The Latvian daily Diena said on Jan. 4 there were reports about Finland's Sonera, another member of the Tilts Communication consortium, purchasing these shares from IFC under the agreement signed last year. The purchase price was not disclosed.
The daily said the deal was not complete yet and thus could say that Sonera was the only holder of a 49 percent stake in Lattelekom that belongs to TC. Formally, the deal has been made and IFC will sell its holdings, confirmed Lattelekom President Gundars Strautmanis, adding that the sale will not bring about any changes in the company's operations.
Meanwhile the Latvian government and Sonera continue negotiating a settlement in arbitration proceedings between TC and the Latvian state. It is not known yet when the documents could be signed but comments by some officials suggest the settlement could be finalized this month.
The Latvian government has to decide whether it agrees to sell to Sonera 5 percent in mobile telephone operator LMT and 5 percent in Lattelekom for some $45 million to 50 million to see the consortium hold up its end of the deal by completing telecommunication network upgrading in Latvia, or continue with the proceedings that have already cost the state over 4.5 million lats ($7.26 million).
If this settlement is made, Sonera will hold a 54 percent in Lattelekom and, indirectly, a controlling stake in LMT. Latvia would comply with the EU and World Trade Organization's requirements to liberalize the telecommunication market and to start privatization of state-owned Lattelekom shares against payment in privatization vouchers.
In 1998 Sonera acquired a 90 percent in TC, buying them from Cable & Wireless. The consortium formed by Cable & Wireless and IFC was approved as a strategic investor for Lattelekom in late 1993. In early 1994 TC and the Latvian government signed a framework agreement that in summer 2000 became the subject in arbitration proceedings in Stockholm as the consortium sued the Latvian state over its intention to cut short the 20-year monopoly period granted to Lattelekom under the document.