Transport Ministry spokesman Didzis Jonovs said July 20 the ministry will prepare tender provisions and organize a tender for the license of a third mobile phone operator in Latvia in the next few months.
There are currently two mobile phone operators in Latvia, Latvijas Mobilais Telefons and Baltkom GSM, but they seem to doubt the Latvian market can sustain a third one.
"There is no place for a third mobile operator given the current economic situation," said Eriks Matulis, Baltkom GSM public relations manager.
Matulis explained that there are not enough potential clients for the third operator to work successfully in Latvia. LMT has 146,076 clients, while Baltkom GSM has about 74,000, of which 40,000 are subscribers. The remaining 34,000 use the company's payment cards.
"All those people who could afford a mobile phone have already been divided between the two operators," he said. "Potential new clients are not going to generate enough revenue for the third operator, so the current clients will be divided between the three operators."
He predicted that such high competition between operators may have a negative effect on the development of Latvia's mobile communications network.
LMT Director General Juris Binde shares this view.
"The third operator undoubtedly will try to conquer the market in large cities and the most economically profitable regions," Binde said.
"If the competition gets stiffer, the existing operators will pay more attention to these regions, and that may slow down or completely stop mobile network development on the remaining territory. In countries with hyper competition between operators, clients are lured from one operator to another, but in general, the total number of mobile phone users does not increase."
Proponents of mobile communications market liberalization say higher competition among operators means lower tariffs for users.
Matulis refuted these claims.
"The drop in prices does not depend on the number of operators, but on competition, and in Latvia competition is ensured by the two current operators."
He said that in Estonia, where there are three mobile phone operators, tariffs have stayed the same and only prices on mobile phones have dropped. He predicted that the third operator may come with a different payment plan, but in general tariffs would not decrease.
So far, only Estonia's multimedia group Levicom has announced it will take part in the tender for the third license, the Baltic News Service reported. Levicom already tried to obtain a license in 1996, but the Transport Ministry then ruled in favor of Baltkom GSM.