More on LMT, HAL & the bag man - Lattelecom be slightly afraid

I found out the real story behind the Latvian Mobile Telephone (LMT) offer that seems to suggest the fixed line numbers can be transferred to a mobile operator. They can. What LMT has set up is a wireless "fixed line" phone service, much the way Lattelecom once did with CDMA standard operator Triatel.  The whole thing does run off a GSM SIM card, to which the Lattelecom  number can be transferred as a fixed line number. This baffled me at first, since, generally, fixed line phones don't need SIM cards (except when they are wireless). As for tariff plans, the new LMT home package will be on a semi-flat rate basis, that is, giving more minutes for a fixed price than a normal user can consume in a month (up to 1 500 minutes, unlimited on the LMT network. The minutes in  can be used both for calling fixed and mobile phones (almost perfect convergence?). It is perhaps better than the Lattelecom unlimited flat rate, because with Lattelecom, once off the network or even calling a mobile phone, the money counter switches on.
So Lattelecom  is challenged to some extent. It may have to find a way to offer a similar service, at least to  add a mobile component to its offering, or to join forces and co-sell with LMT, with whom they have had a mutually cool arms-length relationship all these years. Maybe things will change when the never-ending story ends and TeliaSonera, hitherto the half-mother (haven't used that term in a while) is finally allowed to buy out the state and other shareholders in Lattelecom and LMT.

Latvia affirms, yet again, it will someday privatize Lattelecom and LMT

This is beginning to remind me of a black humor headline from way back, when popes were dying frequently -- "Pope dies yet again".
Well, Latvia's Prime Minister Valdis Dombrovskis and not-too-swift Minister of Economics Artis Kampars (he just offered to buy Russian gas at winter premium prices) said, yes, we want to sell off the state shares in Lattelecom and Latvian Mobile Telephone (LMT). Latvian governments have been saying this since the late 1990s and "jack shit" has happened. I think that "jack shit" will happen again in 2011. An earlier Latvian government passed up a chance to sell the state stake in both companies for around 500 million USD (?) back in what the Latvians call the "fat years." Now the government keeps muttering that they don't want to sell to "the Swedes" because that would create a monopoly.
This is horseshit. There is competition on voice telephony with most people in Latvia using mobiles, and fixed domestic voice is no longer tariffed if you buy a package deal -- phone plus internet (optical 100 Mbps or more) and TV. On the cable TV market there is competition and in fast internet as well -- both Baltkom and Izzi offer 100 Mbps on different technologies. The problem is that Latvia cannot politically unfuck itself and get on with getting the government out of telecoms. It also has to realize that there isn't exactly a queue around the block waiting to buy the 51 % stakes in both operators. TeliaSonera is probably it, unless you want to sell to some bizarre, sleazy Russian consortium.
And so the never ending story continues. That is my piece of cynicism to round out the year.

TeliaSonera honcho talks about Latvian telco privatization

Håkan Dahlström, TeliaSonera's head of Mobility was in Riga briefly and sat down for a short chat with this blogger about the state of play on the issue of privatizing Lattelecom and Latvian Mobile Telephone (LMT), now that the elections are over and the old/new government has been voted in by the parliament or Saeima,

Here is what he had to say on video:

Karlberg leaves TeliaSonera, taking Latvia experience with him

TeliaSonera's head of Mobility, Kenneth Karlberg, left or was eased out of his position at the Swedish telecoms group. It was only two weeks after I interviewed him for this blog. Mobility had shown good results and Kenneth was preparing to go (or sent his people) to the Mobile World Congress in Barcelona to look for more suppliers of 4G modems after being the first in the world to launch the high speed mobile broadband service last December.

It looks like Karlberg was discreetly fired from TeliaSonera because of some internal problems with others in top management. Margins and EBITDA earnings were up for Mobility, revenues were almost unchanged despite the recession in Sweden and globally. Things looked good on his watch, perhaps too good and others may have felt threatened that one star was outshining the others. The official press released in its English-language version contains the strange phrase "we need to change certain behaviors and act more like one company". Whose behaviors? And was a strong Mobility pulling ahead of the rest of the TeliaSonera group? I have not had time to scan the Swedish business press for their analysis of what all this means in terms of possible office politics. It is not unique to TeliaSonera, there seems to have been a management "Night of The Long Knives" at the top of Tele2.

As far as this blogger is concerned, Kenneth's departure means that he takes the whole portfolio of experience in dealing with Latvia and the Baltic states with him wherever he is going. There, since he will not be trying to work out a deal to privatize Lattelecom and LMT, it will be of little use to anyone. Indeed, the deal is now in nobody's hands as far as TeliaSonera is concerned (or that I have heard). Anyone who wants to take up where Kenneth (who was in charge of business in the Baltics before TeliaSonera's last reorganization) will have to start more or less from scratch. As far as Kenneth's plans to at least work out the details of a possible transaction despite Latvia's election year (as he says in my videoblog), so that only the price and date would have to be finalized -- well, that has fallen off the back burner somewhere behind the stove. A setback for the privatization of Latvia's two biggest telecoms operators, at least if one thinks selling to the Swedes is not such a bad option.

Lattelecom looking to LTE for its mobile side?

Lattelecom, the Latvian fixed network operator owned 49 % by Sweden's TeliaSonera, may be looking in the medium term to build out a 4G or LTE (Long-Term Evolution) mobile internet network (with voice capability).
With the future of telecoms privatization in Latvia stalled and highly politicized, there is a good chance that in the next three to five years, Lattelecom could end up sold or owned seperately from its distant sister company, mobile operator LMT. Both companies have done little or no cross-selling or integration of their products.
Without some kind of mobile business, any modern telco operator that doesn't want to be a mere ISP (and even an ISP with national coverage) is hobbled. In the medium term, LTE, which hasn't even been allocated frequencies in Latvia, is a viable option. Latvia's mobile operators -- Bite and Tele2 -- have indicated they will go for LTE and its up to 100 Mbps internet speed at some point. Tele2 in Sweden is launching LTE next year together with Telenor, as is LMT's parent TeliaSonera.
Lattelecom is already cooperating with wireless/mobile internet provider Triatel (the mobile internet offering is still in the works) which runs an EV DO network countrywide and offers an unspectacular download speed of 3.6 Mbps (compared to 3.6 Mbps on the GSM/UMTS operators HSDPA networks, with 14.4 Mbps promised soon by Bite).
The Latvian government has yet to allocate frequencies for LTE, but this will happen in 2010. As far as Lattelecom and LMT goes, it still remains for the Latvian government to (as I wrote to the great amusement of a high executive in the Nordic telecoms industry) to unfuck itself on the issue of privatization (i.e. a sale to TeliaSonera of at least all of LMT). With 2010 an election year, this is unlikely, but in 2011, with yet another round of drastic budget cuts upcoming, Latvia may be ready for anyone tossing coins into its begging bowl.

No one first to name a price in Latvian telecoms deal?

NOTE: I got tweeted by an executive at Lattelecom, see below.

The Latvian government seems to have re-opened the seemingly dormant issue of selling its holdings in fixed network operator Lattelecom and mobile operator Latvian Mobile Telephone (LMT). During an October 16 television talk show, where this blogger was one of the journalist participants, Minister of Economics Artis Kampars said the government was ready to consider selling its telecom assets, but added that the most eager (and probably only) potential buyer, Sweden's TeliaSonera, had not named a price in talks with the Latvians in early September. By Kampars' account, that meeting was one where the sides got nowhere by saying: "What do you want for the companies?" "No, you tell us what you are ready to pay." "No, you please tell us what you want..." and so on.

Kampars also repeated what he had said publically a few days earlier, that state assets, including Lattelecom and LMT, would not be sold "on the cheap." TeliaSonera recently completed acquisition of all remaining shares in Eesti Telecom (which, unlike Lattelecom and LMT, is a traded company and already had a majority holding by the Swedes). Telia Sonera was less successfully with Lithuania's TEO, failing to get the necessary percentage of shares to delist the company and force the sale of any remaining minority shares.

I haven't been in touch with my Swedish sources about the latest chapter of the neverending story of trying to buy Lattelecom and LMT, but will try to do so before I leave for the States on Wednesday to attend an IBM conference in Las Vegas (October 25 -28).

Latvia is in dire need of any revenues to patch its budget deficit and, considering that telecoms have not suffered too badly in the crisis and against a background of rising stock markets in Europe and the US, the two unlisted companies could probably be sold for a decent price. Of course, Kampars and the Latvian government will never see another LVL 500 million bid by the Swedes, as was made a couple of years back in one of the "fat years" of real-estate bubble and lending frenzy. Interestingly, the sum is exactly as much as international lenders want Latvia to cut from its spending in 2010 and 2011 (for a total of LVL 1 billion). But that chance was blown. Maybe they could try for, say, LVL 400 million and settle for LVL 375 million -- these are just my wild guesses. Even without the deep recession, which I think will last at least until 2014 in Latvia, the value of any fixed-line network will decline as everything goes mobile and 4G networks appear. So the best bid has already been lost -- maybe it is time to seize the opportunity.

From Twitter: A Lattelecom executive tweeted me that he believes the company will gain in value because of broadband, IP TV and content distribution (IP TV, video on demand and the like). Welcome to the new web order :).

Kenneth Karlberg (TeliaSonera) comments while in Rīga

Here is a short video of TeliaSonera's Kenneth Karlberg making some brief remarks about the telecoms situation in Latvia during a short visit and informal lunch meeting with journalists.

The significance of nothing?

Just met a former Lattelecom person on the street who wondered why I have written nothing on the blog for some time. First, I was in the US for more than two weeks. Second, nothing is happening.
On the other hand, that may be significant in and of itself. The most important area of nothing is with regard to a final ownership arrangement for Lattelecom and LMT, the mobile operator. Other than the government asking the Latvian Privatization Agency (LPA) to get an advisor/consultant (the guy who takes your watch and tells you what time it is) on this matter, nothing is, indeed, happening in the scheme to nationalize Lattelecom (then, maybe, resell 49 % to The Blackstone Group) and let Sweden's TeliaSonera take all 100 % of LMT.
My feeling is that getting an advisor is, in effect, another delaying tactic (though maybe not a conscious choice by the government). The advisor must, after all, study your watch, find the hands or digits and figure out how to hold it so as to tell you the correct time. I don't think this deal will get done by the end of the year. The Swedish side of it is in the summer doldrums, too. Only when schools start in mid-to-late August do things get rolling in the land of endless vacations and crayfish parties.
Once we are in 2009, we are in election territory. There will be bellweather municipal elections next year, followed by national elections in 2010. Surprisingly, there are signs of paranoia among the 100-strong monkey troop that forms the national parliament or Saeima after the failed referendum where around 97 % of those who did vote were in favor of an amendment making it easier for the electorate to dismiss the Saeima. They and the already unpopular government may not be ready to make any controversial decisions, especially about selling "national treasures" etc.
So I don't see the final ownership arrangements for the big players in Latvian telecoms being approved this year and probably not even in 2009 or 2010. Unlikely, at the least. But one must be ready for many surprises in Latvia and, rarely, one of them may even be pleasant.

The half-mother stays single for now

France Telecom has withdrawn its bid for TeliaSonera, a mixed offering of shares and cash valued at EUR 33 billion. That leaves the half-mother of Lattelecom and holder of just over 60 % in mobile operator LMT "still single". The Swedish side initially rejected the offer and subsequent negotiations between the companies were apparently fruitless.
TeliaSonera was probably right to shrug off the bid, where the share portion could prove to be rather volatile in value, especially if it were to have taken the merged company a couple of years to get its act together.
As for Latvia, this should (theoretically only) remove a reason for the endless footdragging by the Latvian government that would finalize a deal allowing it to divest its last remaining holdings in LMT, and to at least temporarily nationalize Lattelecom in the hope of reselling at least the 49 % held by the half-mother to someone else.
In other words, no one can say : "What if we are soon owned by the French, then what?"and wait to see what it is that "the French"may want. Maybe they aren't (and, indeed, turned out not to be) interested in the Nordic-Baltic region?
My view: just because an excuse for delaying is gone, doesn't mean that there won't be any delays. The economy is in rapid decline, inflation will top 20 % with 25 % not an impossibility, so the value of almost any Latvian asset is being undermined. Who will make 100 LVL of Lattelecom worth 125 LVL next year just to stay a small distance ahead of inflation? It may even be prudent for the government to wait, although this will be mitigated (or rather, vitiated, worsened) by other factors such as stagnation on the Latvian telco market, the inability (without the participation of the by now totally frustrated and apathetic half-mother) to move boldly ahead. etc.
Whatever happens, we will be lucky to see a resolution of the privatisation or other disposition of Lattelecom and LMT sometime in 2009. But don't hold your breath.

The half-mothers agree to move ahead

The Latvian government and TeliaSonera have agreed, as co-owners of Lattelecom, to study ways in which the fixed-line operator could implement functional separation. Agreement to functional separation of Lattelecom into wholesale and retail operations is a precondition for doing the swap of the Swedes 49 % share for the remaining state stake in LMT, the mobile operator and the real prize for TeliaSonera in this long dragged out process. Kenneth Karlberg talks about what was achieved:

Catching up ahead of May 21

On May 21, Sisyphus (Kenneth Karlberg) and others from the half-mother TeliaSonera will be coming for negotiations (rolling the rock again) with the Latvian government on the proposed privatization deal concerning Lattelecom. Under the proposed deal, TeliaSonera will swap its shares for Lattelecom for the state's remaining holdings in Latvian Mobile Telephone (LMT) and probably pay a cash premium on top of the 49 % stake in the fixed operator.

Sisyphus (why do I call Kenneth that? Remember the Greek/?/ dude who was condemned to roll a stone up a hill only to have it roll back again and then roll a stone up a hill only...) should not get his hopes up. 

Still, I think that the half-mother should quietly forget about the idea of having the government sign off on a functional division into wholesale and retail operations of Lattelecom. TeliaSonera wants this to ensure that LMT will have open and fair/fairly priced access to Lattelecom's network. The Latvian government says it won't do this, but by 2010, it will have to do this because of upcoming European Union rules. As I see it, by the time the deal goes down (and we will be f**king lucky if it goes down by 2010), the functional division of Lattelecom will be an unavoidable reality.

So my recommendation: put your Lattelecom stake on the table with a nice pile of cash (let us say, an eye-opening amount). If you are lucky, the dude with the beard will say " Point one -- yes, point two -- we can sign on..." (this is a satire for my Latvian readers). If things go as usual, nothing will happen, so what else is new... As we all know, Sisyphus is head of TeliaSonera Mobility, a field where anything can happen, the future is unpredictable, technological change is mind-boggling, and nothing, nothing will be certain for Kenneth except that with Latvia, he will still be rolling that stone even if he retires, still shuttling to Riga,  as head of France Telecom Nordique Telepathy.

I have been remiss in updating the blog for a while.  Juris Gulbis, the new CEO of Lattelecom, has given a couple of interviews where he has said he will continue with the same strategy of developing broadband and related services that Lattelecom was following before Nils Melngailis was unseated. He also said that it was very important to settle the ownership question soon, so that management could get on with running the company, moving into mobile service and becoming a regional player. These points make sense, almost. If the against all previous experience, something actually moves ahead,  Gulbis could face answering to Ainars (Slesers, the Minister of Transport) and the Wackbats (the rest of the government) instead of the Swedes and the Wackbats. 

Who is smoking what?

While this may sound way off-topic, it has recently been discovered that a plant called Salvia can legally be smoked in Latvia with apparently entertaining results. It seems that someone at Deloitte in Latvia was smoking something when they signed off on a report saying that Latvia was one of the best places in the world for private equity investment.  

Hello! Hello! Are we on the same page? Or planet?

One of the world's largest private equity investors, The Blackstone Group, took part in a management buy-out bid  for Lattelecom which was given the BIG FINGER (with no rational argument) by the present government. I got the impression that the Latvian government was saying between the lines  that big, respectable private equity capital was about as welcome as a pig at a synagogue. 

I may be able to get a meeting with Sisyphus on the 21st and put up some video of it. 

Lattelecom - staying the course on autopilot

Ran into some unnameable sources today and they said that Lattelecom, despite the long delay in selecting a new CEO and the endless talks on privatization, is more or less staying the course. A few people with close loyalty to departed CEO Nils Melngailis have left, but there has been no general bleed-off of staff or middle management. "The board is still there, watching how the company is run" said one of my informants. They also said that there were no noticable issues about strategy and "the goal of any owner will be to have the company make money."
Finance director Juris Gulbis is acting CEO until a replacement for Melngailis is selected.

Latvian telco privatization --writing off yet another year?

Latvia and Sweden are similar in that both countries stop for a while after the Midsummer holiday. This is more pronounced in Sweden, but Latvia's parliament also goes on vacation after June 22, if not earlier.

With the next round of talks on the proposed Lattelecom for LMT swap set for May 21, it is unlikely that anything will be resolved before Midsummer. That essentially kicks the next "round" of the never-ending story into September, which, even if the both parties to the talks decide to go ahead, do valuations, etc., means that nothing will happen before the end of the year. So look to 2009, maybe, as the next possible time when this matter may finally be resolved. But don't count on it. 

Meanwhile, Lattelecom remains leaderless, a few more important mid-managers may leave and the value of the company will continue to drift downwards.

Springtime for Nyberg

The suitors are lining up for TeliaSonera under CEO Lars Nyberg (whence the title). Norway's Telenor, an old flame of Telia (1999) who was left at the altar (or stormed away, forgot which) is back, according to press reports. France Telecom is mulling how to bid for the Swedish telco with enough cash in the offer to attract finicky TeliaSonera shareholders. A merger with Telenor would create a real Nordic giant, though still mid-sized by global standards.
This may leave the half-mother of Lattelecom with less time and energy to deal with the wackbat* Latvian government, so she may just take any deal on offer. In other words, do the share swap using the Latvian State Radio and Television Center, get its 100 % of mobile operator LMT (the most profitable of all of TeliaSonera's subsidiaries, I believe) and forget about any covenants in the deal to functionally seperate Lattelecom into wholesale and retail units. By the time the Latvians get around to doing it -- late 2009 is for the real Pollyanna optimists, to my mind-- the European Union will decree functional separation in any case. So it doesn't matter. What matters is to get the f**k out of bed with the government, get LMT and start turning it into a full service telco (including wireline, DSL, LTE wireless internet, etc. in the next couple of years).
*an amalgam of wacko and batshit. I like it.

Much time, no honcho

The owners of Lattelecom (the Latvian government 51%, TeliaSonera 49%) failed yet again on April 25 (?) to agree on a candidate for managing director of the company to replace Nils Melngailis, who resigned and left his post on April 1.

The stakeholders want more information on the candidates -- the current finance director and acting managing director Juris Gulbis,  network services director Valdis Vancovics and Gatis Kokins, a former executive of Parex Bank, currently in his own business. 

Whoever gets the job will still face the uncertainty of who will finally control Lattelecom  and what strategy the fixed-line operator will follow. This may be a reason why international executives have not been swarming to apply for this position. If Lattelecom is sold to a third party, say, Blackstone, the new owners may want to see their own man or woman in the CEO position. 

More headaches for the half-mother

The Latvian government appears to have decided to privatize Lattelecom by swapping its shares in mobile operator LMT for the 49 % of Lattelecom held by TeliaSonera (the half-mother). The Swedish stake will then be sold to a new investor, most likely The Blackstone Group, a US private equity company.
The decision was announced over the objections of a coalition partner, the Fatherland & Freedom party, whose Minister of Economics Kaspars Gerhards would prefer to have 100 % of Lattelecom put up for auction by both current stakeholders.
The government has also indicated that it does not want to divide Lattelecom into wholesale and retail units, a condition TeliaSonera insists upon. The European Union is expected to mandate such a functional seperation for telco operators soon, and TeliaSonera, British Telecom and Telecom Italia have already done so voluntarily.
My guess -- the shakily backed government plan will fall apart either because of political dissension or the non-acceptance of terms by TeliaSonera. According to some sources, Prime Minister Ivars Godmanis is ready to let everything go back to "square one"where things stay as they have been, that is, TeliaSonera remains a minority stakeholder in Lattelecom and an indirect holder of more than 60 % in LMT. In other words, the Swedes will remain reluctant and restricted owners of companies they want to either buy 100 % or divest 100 %, but these options will be blocked by the government.
Another stumbling block for the deal is that Blackstone will surely demand an airtight management agreement in order to take less than a controlling stake in Lattelecom. That means that all strategic and management decisions will be made by managers appointed by Blackstone, with the government kept at arm's length. The government is unlikely to accept this, so the deal may collapse on that note.
And on we go...

The muddlers decide - we pick a new half mother

The Latvian government more or less decided on a scheme for finding a new half-mother for Lattelecom. It is an amalgam of ex-Lattelecom CEO Nils Melngailis and The Blackstone Group's  plan B -- to buy 49 % of Lattelecom and Minister of Transport Ainars Slesers plan to swap 23 % of mobile operator LMT for TeliaSonera's stake in Lattelecom.

How it will work is that the 49 % held by the Swedes will be parked with the Latvian State Radio and Television Center (LSRTC) until it is bought by, most likely, Blackstone. Blackstone will most likely demand an ironclad management contract so that the government doesn't use its remaining 51 % majority to mess with strategy and operations.

TeliaSonera will then do a deal to get the rest of the shares in LMT held by Lattelecom and the state (they will already have the 23 % from the LSRTC and already directly hold 49 %). At the end of the whole Chinese fire-drill, the Swedes will have 100 % of LMT, the Latvian state and Blackstone --100 % of Lattelecom, plus covenants binding them to split Lattelecom into wholesale and retail units, as some other European operators, including Telia, the Swedish unit of TeliaSonera, have already done. 

I am a bit late writing this because I didn't want it to look like an April Fool's joke. Also, I am leaving for the US this morning and won't be writing until I get over there (Boston, then an IBM event in Las Vegas).

The whole thing could still crack up if 1) the Fatherland and Freedom party decides to swamp the coalition boat -- it wanted some kind of auction of 100 % of Lattelecom (they would have a potential ally in Slesers, who wanted  100 % for the state) 2) if the management agreement is unacceptable to the government, or the government's desire to modify such an agreement pushes Blackstone to walk away. 

Then there is the Baltkom/Peteris Smidre proposal.

So there is still a way to go and nothing is certain.

Yet another interesting question -- will Melngailis, who was closely linked to Blackstone's plan B, somehow return to running Lattelecom?  He is rumored to have been offered a position with Blackstone representing the private equity firm's interests in the Baltic, although there is at least one Baltic country that, until April 1, was giving Blackstone the finger. 

Baltkom honcho proposes merger with Lattelecom

Peteris Smidre, the founder and top honcho at Baltkom, Latvia's largest cable TV company which also provides internet, fixed and mobile telephony, has said he and an international investor could participate in an auction of TeliaSonera's 49 % of Lattelecom, after which Baltkom and Lattelecom could merge to form a single group.
Smidre said such a merger would dilute the Latvian government's holding in the merged company to less than 51 %. It would also open up synergies in content distribution -- Baltkom has some 180 000 cable subscribers -- and give Lattelecom access to Baltkom's virtual mobile operator, which runs on the Bite network. With all frequencies allocated, Lattelecom has no chance to start its own GSM/UMTS operator should it leave the TeliaSonera sphere one way or another.
Smidre would not comment to this blogger on which investors he had contacted, but they are rumored to be Citigroup and The Blackstone Group.
The Latvian cable and telecoms entrepreneur (he started Baltcom GSM, then sold it to Tele2) didn't deny that one reason for his proposal was to offer an alternative to the nationalization of Lattelecom proposed by Minister of Transport Ainars Slesers.
Slesers wants TeliaSonera to swap its 49 % of Lattelecom for 23 % of mobile operator LMT held by the Latvian State Radio and Television Center (LSRTC). TeliaSonera would then buy any outstanding LMT shares held by the Latvian state for cash. Lattelecom would then be 100 % owned by the state and the state-owned LSRTC.
This is a plan that passes the Alfred E Newman test*, sorta. The possible insanity is in believing that the Latvian government will decide anything at its very appropriately scheduled April Fool's Day meeting.
* not insane

More indecision, as usual...

The Latvian government, having called an extraordinary meeting of the Cabinet of Ministers (that is, of itself) in order to make a decision about how and/or whether to privatize Lattelecom, has come to no decision and will try to decide again at its regular meeting on April 1.  April Fool' s Day, how appropriate.

My thoughts (writing from Stockholm where I did an interview) is that Prime Minister Ivars Godmanis, scheduled to visit Sweden on Monday, March 31, avoided a possible split in the coalition between his (and the Minister of Transport Ainars Slesers) party and the Minister of Economics Kaspars Gerhards of the nationalist Fatherland & Freedom, who have vehemently opposed Slesers' plans to  nationalize Lattelecom (see earlier posts).

Having a Latvian government come apart on April Fool's Day would be more than appropriate. We shall see...

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 :)