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Change in Baltic fortunes could be in store for TeliaSonera

  • 2004-12-22
  • Baltic News Service
RIGA - Speculation over Telia-Sonera's intentions to acquire controlling stakes in two Baltic telecommunication companies resurfaced last week, with Latvia's new government hinting that it might reverse its stance on the privatization of Lattelekom and Estonia's that it wouldn't budge on the offering price for its stake in Eesti Telekom.

Economy Minister Krisjanis Karins said that the new government should consider selling its stake in Lattelekom, the fixed-line telephone company, and the super-profitable LMT mobile operator.

"I do not see why the state should conduct this kind of business or whether it shouldn't sell both companies or one of them and how to do it in the most correct way strategically," Karins told the Baltic News Service. "These are questions that we have to solve."

His words contrast sharply with statements made by the previous government, which had chilly relations with Scandinavia-owned TeliaSonera and regarded Lattelekom and LMT as valuable sources of dividend income to fill state coffers.

Karins said he was certain that there would be investor interest in the state's holdings in the two companies, though the government first needed to define its goal in privatizing these businesses. One such goal, he said, would be ensuring prices for telecommunication services fall.

It is crucial to determine "whether they believe that they will be able to achieve our prescribed goal [of reducing prices] or whether they only talk about it a lot," the minister said.

Karins added the question of further sell-offs should be tackled only after the fate of privatization vouchers is clarified.

TeliaSonera owns 49 percent of Lattelekom and 49 percent of LMT. It has repeatedly expressed interest in acquiring majority stakes in both companies. The state owns 51 percent of Lattelekom and 28 percent of LMT (5 percent directly and 23 percent through a digital television company).

The two sides had litigated with one another over claims soaring into tens of millions of lats, but the previous government of Prime Minister Einars Repse signed a memorandum of understanding before the new Cabinet took over in March. Repse and Karins are the two leading members of New Era, a right-wing party.

Meanwhile, TeliaSonera has reportedly contacted representatives of the Estonian government on an informal basis to inquire about the possibility of buying the state's 27.23 percent stake in Eesti Telekom. However, the government, which rejected an offer from TeliaSonera earlier this year, has apparently told the company that it would not change its opinion of the sale.

Finance Minister Taavi Veskimagi confirmed to the daily Postimees that the possible sale of the state's stake had come up in conversations in recent weeks though on an informal basis.

"Since no formal takeover offer has been made, there has been no need to set out the final stance of the government either," Veskimagi said. "At the same time, I can see no reason why the Telekom shares should be sold at a lower price than at the level we considered in spring."

At the time of the previous offer, hired consultants had advised the government to proceed with a sale of Eesti Telekom on the basis of an estimated value of 18.3 billion kroons (1.17 billion euros), or 133.5 kroons per share. TeliaSonera, however, was only willing to pay 111.3 kroons.

Kjell Lindstrom, communications manager at TeliaSonera for Norway, Denmark and the Baltic states, said TeliaSonera's plans in regard to Eesti Telekom hadn't changed and the company was still interested in acquiring up to 85 percent of the fixed-line operator.