Latvian government prepared to sell LMT to TeliaSonera, not Lattelekom

  • 2006-05-10
  • From wire reports

DECISIVE: After less than two months on the job, Stokenbergs was able to make a decision that none of his predecessors could.

RIGA - Latvia's economy minister said the government would allow TeliaSonera to acquire 100 percent of LMT, the country's leading mobile phone operator, but that the Swedish-Finnish telecommunications company would not take over Lattelekom, the dominant fixed-line operator, according to a press report.

Economy Minister Aigars Stokenbergs, in his second month on the job, told the business daily Dienas Bizness that he had telephoned TeliaSonera Vice President Kenneth Karlberg to inform him of the decision. For more than two years TeliaSonera has been trying to increase its stakes in both Lattelekom and LMT, but with no success. Government officials do not want any one foreign investor to control both companies.
"Let it be fully clear to both Swedes and Latvians. The answer is an absolute, crystal-clear 'no.' They won't get Lattelekom," Stokenbergs said.
He added that he had made the decision out of a desire to let Lattelekom develop its business strategies and directions, which probably did not coincide with TeliaSonera intentions and regional interests.

Stokenbergs said that talks over a sale of LMT would continue, and the main point was to agree on compensation. Also, the two sides must find a way to annul the mutual rights of first refusal and hand over 23 percent in LMT, currently held by Lattelekom, to the Swedes.
TeliaSonera spokeswoman Brigitta Grafstrom told the newspaper that the company had accepted the minister's reply and hoped "to continue the dialogue with the government."
She would not state clearly that TeliaSonera had given up all hope of acquiring Lattelekom but agreed that continuing talks about LMT's acquisition was a logical conclusion.
Earlier, Stokenbergs told the Baltic News Service that the state could buy out TeliaSonera's shares in Lattelekom and sell the Swedes the state-held shares in LMT.

He said the state holdings in both telecommunications companies should by no means be allowed to pass into the hands of TeliaSonera, which already is among Lattelekom and LMT shareholders.
"Both those companies must not end up in TeliaSonera's hands as a private monopoly is worse than the state monopoly," said the minister, adding that the issue won't be rushed.
A task force is currently negotiating with TeliaSonera on the possible sale of state holdings in both Latvian telecommunications companies.

Last summer, TeliaSonera made an offer to buy 51 percent in Lattelekom and 28 percent in LMT from the Latvian state. The initial price offer was 274 million euros for 51 percent in Lattelekom and 168 million euros for 28 percent in LMT.
At present TeliaSonera holds 49 percent in Lattelekom and 49 percent in LMT. Lattelekom owns 23 percent of LMT. The Latvian state or state-owned companies control 51 percent in both Lattelekom and LMT.
Lattelekom is the largest fixed-line telecommunications company in Latvia. Its revenues in 2005 amounted to 134.1 million lats (191 million euros), and net profit was 34.7 million lats.
LMT is the oldest mobile operator currently providing services in Latvia. The company's preliminary profit in 2005 was 56.4 million lats, up 3.3 percent from 2004, and turnover grew 12.8 percent to 168.4 million
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