RIGA - Speculation on who may purchase ownership of Bite, a mobile operator in Lithuania and Latvia, increased over the holiday break, with several international investors reportedly expressing interest in the deal, which could be worth as much as 500 million euros.
News of Denmark's TDC's intention to sell its Baltic business first surfaced in November, and since then numerous companies have been mentioned as possible buyers 's including Poland's TPSA and Finland's Elisa.
In recent days, however, the focus of speculation has shifted further from the region and centered on Norway's Telenor and the IDB Group, an Israeli consortium that control Cellcom, a mobile operator in Israel.
Other companies named as possible investor include MidEurope, a Central and East European investment company, Doughty Hanson, a U.K.-based private equity firm, and VP Market, the Baltics' leading retail grocer.
Unconfirmed reports also indicate that Hermis Capital, a Lithuanian investment fund, is interested in the asset.
Information on the ongoing talks is scant, but Danish media has reported that TDC is hoping to receive as much as 3.5 billion Danish kroner (470 million euros) for the two subsidiaries 's Bite Lietuva and Bite Latvija.
It is unclear why TDC has chosen to sell the companies, considering both operate in high-growth markets. Bite Lietuva's sales were up 11.7 percent in the first nine months of 2006, and in one year Bite Latvija acquired some 175,000 subscribers after having entered the market in late 2005.
As late as October the head of Bite Latvija, Maarten van Engeland said the company would "seek to further trends and enhance competition on the Latvian market."
What's more, the decision to bail out of the Baltics comes at a time when TDC's core business of broadband and mobile telephony are growing rapidly. In October the company announced that worldwide it has 15.9 million customers, up 1.2 million over the year.
Last week the company introduced, amid much hoopla, live television on mobile telephones. TDC Mobile Television is part of the third generation of mobile services that will transform the industry, according to the company.
"Live television on the cell phone is epoch-making news. With a cell phone in your hand you can now access all kinds of media which you earlier only had access to at home: television, music, e-mails and speaking to your friends and family," TDC Mobile Vice President Anders B. Christjansen said in a statement.
The sale of the "Baltic Bites," which is expected to take place in early 2007, is part of what could be a major ownership realignment in the local telecommunication industry. The Latvian government is currently considering a share swap with TeliaSonera that would give it 100 percent in Lattelecom, a fixed-line operator, while Scandinavia's telecom leader would assume total control over LMT, Latvia's leading mobile operator and most profitable corporation.
TeliaSonera has expressed a wish to take over both companies, but Latvian officials fear the dominating presence of one company in the industry.
The Cabinet is expected to discuss the deal in January.
Equally important is the fact that the sale of the two Bite subsidiaries will take place as the Baltic market makes the gradual switch to 3G services. In Lithuania, two of the main operators 's Omnitel and Bite 's have already begun offering 3G services, which include video exchange and music downloads at higher transmission speeds.
Tele2, Lithuania's other main mobile telecom provider, announced it would introduce 3G services in March 2007.