Eesti Telefon says open books harm shareholders' interests

TALLINN (ETA) - The phone monopoly Eesti Telefon said that revealing its business plans to the government would hurt other shareholders. The government, and therefore the public, owns a major portion.

Eesti Telekom's spokesman Raul Kalev said that both the board and the council of Eesti Telekom base their decision on the regulations of the Tallinn and London stock exchanges and the international principle of equal treatment of shareholders.

"Revealing any detailed financial documents and marketing policy to just one investor is in disagreement with those principles and would harm considerably the interests of the shareholders of the company," Kalev said.

The Transport and Communications Ministry threatens Eesti Telefon with a 75 million kroon ($5 million) fine for the failure to reveal its business plan to the ministry, the daily Eesti Paevaleht reported on March 13.

The daily said that according to the concession agreement, the telephone company is to submit its business plan to the government every year.

Kalev said that Eesti Telefon presented its development plan to the ministry last year. After negotiations Eesti Telefon revised the plan and presented it to the ministry again on March 7.

Kalev said that Telefon hopes to continue a constructive dialogue with the ministry to find a solution suitable to both sides.

The concession agreement foresees a compensation of up to 5 percent of the telephone company's last year's turnover for the violation of the agreement. Last year's turnover was 1.5 billion kroons, resulting in a fine of approximately 75 million.

Eesti Telefon intends to raise the prices of domestic calls by 10 percent to 20 percent before 2001 when the market opens up for competition.