Adviser sought for phone sell-off

RIGA (BNS) - Lattelekom telephone company's privatization adviser
will have to study the possibility for the Latvian state to buy from
Lattelekom its 23 percent stake in mobile operator Latvijas Mobilais
Telefons for the lowest price.

A Latvian Privatization Agency representative told BNS this is one of
the goals included in the working program of financial advisor for
Lattelekom's privatization and talks with Tilts Communications on
reduction of Lattelekom's monopoly period over fixed
telecommunications in Latvia by 10 years, from 2013 to 2003.

TC, 90 percent owned by telecommunications company Sonera of Finland,
is a co-owner of Lattelekom.

The goal of the possible purchase of LMT's shares is to set up a
market structure with several independent operators, the LPA said.
LMT is one of Latvia's two mobile communications operators. The LPA
board June 15 decided to announce an international tender to select
the financial advisor for the privatization of state owned shares in
Lattelekom.

The LPA board also approved the financial advisor's work program and
the timetable of the tender.

The LPA hopes to sell the remaining state-owned capital shares in
Lattelekom, raising maximum proceeds from the sale, and further
liberalize Latvia's telecommunications market as a result.

The adviser will have to forecast economic and financial consequences
of limiting Lattelekom's monopoly period, advise on what steps should
be taken to reach the reduction, and calculate the volume of the
possible mutual compensations between the Latvian state and TC.

After the compensation issue is solved, and Lattelekom is transformed
into a joint stock company, the adviser will have to develop the
company's privatization model and strategy for selling state-owned
capital shares in Lattelekom in line with the best international
practice.

The model will have to include use of privatization vouchers, with
15 percent of the Lattelekom shares remaining in state ownership
after the monopoly reduction compensation scheme to be offered
publicly for privatization vouchers.

Given that TC is advised by Goldman Sachs, one of the most
experienced international investment banks, the LPA hopes to match
their expertise through the tender.

The potential advisers may apply for participation in the tender by
2:00 p.m. Latvian time on July 7. Tender proposals by approved
bidders will be accepted until 2:00 p.m. Latvian time on Aug.17.

Invitations to the tender will be published in the domestic and
foreign press soon.

LPA director general Janis Naglis said earlier the Lattelekom
privatization adviser could be selected before the end of August.

The privatization of state-held capital shares in Lattelekom could
then take place at the end of the 1st quarter or in the beginning of
the second quarter in 2001, Naglis assumed.

The Latvian state currently holds 51 percent of shares in Lattelekom
capital. Naglis said the shares will be offered publicly against
privatization vouchers and also on the international market against
cash.

The international offer will not be made in a single block. Therefore
anybody, including TC, which currently holds 49 percent, will be able
to buy shares.

Naglis also said the talks with TC over its monopoly must finish this year.