Latvia, Technology, Telecomunications

In reply to the letter sent out by TM on March 17, TeliaSonera has accepted the offered solution in the Lattelecom privatization matter and is ready to continue negotiations regarding it. This was confirmed in an official letter to TM, sent by the President of TeliaSonera Mobility Services Kenneth Karlberg.

Transport Minister Ainars Slesers (Latvia's First Party/ Latvia's Way) is gratified about the positive response from TeliaSonera because this gives an opportunity to finally put a full stop to the long lasting political discussion on the future of Lattelecom. Moreover, the separation of Lattelekom and LMT ownership will encourage competition in the industry and thus will enhance even more qualitative and better available services.

The research done by the TM, in contrary to the legal obstacles found by the Economy Ministry, proves that at the present moment there are no legal contradictions for this deal.

As reported, Ainars Slesers's proposal foresees that TeliaSonera's 49% interest in Lattelecom could be acquired by the state-owned Latvijas Valsts radio un televizijas centrs (Latvian State Radio and Television Center, LVRTC), whereas TeliaSonera would in turn receive LVRTC's 23% interest in Latvijas Mobilais telefons (LMT), as well as the option of buying a 5% stake in LMT, that presently belongs to the state via the Latvian Privatization Agency, and another 23% stake in LMT that belongs to Lattelecom.

Therefore, Lattelecom would end up as a fully state-controlled company, whereas TeliaSonera would acquire 100% interest in LMT.

On March 17, the Transport Ministry sent an official letter to the Scandinavian concern TeliaSonera with a proposition to exchange Lattelecom and LMT capital shares.

Slesers has previously said that in the next few years Lattelecom has to remain state property. "51% or 100% – this decision needs to be made by the government. Transport Ministry will not object if 49% is sold by attracting a reliable investor," Slesers said.

As reported, on March 11 the government did not come upon the final decision on supporting any of the proposed Lattelecom privatization options and examination of the topic was postponed.

The question of Lattelecom and LMT privatization is being actively addressed since the second half of the last year, however the government still has not taken the final decision regarding the best privatization scheme.

The Ministry of Justice in its assessment, similar to the statement from the Economy Ministry, has pointed to legal obstacles to Lattelecom and Latvijas Mobilais Telefons (LMT) state shares' privatization deal as proposed by Transport Minister Ainars Slesers (Latvia's First Party/Latvia's Way).

Ministry of Justice will not issue official information due to confidentiality, but the newspaper Diena, referring to an sources, reports that also Ministry of Justice sees legal guidelines set in the Law on Radio and Television as the main obstacles to Slesers' offer.

As reported yesterday, Slesers's proposal foresees that TeliaSonera's 49% interest in Lattelecom could be acquired by the state-owned Latvijas Valsts radio un televizijas centrs (Latvian State Radio and Television Center, LVRTC), whereas TeliaSonera would in turn receive LVRTC's 23% interest in Latvijas Mobilais telefons (LMT), as well as the option of buying a 5% stake in LMT, that presently belongs to the state via the Latvian Privatization Agency, and another 23% stake in LMT that belongs to Lattelecom.

The mentioned regulations in the Law on Radio and Television foresee that LVRTC must not participate with its share in any other broadcasting company either directly or indirectly.

Transport Ministry. however, points out that digital television cannot be a reason to classify Lattelecom as a broadcasting company. Lattelecom is not producing the content of digital television, but is only ensuring the broadcasting service.

Transport Ministry released information that the co-owner of both telecommunications enterprises, TeliaSonera, has expressed in a reply letter support for Slesers' proposition and is ready to continue negotiations. The final decision on the Lattelecom and LMT privatization deal has to made by the government. It plans to do this on Friday during an emergency session.

United States Ambassador to Latvia Charles Larson hopes that the Latvian government will continue the discussion on telecommunications operator Lattelecom's privatization and that transparency of the process will be ensured.

In an interview on Latvian State Radio this morning, the ambassador did not criticize government's decision to turn down U.S. investment company Blackstone's offer regarding Lattelecom's privatization. The diplomat reckons that Latvia's government is struggling to come to a final decision on the privatization issue overall and is not turning against Blacktone in particular.

If transparent Lattelecom privatization is ensured, then, the ambassador believes, it is possible that the U.S. company will still be able to obtain a stake in the phone company.

Larson expressed hope that U.S. investment in Latvia will grow. In his opinion, also attracting investment from Blackstone particularly would provide new economic growth opportunities.