Competition Council decision opens up data transmission market

  • 2005-10-05
  • Staff and wire reports
RIGA - The Competition Council has passed a ruling that will oblige Lattelekom to sell Microlink's electronic communications infrastructure if the former acquires the latter.
Earlier this year, the three Baltic land-line telephone companies - Elion, Lattelekom and Lietuvos Telekomas - announced that they would take over Microlink, an Internet provider and data transmission operator, with each country company acquiring the respective state-based part of Microlink.

Dana Sosnovska, a Competition Council official, told the Baltic News Service that the council wanted to prevent Lattelekom from monopolizing the market of data transmission services.

The council obliged Lattelekom to sell the assets of Microlink Latvia, which would ensure data transmission services within a definite time period after the purchase date of Microlink Latvia. In order words, Lattlekom will have to sell the electronic communications infrastructure or the network of Microlink Latvia that ensures data transmission, Sosnovska said.

She added that Lattelekom must sell to a third party, one that is neither directly nor indirectly related to the company. It has to approve the deal with the Competition Council.

The competition watchdog also said that, before selling the electronic communications network, Lattelekom may continue providing data transmission services 12 years afterward, but only to existing Microlink Latvia clients.

"The set regulations will ensure that after the merger of Lattelekom and Microlink Latvia, the concentration of Internet access and data transmission services will not increase on the market in the territory of Latvia," she explained. "Lattelekom and Microlink Latvia can merge only complying with the binding regulations."

Gundars Strautmanis, council chairman of Lattelekom, said the operator would likely agree to sell Microlink Latvia's data transmission network, yet he added that the company needed time to study the council's decision.

A company study found that, by purchasing Microlink Latvia, Lattelekom would acquire 46 percent of the data transmission market in Latvia. The study says that in 2004, Lattelekom commanded a 37 percent share of the data transmission market, while Microlink's share was about 9 percent.

Meanwhile, other Internet service providers - Telia MultiCom and Baltkom TV - are mulling over the possibility of acquiring Microlink Latvia's data transmission network after the council's decision.

Baltkom TV owner Peteris Smidre said, "If there is an offer, we will consider it. Everything depends on the market, the price and other circumstances." According to Smidre's estimates, Microlink's data transmission network might be an attractive purchase for companies both in Latvia and abroad.

Kaspars Spunde, marketing director of Telia MultiCom, said: "Telia MultiCom has not considered such an option yet, but we do not rule out the possibility that such an interest might arise. It would take time and additional information, especially information on the network's client base, which is the main value of the infrastructure, to take a decision."

Analysts said that Microlink's data transmission network would attract a great deal of investor interest.

Elion is set to buy a 95 percent stake in Microlink's main unit - Microlink Estonia - while Lietuvos Telekomas will take over Microlink Lietuva.