Benign effects of mega-merger

Nov 21, 2002

The planned merger between Telia and Sonera should have a favorable effect on operations of Lietuvos Telekomas, the Lithuanian fixed-line telephone operator controlled by the Nordic telecommunication companies, analysts said.

On Nov. 18, Sweden's Telia said that it had received support from 94.8 percent of shareholders of Finland's Sonera for its 6.3 billion euro takeover offer, clearing the way for the merger.

Aurelijus Rimkus of Finasta, a financial brokerage company, said this news was unlikely to provoke any prompt reaction from the Lithuanian stock market because it may take another half-year until any steps toward the actual merger are made.

"The current market developments are most likely an indication of foreign investors' changing attitude toward the telecommunications sector, rather than a result of the planned merger between Telia and Sonera," he said.

Lietuvos Telekomas' share price has risen by 15.3 percent to 0.90 litas (0.26 euros) on the National Stock Exchange of Lithuania over the past month.

Tomas Langaitis, an analyst with Hansa-LTB, said the merger should have a good effect on both Lietuvos Telekomas' operations and its share price.

Telia and Sonera each hold 50 percent of Amber Teleholding, the consortium that owns 60 percent of Lietuvos Telekomas.

Following the takeover of Sonera, Telia may consider two possible options: to merge Lietuvos Telekomas with Omnitel, the country's leading mobile operator, or merge the fixed-line operations in all three Baltic countries.

Telia and Sonera, through Amber Mobile Teleholding, own 60 percent of shares in Omnitel, but the U.S. group Motorola holds a blocking stake of 35 percent in the Lithuanian company.

The Nordic companies also control the Latvian and Estonian fixed-line service providers and the leading mobile operators in the two countries.

Lietuvos Telekomas is listed on the blue chip Official List of the NSEL. The company's market capitalization stood at 697 million litas on Nov. 18.

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