VILNIUS - Latvia's two mobile operators appear unwilling to cooperate with newcomer Lithuania's Bite GSM, which is eager to lease mobile infrastructure to begin operations, possibly setting the stage for a confrontation.
The Verslo Zinios daily reported last week that LMT and Tele2 are unlikely to lease their infrastructure to Bite GSM while the latter begins the lengthy and costly process of installing its own relay network.
Bite GSM won the tender for Latvia's third GSM license on March 31, obliging it to invest 150 million euros in building its own new network, but in the meantime the Danish-owned company would like to use competitors' infrastructure in order to launch operations and begin receiving revenue.
CEO Jesper Teil Eriksen told journalists last week that Bite has invited Latvia's LMT and Tele2 to launch talks concerning the lease of their networks, and Eriksen said that the two companies should also be keen on leasing their networks to Bite GSM, since this would be additional revenue.
Based on Bite's previous experience in Latvia, he said, the government and the public utilities regulatory commission would be interested in the company's success and would "help the company settle the issue" with LMT and Tele2.
The story from Riga, however, appeared to be the opposite. "We are not considering such a possibility now," Petras Kirdeika, acting CEO of Tele2, was quoted by Verslo Zinios as saying.
LMT, Latvia's leading mobile operator, said that it had no possibilities to lease its network to other operators, the Baltic News Service reported.
Bite GSM officials said that LMT's existing capacity is too small to share, but technologically it would be possible 's and affordable 's to increase capacity. Eriksen said Bite GSM is ready to cover these costs.
Still, LMT President Juris Binde said the company is not planning to increase network capacity for the sake of another operator.
Liga Rimsevica, spokeswoman of the Public Utilities Regulatory Commission, pointed out that it is mobile operators' right to refuse to share their networks with other companies or to agree on a mutually acceptable deal. "This is a complex issue, and we have not discussed it. At any rate, presently we do not have a lever for putting additional commitments on LMT and Tele2 regarding the lease of their networks," she said.
Bite GSM, which is owned by TDC, a Danish concern, paid 9.5 million euros for the third GSM license. The tender was hailed as an unprecedented success 's the final price being far over the 2 million euro starting price 's but it also puts pressure on the winner to begin operations as quickly as possible.
Previously the company stated that it wanted to start offering services by the end of the year, particularly in Riga, and recently it was reported that the company is busy raising finance for the massive infrastructure investments it must make.
Eriksen told reporters that Bite GSM would build its network in three stages 's first in the largest cities, then in other densely populated areas and finally in outlying areas.
He would not say when the construction of the network would begin and what was the timetable, citing confidentiality.
Eriksen said their network could cover about 90 percent of the Latvian territory.
Bite GSM has been operating in Lithuania for 10 years. 2004 revenues reached some 117 million euros, up 7 percent from 2003. The company had 927,000 subscribers at the end of last year, a staggering increase of 75 percent year-on-year.
Eriksen said Bite would work in Latvia under the same brand name because they wanted Bite GSM perceived "as an integrated company both in Lithuania and Latvia so that people would understand that it is one and the same company."
