Latvia’s Cabinet of Ministers decided on Tuesday that state-owned companies Latvenergo and the Latvian State Radio and Television Centre (LVRTC) will buy out stakes which the Swedish telecommunications company Telia owns in Tet and Latvian Mobile Telephone (LMT).
Latvia’s Economics Ministry has been negotiating with Telia on the future of the two firms, and Latvenergo and the LVRTC will now be authorised to make an offer for the buyout.
The Swedish company has not yet said whether it plans to accept the offer.
Economics Minister Viktors Valainis promised updates about the deal in the near future, saying that it will be subject to certain processes, but the sum will be close to the market price.
According to unofficial reports in the past, the deal could be worth several hundreds of millions of euros or perhaps as much as half a billion euros.
Latvenergo board chairman Martins Cakste has said that he hopes that the deal will be inked before a year has passed.
Valainis explained that the government’s decision on Tuesday was a conceptual one in terms of moving forward in the country’s relations with Telia to determine how the future development of Latvia’s largest telecoms company will proceed.
“Our goal is to make the companies more export-oriented with more favourable terms for the state,” the minister said. He insisted that Tet and LMT have worked very well, but their existing model of governance has hindered their development.
Latvia and Telia had different visions about the future. Latvia wanted to develop technology and exports, while Telia was focused more on the domestic market, Valainis said.
The minister added that energy and telecoms companies in other countries are also forming joint ventures so as to combine their areas of competence, but at the same time, it is too early to think about a potential merger between the two firms.
Cakste called for the ability of business leaders to view future trends, including the fact that energy is changing at a rapid clip and is becoming very smart, indeed.
“I think that we are going through a transformation for which we need to prepare,” the businessman explained. “We see opportunities in this investment to create a strong technology company which also provides solutions in the energy world.”
LVRTC board chairman Girts Ozols, for his part, stresses the fact the his agency had expressed its readiness last year to make investments in the further development of the ICT sector, and the company is therefore pleased that the process is gradually moving forward.
“The LVRTC is a well-capitalised company with project portfolio management close to EUR 300 million,” Ozols said.
The chairman also pointed out that the development of the necessary infrastructure is increasingly dynamic in terms of providing meaningful artificial intelligence solutions and communications data transmission solutions whilst simultaneously ensuring security in line with modern technologies.
Mr Ozols added that both Tet and LMT have strong teams of specialists and engineers, adding that these people are the companies’ greatest asset.
Latvian Transport Minister Atis Svinka says that it is important to develop IT, communications services, infrastructure, data services and innovation.
As has been reported in the past, several options have been discussed in terms of negotiations between the Latvian government and Telia, ranging from a merger between Tet and LMT to a preservation of the status quo. The possibility of a full or partial buyout of the two companies from Telia along with the divestment of certain assets has also been considered.
A complex management system was set up for Tet and LMT in the past, and the two shareholders – the government and Telia – have so far been unable to agree on whether and how to change it.
The state’s Public Asset Management Possessor owns 51% of Tet, while the Telia subsidiary Tilts Communications owns 49% of TET. Telia and its subsidiary Sonera Holding own 49% of shares in LMT, the Latvian government owns 28% through the LVRTC and the Possessor (5%), and Tet controls another 23%.
This, in theory, means that via Tet, Telia controls 60.3% of LMT, while Latvia’s stake is just 39.7%. This, however, is not how it works in practice, because the state still maintains decisive control over LMT as the majority shareholder in Tet. This complex ownership scheme has been impeding several strategic projects which require shareholder unanimity.
Source: BNS
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