2 By TBT Staff, RIGA
Tele2, Latvia's largest mobile phone operator, saw a large growth in sales last year, but reported a 14.6 percent drop in profits.
The Swedish owned Latvian operator registered sales of 130 million lats (185 million euro), but was down 48 million lats compared to 2007.
Tele2 chairman of the board Petras Kirdeika told reporters that "2008 profit had decreased because Tele2 has invested in development of the communications network, the largest amount in our company's entire history."
Total investments of 2008 were 14.8 million lats, up over 50 percent from 2007.
Tele2 also has not seen an increase in the number of customers, now at 1.1 million. Kirdeika said the number could be explained by intense market competition and a high turnover in customers.
Kirdeika also said company profit for 2009 will most likely be lower than 2008, but declined to make any concrete prognosis.
According to Janis Spogis, marketing director of Tele2, the company is going to conitnue improving its communications network while focussing on customer service. A mobile Internet campaign has also been freshly launched.
Because of increased competition, customers are more demanding and want better service.
"Price will be a key aspect over the next two or three years, not to mention the quality," said Spogis, adding that further decline of prices for mobile services was possible.
According to Kirdeika, prices for Tele2 services were lowered by more than 10 percent last year to increase the companies competitive edge in the mobile communications market.
Spogis also said the Latvian government could save 4 million lats (5.7 million euro) by holding a competition for mobile telecommunications and choosing the best offer.
The Tele2 marketing director told reporters that government institutions have held nine mobile telecommunications tenders during the last three years. He said such tenders should be used more extensively since the budget available to the public administration has been substantially reduced.
The marketing director said Tele2 had offered its services to several government institutions but the institutions had not shown much interest.
Tele2 CEO Petras Kirdeika also voiced surprise about the unpopularity of Tele2 services among government institutions given that Tele2 controlled more than 50 percent of the Latvian mobile telecommunications market.
Other operators providing mobile telecommunications services in Latvia are LMT, Bite Latvia, and Triatel.
Tele2 is the largest mobile operator in Latvia by the number of clients and the second largest by turnover. The company was founded in 2000.