The half-mother says yes, the government --???

TeliaSonera, the long-suffering half-mother of Lattelecom (49%) has officially agreed to a proposal by Minister of Transport Ainars Slesers to a deal that would essentially nationalize Lattelecom but leave TeliaSonera with 100 % ownership of mobile operator Latvian Mobile Telephone (LMT).
This is an exhumed version of what Minister of Economics at the time, Aigars Stokenbergs proposed in 2006, when he said that TeliaSonera would not be allowed to buy both Latvian telecoms operators. TeliaSonera and the government did valuations of both companies for a share swap and cash payment deal very similar to what Slesers wants to see done. The earlier deal was muddled about and never done.
For TeliaSonera, this would mean that after several years of muddling around the issue, it would at last be settled, even if as Plan B (the Swedes get only LMT). For Sisyphus (Kenneth Karlberg, head of Mobility at Telia Sonera), it means that he gets the stone to the top of at least hill B.
If that happens, LMT will be developed as a company capable of anything that Lattelecom currently offers, at least in terms of telecoms and internet. Lattelecom will be split, as was the Telia branded operation in Sweden, into wholesale and retail units. LMT will probably start a limited fixed line business, while Lattelecom will have very few options for offering mobile services.
TeliaSonera must know that the chances of Lattelecom being ridden into the ground have increased signficantly with the resignation of Nils Melngailis and if the company is nationalized and held 49% by the Latvian State Radio and Television Center (LVRTC), which has little global telecoms experience.
But wait, the Latvian government, like a finicky old maid (this is how Dienas bizness described it), is split on the issue of how or whether Lattelecom should be privatized at all. The Ministry of Economics claims there are legal obstacles to Slesers' proposed deal. The Ministry of Transport gleefully announced that the Swedes had agreed and there were no problems.
On March 28, there will be an extraordinary cabinet meeting to decide this. One side or the other will or could win, but the issue could also strain the government coalition. It would not surprise me that if someone, say, the Fatherland and Freedom party economics minister, mustered enough votes to tilt against Slesers, Slesers would pull his religious-right wing Latvian First Party out of the coalition (including the PM, Ivars Godmanis). If that doesn't happen. there is still the question of, having rejected Slesers plan and given the finger, yet again for the Nth time to Sisyphus, WTF do we do now?
I don't think the wackbat* government has a clue...
* this was defined in an earlier post, I have offered it the the urban slang dictionary online :)

PM: Latvian government split on telco privatization

The Latvian government is split on the issue of privatizing Lattelecom and Latvian Mobile Telephone (LMT) Latvian Prime Minister Ivars Godmanis told journalists following a regular government meeting on March 18.
He said it would be difficult to reach a decision without a vote of all cabinet members, which he said he would be ready to take.
Godmanis also said he would be going to Stockholm after Easter to speak to officials of TeliaSonera about the various privatization proposals.
The Swedish-Finnish telecoms group has said it wants to buy all remaining government stakes in Lattelecom and LMT for LVL 500 million, then split Lattelecom into a whole sale/network and retail/services unit.
The Latvian government has said it would not sell both the fixed and mobile operators to TeliaSonera, citing fears of a monopoly. TeliaSonera has said that, if given no other choice, they would settle for buying LMT alone and develop it as a full service provider, including fixed network services.
Latvian Minister of Transport Ainars Slesers has proposed swapping TeliaSonera's 49 % of Lattelecom for the 23 % of LMT held by the Latvian State Radio and Television Center (LVRTC), effectively nationalizing the company 100 %. This initiative was denounced by other members of the coalition government as an unapproved, individual initiative by the minister. Slesers send an official letter with the proposal to Sweden on March 17, having previously said that TeliaSonera had agreed in principle to the deal.
All plans by The Blackstone Group to get a stake in Lattelecom can be regarded as clinically dead, waiting for the right breeze to topple them over like a dead horse, eyes glazed and tongue hanging out...
The mess continues...

Decision -- on April Fool's Day ??:)

It now looks like a government decision on the privatization or nationalization or continued muddlization of Lattelecom will take place at a government meeting on April 1, not March 18, as previously thought.
The government may have been blindsided by Minister of Transport Ainars Slesers sudden announcement that he backed the nationalization of the fixed network operator by swapping the 49 % stake in Lattelecom held by TeliaSonera for 23 % of mobile operator LMT held by the Latvian State Radio and Television Center (LVRTC).
The other offers on the table, at least nominally, are TeliaSonera buying out all of Lattelecom and LMT for LVL 500 million (you don't often see that much cash on the card table in these parts) as well as a clinically dead offer by The Blackstone Group to buy the TeliaSonera stake and somehow roll the rock from the tomb and bring back Nils Melngailis as CEO.
I hope Nils has been having job interviews, YGTBFC* to come back to this. In fact, even with ironclad management contracts, Blackstone has to be PFC** to even think about sharing ownership with the Latvian government.
I think the April Fool's joke will be that the muddle will continue. The only one who made a decision before Easter was Melngailis and some others at Lattelecom who are departing on that very day, April 1, no joke.
And then there was the move by the Bulldozer (as Slesers was portrayed in 2006 campaign posters). Dramatic, decisive, probably totally batshit.

*you gotta be fuckin' crazy

**pretty fuckin' crazy

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.

New investor proposed for Lattelecom deal

Latvia's Minister of Transport Ainars Slesers has proposed selling TeliaSonera's 49 % share in Lattelecom to a new investor, while TeliaSonera says it will insist on implementing functional separation at Lattelecom if this deal goes through.
Slesers proposal effectively kills any chance of The Blackstone Group participating in the privatizaion of Lattelecom.
According to Kenneth Karlberg, head of TeliaSonera's Mobility business and the Sisyphus who has been rolling the privatization rock up the Latvian government hill for several years, the investor is someone "closer to the government" but apparently an entity that TeliaSonera could do business with. Karlberg declined to name the investor, saying that he was awaiting a formal written proposal to be delivered early next week.
Sisyphus (who may actually be getting the rock to the mountaintop this time) indicated to this blogger that TeliaSonera would still prefer doing a LVL 500 million deal to acquire 100 % of both operators, but if this fails, plan B is to develop LMT as a full spectrum competitor to Lattelecom, including fixed line services. Karlberg said that buying network and copper last mile capacity from a future Lattelecom wholesaler was an option for LMT.
He stressed that any deal selling 49 % of Lattelecom to the new investor would have to include covenants committing the new owners -- call them Brand X and the government -- to implementing the functional seperation of Lattelecom into wholesale network and retail services companies as proposed in TeliaSonera's last letter to the government where it proposed buying both companies.

No decision on Lattelecom privatization

As predicted in this blog, the Latvian government failed on March 11 to take any decision on the privatization of Lattelecom (and the parallel sale of the state's remaining stake in mobile operator LMT).

However, Prime Minister Ivars Godmanis indicated to journalists that the government had not changed its view that both companies should not be sold to the same buyer -- TeliaSonera. The Swedish telecoms group had said it was willing to modify its offer for both operators and promise to split Lattelecom into  legally separate wholesale and retail entities. This has been done in Sweden with TeliaSonera' s network operator Skanova.

At the same time, the government has effectively rejected two alternative bids -- the proposed management and staff buy-out financed by The Blackstone Group and a bank consortium and a "plan B" whereby Blackstone would buy out TeliaSonera' s 49 % holding in Lattelecom and later bid on the 51 % held by the government.

However, even the plan B bid was based on the continued management of the company by CEO Nils Melngailis and the signing of a management agreement that would have kept the government at arms length from Lattelecom.

Melngailis is definitely leaving the company on April 1, and some of his staff have already moved on. Press secretary Maija Celmina is joining the press staff of President Valdis Zatlers'  office. Agris Tamanis, a key executive at Lattelecom BPO is also said to be leaving his post on April 1.  It appears he will be joining a start-up together with social network draugiem.lv founder Lauris Liberts. It is not 100 % certain that Tamanis departure has anything to do with the failure of the MBO and Melngailis departure, but it could have influenced a choice to work with the start-up full time.  Among Lattelecom middle management there also appears to be a sense of uncertainty as to what will happen with the company and the direction set by Melngailis after April 1.

And now for some weird theories:

1) A seemingly frivolous lawsuit by an unknown, small Latvian company, Time Investments demanding participation in the privatization of Lattelecom (now heading for Latvia's highest appeals court) is rumored to be backed by Ventspils business interests and possible investors from Russia. Claiming to be acting on behalf of unnamed investors, Time Investments is seeking to set aside the rights of first refusal of the current stakeholders in Lattelecom and open the privatization to any and all. 

2) Minister of Transport Ainars Slesers is rumored to have supported the MBO and the Blackstone plan B, having seen the implications of rejecting a global American investor and the benefits of having American investment. In the wake of the "giant" Blackstone, other American investors would come to Latvia. Naturally, Slesers business partners and even the minister himself could benefit (if political conditions change) in a legitimate way. Some American deals could go to Slesers business associates and in the future, there could be deals for a then ex-minister.