Changes in phone contract on the table

RIGA - Negotiations have resumed with Tilts Communications to cure Lattelekom of its monopoly on Latvia's phone service. The company's original contract ran until 2013 but must be shortened to allow competition in keeping with requirements of the European Union and the World Trade Organization.

The WTO invited Latvia to join in October. By accepting membership in the 132-country association, Latvia agrees to end the Lattelekom monopoly in 2003. EU and Latvia are still locked in courtship.

Latvia's people own 51 percent of the phone service provider and the remainder is owned by Tilts Communications, which is owned wholly by Finnish utility Sonera except for 10 percent of Tilts owned by the International Finance Corporation. Before its purchase by Sonera, Danish-based Tilts Communication comprised Cable & Wireless, Telekom Finland and IFC.

Latvia's Communications Law and the umbrella agreement concluded between the state and Lattelekom in January 1994 provides that compensation may be claimed by Tilts for shortening the monopoly.

The Latvian Privatization Agency has proposed that the state set up a joint stock corporation by selling its portion by shares, some to Tilts, 15 percent to the public and some to Lattelekom employees and other investors.

On Oct. 13 the Latvian government canceled restrictions on privatization of the state-owned share and put it up for privatization by the end of the year. LPA Director General Janis Naglis told BNS that the terms of the privatization should be set by the middle of 1999. Naglis predicted that Lattelekom shares could be offered on an international stock exchange.

The next negotiations will take place on Nov. 5.