Bidding conditions for third mobile-operator license agreed

  • 2004-12-01
  • From wire reports
RIGA - The starting price for the third GSM and UMTS mobile-telecommunications-operator license in Latvia has been set at 1.3 million lats (1.9 million euros), with the provision that the winning bidder must invest at least 150 million euros in setting up a new network, the government decided Nov. 23.

The government decided that an auction commission would be set up in the near future to assess bids submitted for the third mobile-operator license, seen as crucial for increasing competition on the cellular phone market.

Head of the Latvian Public Services Regulator, Inna Steinbuka, said that the government's decision would allow for the license-selling process to move ahead as soon as possible.

"Entry of the third operator is vitally important for awaiting a drop in tariffs," said Steinbuka.

She stressed that the auction terms were also fair to current operators LMT and Tele2, who paid 5.8 million lats each for their UMTS licenses.

Transport Minister Ainars Slesers also emphasized the need for a third operator to enter the country, as mobile-telecommunication fees are especially high. He said that Latvia's EU accession could have raised foreign investors' interest in offering the country new mobile services.

The government has previously failed to auction off a third mobile-operator license, as in the last attempt in 2002 no bidders even came forward.

According to Slesers, "there's no guarantee that it will work this time."

Some have said that the government's decisions on the auction were tailored to suit an initiative previously voiced by International Telecommunications and Technologies in a letter to the ministry. The ministry denied the charges, with Slesers saying that both local and foreign companies would have an opportunity to bid in the auction.

IT&T previously announced that it wanted to buy the third license for mobile services in Latvia, and that 1.3 million lats would be a suitable price. The company offered to buy a license for GSM, UMTS and CDMA services and said it was willing to invest 150 million to 200 million euros in the development of an independent telecommunications network infrastructure over the course of a year. This was the company's first such offer in the country.

Yet research carried out by the Transport Ministry showed that some 38 different firms could show interest in the third license, including both local and foreign companies - Canada's Bell Mobility, Finland's Elisa, France's Bouygues, U.K.'s Vodafone, Russia's MTS, Taiwanese J-TONG Telecom Inc., as well as local Baltkom TV, CSC Telecom and Latvenergo.

The public regulator has countered this by saying the research was incomplete and provided no real clue as to the number of companies that would actually be interested in the auction.

Latvia's two existing mobile operators, LMT and Tele2, currently provide GSM services and have also bought licenses for UMTS services. A new mobile operator, Triatel, launched commercial operations in the CDMA standard in November.