RIGA - The Transport Ministry announced last week that it had received several applications for the country's third mobile-operator license, with Lithuania's Bite GSM confirming that it submitted a bid.
Guntis Macs, head of the license-auction committee at the ministry, refused to reveal the number or names of bidders. Other than Bite GSM, it was announced that Alina, a Latvian firm owned by businessman Peteris Smidre, also put in an application for the GSM/UMTS standard license.
Macs said he had expected a higher number of bidders and hoped to see some of Europe's largest operators amongst them. "We should understand that Latvia has a population of just some 2.3 million, and the market is 60 percent filled. Maybe that had hampered interest," he commented.
The government set the initial price at 1.3 million lats (1.8 million euros) and will demand that the winner invest at least 150 million euros in establishing an independent communications network. The ministry will release the names of the bidders March 14 or 15, and the auction will take place March 31.
Currently Latvia has only two mobile operators 's Latvijas Mobilais Telefons, which is owned by TeliaSonera and the government, and Sweden's Tele2 's and the government is hoping the entrance of a third operator will shake up the market and result in lower consumer prices.
Bite GSM officials promised to do just that. "If Bite becomes a new member on the market, we will undoubtedly ensure stiffer competition and better services and conditions for the users of mobile telecommunications. We are fully prepared to make very competitive offers to the market, at the same time providing high-quality services," said Jesper Theill Eriksen, managing director.
Bite GSM, which is part of Denmark's TDC, estimated that the mobile-phone market has great prospects, since the latest European Commission report claimed the mobile penetration rate does not surpass 59 percent, the second-lowest figure in the EU.
Meanwhile, Smidre confirmed on Feb. 25 that Alina placed a bid in the tender together with U.S. investment fund MVC Capital. MVC is a U.S.-based investment fund working mainly with medium and small businesses in various industries. Last year the fund invested in the Baltic Motors Corporation, a U.S. company which imports Ford and Land Rover vehicles to Latvia and owns several subsidiaries, including the Baltic Motors car dealer.
Smidre's company, Alina, once was a co-owner of Baltkom GSM, a mobile operator renamed Tele2 after it was sold to Sweden's Tele2.
Last month Smidre submitted a request to the Transport Ministry to extend the tender's application deadline, but Transport Minister Ainars Slesers refused it. The minister said disagreements about tariffs for interconnections with fixed-line operator Lattelekom, the crux of Smidre's request, was irrelevant in regards to the tender.
"Since we have already extended the application deadline once, this time it will not be extended," he said, predicting that the final bidding price of the mobile operator's license would "exceed the initial price considerably."