TELECOMS AND HOOP SHOOTS

Jun 22, 2000

Much has been said about Lietuvos Telekomas' initial public offering
- much of it negative. Critics of the way this controversial IPO was
handled by the Lithuanian government and the privatization advisers,
Dresdner Kleinwort Benson and CAIB Investment Bank (which walked out
with $14 million in fees), may have sound complaints.

The IPO's timing may have been poor, and the Lithuanian government
has made past mistakes in previous attempts to privatize state-run
entities. In reducing its share of divestment from 35 percent to 25
percent, and deciding to sell the stock at a bargain basement price
of 3.15 litas ($0.79), the government has earned this controversy.

It needs to be said also that simultaneously with the Telekomas IPO,
the Swedish government divested its shares in Telia, choosing to
increase its divestment from from 20 percent to 35 percent. Kudos for
Sweden.

The truth is that the Lithuanian government needs money, and badly.
The government struggles to collect budgetary funds. Divesting its
shares in Telekomas to the public was not a bad means to that end.

Spotty, monopolistic reputation and all, Telekomas has made some vast
improvements in infrastructure and service since the Swedish/Finnish
Telia/Sonera consortium took over two years ago.

Telekomas is a remnant of the Soviet Union's lousy phone system,
which had about as much built-in quality as a Zhiguli car.
Realistically, Telekomas has a mountain to ascend to become
competitive with other European telecoms, which are no Lucent
Technologies themselves. This IPO, bad timing or not, is one step on
a long, bumpy road towards competitiveness in a European market which
will grow fiercer with time.

For the average world investor, this is obviously not a huge
moneymaking opportunity. But for the average Lithuanian, this could
be a good way to wet one's feet in the quirky ocean of global
investment. The wealth will follow.

The National Stock Exchange of Lithuania is getting ready to join
NOREX and is planning a union with the other Baltic bourses. These
moves will expand exponentially the investment possibilities in
Lithuania, as in Latvia and Estonia. Perhaps someday investing will
surpass, in terms of excitement, Lithuanians' interest in the
grandest national lottery of them all: krepsinis (basketball).

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