Telekomas continues to be magnet of protest

VILNIUS - While funds from the June 12 Lietuvos Telekomas initial
public offering have almost finished flowing into the State
Privatization Fund, to the tune of $96.94 million (387.8 million
litas), a new round of criticism is coming from Parliament.

On May 26, a parliamentary coalition between the Labor Democratic
Party and the Social Democratic Party issued a statement condemning
the government's decision to go ahead with the IPO, which, they
claim, resulted in money losses for the government.

"Lietuvos Telekomas shares were traded at a lower price than the set
lowest limit, which, according to experts, brought losses to
Lithuania. We hoped that, in the event that the price dropped to 3.4
litas ($0.85) per share, the sale would be halted. But the ruling
Conservatives ignored this caution of financial experts, letting the
bidders buy them at an unprecedented low price - 3.15 litas," the
statement said.

On June 15, Prime Minister Audrius Kubilius was summoned to a Seimas
plenary session to give 13 MPs from opposition groups an account for
the stock sale.

"The situation in securities market of Lithuania this week shows that
Lietuvos Telekomas shares, valued late last week, reflected the
current situation in markets," Kubilius said.

He may have been right. During the week following the IPO, share
prices for Lietuvos Telekomas have been disappointingly low. Starting
at 3.15 litas per share, they immediately shrank in value to a low of
2.85 litas per share on June 14. As of press time, the price has
stabilized somewhat, to roughly 3.00 litas per share.

The left-wing coalition also requested that the State Control and
Special Investigation Services conduct an investigation to calculate
the losses made to the state because of the telecom deal. They also
called for a probe by the Prosecutor General's office to disclose
those responsible and initiate legal proceedings against them.

Another battlefront opened up on June 16, this one on the doorstep of
Lietuvos Telekomas itself. Social Democracy 2000, a break-away party
formerly aligned with the Social Democratic Party, initiated a
campaign to petition Lietuvos Telekomas to improve the quality of
service, limit prices, and eradicate fees to consumers for detailed
monthly reports. The party eventually showed up in the lobby of a
Telekomas board meeting, only to be denied entry.

ELTA reported that Social Democracy 2000 claimed that the Swedish and
Finnish Telia/Sonera consortium holding the majority of Lietuvos
Telekomas were hiking prices not to improve the quality of service,
but to boost profits. Earlier this year, Lietuvos Telekomas
"re-balanced" its phone rates, lowering prices for international and
long distance calls, while raising rates for local calls.

The political party is organizing a country-wide signature campaign
to galvanize public support against further monopolistic actions by
the telecom. Member of Parliament Rimantas Dagys, the leader of
Social Democracy 2000, claimed that this move is not much more than
an attempt to send a message.

"This action is not a referendum, it's a moral action. By our
privatization agreement with Telekomas, Telekomas has a monopoly
right. The prices we are now paying for that are too high to compare
with what is being done to improve the telecom," Dagys said. "We are
trying to convince the leaders and the chief of this company to be
moderate and invest more towards quality of the telecommunication
system."

However, this effort might fall on deaf ears as there is little legal
recourse to force Lietuvos Telekomas to agree to anything.

"The action is moral," Dagys reiterated, "because by our agreements
and our telecommunications law related to the agreement, there is no
other mechanism to do something when Telekomas has a monopolized
right here."

He hopes that at worst, this move would serve to influence public opinion.

"Of course it's too early to say what we'll do in the future because
we don't know what Telekomas' reaction will be," Dagys conceded.

The Social Democracy 2000 petition, Dagys added, is happening
independently of the IPO. His party wanted to wait until after the
IPO to plead their case to Lietuvos Telekomas so as not to influence
the share prices in the IPO.

"Now that question is over. Now it is time to discuss," Dagys said.

However, according to an ELTA report, the Lietuvos Telekomas board
declined on June 16 to receive Social Democracy 2000 representatives.
The activists vowed to press on with the signature campaign.