Gulbis attacks cable TV merger

RIGA - Lattelecom CEO Juris Gulbis, interviewed on the LNT TV morning news show, commented that the merger of the telecommunications companies Baltkom and Izzi will create a “pile of problems,” reports Nozare.lv. Gulbis underlined that in the telecommunications sector the past 20 years, prices have dropped steadily and there is stiff competition. After Lattelecom appeared on the scene, a similar tendency was seen in the television market as well, with prices decreasing 17 percent.

A Baltkom/Izzi merger will bring about just the opposite, and competition will decrease. A monopoly is being established in the television market, taking 80 percent in some cities, he pointed out. The proper authorities will have their hands full in monitoring the merged entity’s operations, Gulbis added.

Latvian cable television and communications companies Baltkom and Izzi will be allowed to merge into one company, Competition Council representative Inita Kabanova said on Nov. 23. Kabanova said that the Competition Council will place various restrictions on the merger, however, which would allow the Competition Council to restrict the influence the company’s dealings would have on competitors.

Baltkom Press Secretary Lauris Klavins at the time of the announcement said that “The goal of the merger is to improve services provided over the common territory of the two companies, as well as concentrate the companies’ resources on the development of existing services, the introduction of modern technology, and the creation of real competition in the telecommunications market, which is currently dominated by Lattelecom.”

In order for the deal to go ahead, authorization was required from the competition council. As the companies state in an announcement for the press, “the merger would produce one of the largest telecommunications companies in the Baltic States, which would stimulate competition in the electronic communications market.”
The details of the deal are not being made public; however, the press announcement indicates that “the activity of the new company will be founded on an equal basis, bringing together the best and most effective features from the business practice and experience of both Baltkom and Izzi,” which appears to be a signal that the deal will be an equal merger, rather than an acquisition.

Helmut Kohl, a representative of the Izzi owners, indicated that in buying Izzi two years ago, the company’s new owners outlined a strategic objective - consolidation of the Latvian telecommunications market. “I am pleased to announce that this deal is a very important step in this direction,” said Kohl.
According to information from the Latvian Telecommunications Association, Baltkom commands more than 39 percent of the pay television market in Riga, while Izzi has 25.5 percent. In the Internet market, 25 percent belongs to Baltkom, while 9 percent belongs to Izzi.