State, TeliaSonera to appraise assets before cutting deal on LMT

  • 2006-05-17
  • From wire reports
RIGA - The government and executives from TeliaSonera have agreed to begin an appraisal of the country's two largest telecommunication companies as the first step in concluding a sale deal on one of the companies. Economy Minister Aigars Stokenbergs and Kenneth Karlberg, vice president of TeliaSonera, a Finnish-Swedish corporation, agreed on May 11 to begin the appraisal of both Lattelekom, the dominant fixed-line operator, and Latvijas Mobilais Telefons, the leading cellular operator.

He said an arbitrator approved by both sides could determine the value of Lattelekom in the near future, and that the arbitrator's assessment would be binding to both the state and TeliaSonera. The process of appraisal could take several months to complete and the companies themselves would cover the costs of evaluation.
Stokenbergs added that the state and TeliaSonera would not continue negotiations on handing control of the Latvian telecommunications companies to the Scandinavian concern, and that they will talk only about selling LMT shares to TeliaSonera.
The minister reminded that Latvia is interested in maintaining control over Lattelekom since the state can potentially develop the company more successfully than TeliaSonera.

He declined to predict how much time it would take for the state to cut a deal with TeliaSonera, which is much needed in order to determine the fate of both Latvian companies, but he said he would do nothing to hamper the process.
Karlberg, meanwhile, told journalists that the evaluation of LMT and Lattelekom is the first step in the talks on the telecommunications companies, and that after the completion of this task co-owners of both companies might decide on further actions. As long as the value of both companies has not been determined, further negotiations are useless, he said.
Karlberg again reiterated that the company would like to acquire stakes in both LMT and Lattelekom, but that the government and Stokenbergs had indicated that this was not possible.

Last summer TeliaSonera made an offer to buy from the Latvian state 51 percent in Lattelekom and 28 percent in LMT. 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 directly owns 23 percent in LMT, but it controls a majority through other entities.

Lattelekom's 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 its turnover grew 12.8 percent to 168.4 million lats.