RIGA - Lithuania's Bite GSM won a hard-fought battle for Latvia's third GSM/UMTS mobile communications last week, offering 6.7 million lats (9.5 million euros) in what was arguably one of the country's most successful public auctions.
Bite GSM, part of the TDC Group, the largest provider of telecommunications services in Denmark, outbid Alina, a firmed owned by local industry millionaire Peteris Smidre, and MVC Capital, a U.S.-based consortium.
The government, which for years had struggled to sell a third such license, had set an initial price of 1.3 million lats, far below the subsequent sale price. The auction stretched out for four-and-a-half hours, with Alina's nerves finally snapping after its bid of 5.6 million lats.
Bite GSM, which has been operating in Lithuania for 10 years, will go up against GSM stalwarts Latvijas Mobilais Telefons and Tele2. (Another operator, Triatel, is providing mobile communications services in CDMA standard.)
As part of the conditions, the winner will have to invest at least 150 million euros in forming an independent telecommunications network infrastructure. Immediately after the victory on March 31, Bite GSM said it would cooperate with Sweden's Ericsson to develop the mobile network.
"We already worked with Ericsson when developing Bite GSM network in Lithuania. Therefore, in the initial stage of the project we will surely continue our cooperation with Ericsson," Bite GSM board chairman Darjus Montvila told the Baltic News Service.
He added that this did not mean that Ericsson would build the entire network, as Bite GSM will search for the best arrangement and best partner.
Montvila also said that it was not clear yet whether a tender would be organized to select an infrastructure provider. He said the network would first be built in Riga and that the company intends to start offering mobile communications in Latvia as soon as this year.
A Transport Ministry was quoted as saying that the government could approve the auction results by April 19. After making payment, the winner will also have to submit the relevant documents to the regulator, which will then register the general license for the operator and grant the right to use a specific spectrum of radio frequencies.
The regulator has reserved 40,000 mobile phone numbers for the new operator. The rights are expected to be granted for a 15-year term.
For Latvia, which has wanted to attract a third GSM player since 1999, the auction signaled a major victory. Mobile service prices in Latvia are generally considered to be higher than in Estonia and Lithuania due to a lack of competition.
Peteris Smidre, who had asked the government to postpone the auction, later commented that his firm had not planned on making as high as bid as Bite GSM. "The project's profitability decreases with each step," he told the Baltic News Service.
Bite GSM specializes in several spheres and is offering integrated solutions for fixed and mobile communications, internet, data transmission, cable television. TDC has invested in 10 telecommunications companies across Europe.
Its revenues last year in Lithuania reached some 117 million euros, up 7 percent year-on-year. The company had 927,000 subscribers at the end of the last year, marking an increase of 75 percent over a year.