RIGA - Transport Minister Ainars Slesers announced on June 12 that the Latvian government has given the green light to a proposal to sell off the Lattelecom electronic services provider to the company's executives and employees, BNS reports. Lattelecom management plans to buy the company for 290 million lats (412.6 million euros).
The Latvian state and Scandinavia's TeliaSonera jointly own Latvia's two largest telecommunications companies, Lattelecom and LMT, respectively controlling a 51 percent and 49 percent stake in both. Lattelecom owns 23 percent stake in LMT. Last summer TeliaSonera made an offer to buy out the state's share in Lattelecom as well as an additional 28 percent in LMT.
Slesers indicated that though TeliaSonera would have paid more for Lattelecom shares than the company's execs, that plan would not have been profitable for Latvia in the long-term, as TeliaSonera would then become a monopoly, which could have a negative impact on Latvia's telecommunications industry.
Sleser said the Lattelecom privatization plan, in which the company's executives and employees buy out all shares, is the best solution for Latvia in the long run, but would have the short-term effect of toughening competition in the country's mobile telecommunications market.
The minister said that Lattelecom has great prospects of launching operations in the mobile telecommunications market, which TeliaSonera had not allowed it to do until now. The minister predicted that mobile telecommunications fees might start falling in Latvia after Lattelecom starts operations in the market.
In early May a governmental workgroup, led by the transport minister, supported the management buyout proposal made by Lattelecom executives. TeliaSonera has agreed to the plan in principle.
Under an accord with the government, TeliaSonera will acquire all LMT shares after the Lattelecom sell off. Slesers said that the Latvian state is expected to earn 420 million lats from the privatization of both telecommunication companies.
