More on the Lattelecom shopping list

I have already written about Pionit, the German-Latvian specialized IT company that I strongly suspect is at the top of Lattelecom's post-MBO shopping list. I just want to add some other educated guesses, mostly taken from a post on my Latvian-language blog.

Triatel, I think I have mentioned earlier. Their wireless EV DO based broadband service is what could be of interest to Lattelecom if the price is set right. Lattelecom needs some weapons in a coming war against both Latvian Mobile Telephone (LMT) and Bite, who will surely move aggressively with higher speed HSDPA as a direct competitor to DSL and the only alternative where the optical/copper infrastructure doesn't reach. Bite has already announced it will boost its HSDPA to 7.2 Mbps and by next year, it will be pushing the envelope of the technology at 14.4 Mbps. LMT is a large boat that turns slowly, but expect them to announce a speed boost as well. Triatel is looking to be bought and Lattelecom has been working with them on "digitizing"the rural network using fixed wireless CDMA phones.

IZZI, the cable TV, internet and mobile services (an MVNO running on the Bite network) company, might be of interest for expanding Lattelecom's cable TV base, although they do not directly use IPTV technology to the home (they use it for backbone transmission of their signals, I think). It would be a way of getting over 100 000 TV customers and slowly switching them to Lattelecom's IPTV. IZZI resells Triatel's wireless internet and provides fixed line cable internet where its network is present. IZZI was owned by TeliaSonera (and known as Telia MultiCom) before being sold to private Latvian investors some years ago. Its name is derived from how East Europeans pronounce the word easy :), suggesting that IZZI is easy to use :).

More along the lines of a cooperation partnership, Lattelecom could also look at the wireless broadband network builder Unistars. It has a strictly business customer base and builds some application-specific networks, for retailers and construction projects. That is, these wireless networks are used primarily for running retailing applications (point of sale networks, retail accounting and inventory control applications, etc.) This is the sort of thing Lattelecom is moving into -- setting up IT solutions that run on mission-critical telecom networks. For some customers, the right solution for Lattelecom might just be to call in Unistars as a partner, in others (farmstead internet, small-town business internet access), Triatel may have the solution. Unistars also has some WiMax know-how and is closely watching the mobile WiMax market. Lattelecom CEO Nils Melngailis and Unistars honcho Aleksander Rutman should talk, if they already haven't.

Lattelecom eyeing Pionit, a stealth IT company?

Lattelecom, in the midst of an MBO, is already looking beyond that for forging closer ties with selected IT companies. The most interesting of these may be Pionit AG  in Germany, where one of the chief "assets" is Mikus Grasmanis, a Latvian software engineer and one of the key inventors of GRADE, a business process analysis toolkit developed initially by the Institute of Mathematics and Informatics at the University of Latvia in the early 1990s. Also behind Pionit is Janis Gobins, the "godfather"  of the modern Latvian IT industry (Software House Riga, which later morphed and merger into Dati and Exigen/merged with Dati/).

Pionit was founded in 2006 and is still kind of a stealth company, but apparently looking to do sophisticated projects in business process management and the "industrialization" of software development projects. Pionit is the foothold in Germany that Lattelecom's new business directions in outsourcing and IT solutions need and have been looking for.  Valdis Lokenbahs,  formerly a major honcho at Dati, also recently joined Lattelecom. One reason he was recruited may have been his experience setting up a Dati operation in Germany and his ideas about building what he called a global software factory (assembling resources in a number of countries to optimally produce a software solution).

I predict that, by the end of 2008, Pionit (which already advertises its cooperation with Lattelecom) may become one of the first acquisitions of  the newly privatized Lattelecom.  Indeed, Nils Melngailis, Lattelecom CEO, strongly hinted that Lattelecom will grow in the future by major acquisitions, even of companies of similar size as Lattelecom at present. He was speaking at an annual conference for Lattelecom business customers and partners on September 19.