece of information, name, address, date of birth, credit card, gamer id, passwords, etc. has to be entered in this onerous way. Then the fucking service does not work for certain functions which should be available under the free test.

I think this is a classic example of downright customer, child and user-hostile design and policies by Microsoft. 

Sweden's Mondozer to launch widg... err...mondo platform

Mondozer, a 2007 Swedish startup, is going to launch its platform for creating easily accessible informational widgets (which it calls mondos) on  mobile phones (independent of the operator). Co-founder Karl Bohman talks about the company and its plans to offer the platform in the rest of the Nordic countries and, possibly, the Baltic countries.

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Tele2 Latvia negotiating a club music service

Tele2 in Latvia and Dub Tools, a Swedish mobile services developer, are negotiating to offer the club music platform R.FM in Latvia in the next few months. Dub Tools CEO Peo Strömberg talks about the new service below (note: the video was edited for my Latvian blog, so there are Latvian opening and closing titles and the "Latvian spelling" of Strömberg's name, plus some small errors).

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An informal iPhone demo in Stockholm

I finally got to film an informal iPhone demo in Sweden, thanks to the manager of a Macoteket Apple dealership in Stockholm. Here it is...