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Competition takes bite out of Lattelekom sales

Feb 08, 2006
From wire reports

RIGA - Intensifying competition on Latvia's telecommunication market impacted Lattelekom's top line last year, as the dominant fixed-line service provider saw its sales decrease and profits remain flat.


Council Chairman Gundars Strautmanis declined to cite exact figures for 2005, saying only that the dip in turnover was due to changes in the company's infrastructure and growing competition with mobile operators.

In 2004, Lattelekom reported a profit of 33.5 million lats (47.6 million euros) on sales of 131.4 million lats.

The lower turnover also suggested a reduction in the number of Lattelekom clients, he added.

Lattelekom's monopoly on fixed-line telecommunications services in Latvia expired in 2003, while many consumers have been switching to mobile phones as their primary means of telephony communication.

Butt, Lattelekom still dominates the fixed-line service sector. Tele2, Latvia's second largest mobile phone operator, started offering fixed-line services in 2003 but recently announced it would cease investing into this segment of the market.

Also, LMT, Latvia's largest mobile operator, recently backed out of the fixed-line market, complaining that regulation was prohibitive. Last month the company waived the right to use 20,000 fixed-line numbers.

Lattelekom plans to release specific turnover and profit figures after the council meeting on March 14, where members will analyze the company's 2005 performance. The results of December 2005 have not yet been finalized, said Strautmanis, adding that the turnover reduction in 2005 would be smaller than originally planned at the beginning of last year.

The owners of Lattelekom are the state, which holds 51 percent, and the Scandinavian telecommunications concern TeliaSonera, which holds 49 percent.

Meanwhile, the dispute surrounding Lattelekom's privatization remains unresolved. TeliaSonera has repeatedly expressed interest in purchasing the stake, but the last two Cabinets of Ministers have wavered, particularly given the Scandinavian company's ambition to acquire a controlling interest in LMT, in which the state owns a 25 percent interest.

In late December Prime Minister Aigars Kalvitis said that the state's stakes in the two companies would not be sold to the same buyer. He said the issue was complicated but was likely to be decided sometime this year. The Economy Ministry is currently conducting negotiations with TeliaSonera.
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