Mobile revolution knocking Lattelekom sideways

May 23, 2002
Jorgen Johansson, RIGA

Gundars Strautmanis, Lattelekom president, said at a press conference on May 14 that last year's downward trend in the number of customers would most likely continue this year.

In 2001 the number of active lines dropped by 1.77 percent to 722,000.

Lattelekom has not only been hit by competition from the country's two mobile phone operators Latvijas Mobilajs Telefons and Tele 2, but also by the large number of clients who run up huge bills and then disappear, said Strautmanis.

"We plan to inform mobile telecommunication operators about such clients so that they will think twice," Strautmanis said.

Lattelekom Executive Direc-tor Lena Suhonen said at the conference that the company was not particularly worried about losing subscribers, as this is "a common phenomena in the world today."

Peteris Avisans, a telecommunications consultant with Future Consulting Ltd., explained the differing attractions of fixed-phone lines and mobile phones: "Fixed-phone lines have better quality, but cable installations cost money, which customers are not willing to pay for in rural areas. Mobile phones cost more, but there are better discount systems offered by the operators, and their networks cover 95 percent of the country."

Last week, LMT President Juris Binde predicted the number of clients using mobile phones in Latvia would surpass the number of people using fixed-phone lines within one year to 18 months.

Davids Dane, spokesman for Latvijas Mobilajs Telefons, said decreasing mobile-phone tariffs were the reason why people were being lured off fixed-phone lines.

"You can use a mobile phone everywhere, and it's not much more expensive than fixed-line phones," said Dane.

"Fixed lines will be more for the Internet and for people who need broadband services. This is an ongoing trend we're looking at."

It has been predicted by consultants in the telecommunication industry that mobile-phone usage will increase among individuals, while companies will remain with fixed-line services for their connections to the Internet.

Lattelekom's revenues grew 6 percent last year to 144.6 million lats ($233.22 million). The company's operational profit in 2001 was 22 million lats, down 16 percent from 2000. But its net profit reached 24.7 million lats, a 6 percent growth year-on-year.

The concern comprises parent company Lattelekom and a subsidiary, Lattelekom Communications Systems. It also holds 23 percent of the capital in LMT.

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