EU – Baltic States, Latvia, Legislation, Technology, Telecomunications

"Our vision for a merged LMT and Lattelecom is an uptick in investment in a number of areas, which would be a natural strategic path to follow with a new converged digital player. We will be looking to make an early announcement on 5G commercial launch in Riga as part of our Gigabit society strategy, and Riga would be a natural continuation to our projects in Tallinn, Stockholm and Helsinki," he said in the letter.

He also promised to drive a stronger innovation capacity by opening an arm of innovation and investment vehicle, Division X in Riga as well as service centers across a number of areas of the business to support the Telia Company organization.

"We know (and supported by every major international ranking such as the European Commission’s Digital Economy Scoreboard Index or World Economic Forum’s Network Readiness Index) Latvia is currently the laggard of the region in terms of digitalization of society, and we are committed to changing that. Higher investment, more competence, better jobs, more opportunities for Latvian employees and a strong digital economy are all compelling reasons which we believe offer a clear indication that now is the time to finally act after over a decade of indecision," said Andersson.

As reported, Scandinavian telecommunications company Telia has warned the government of Latvia that it could sell its shares in Latvijas Mobilais Telefons (LMT) and Lattelecom if the two companies are not merged, according to Telia Senior Vice President Robert Andersson's letter to the government.

If the government rejects Telia's recommendations, Telia will finally have to accept that after over a decade of trying and offering every possible solution, it can no longer positively affect the strategy of the companies, as has especially been highlighted recently in both the behavior from the management as well as the recent unworkable deadlocks in the Supervisory Council of LMT, Andersson writes in the letter.

Telia will have to reconsider the status of the companies within the formal structure of its group of companies, as it no longer has the possibility to strategically guide the companies. Telia would also then have to reassess its assets and transfer them from strategic holdings to financial holdings. This means Telia's approach to both LMT and Lattelecom will be forced to change.

Andersson also says in the letter that Telia is proud of two decades of being the leading foreign investor in Latvia and its hope and heartfelt aspiration is for that to continue. Telia's preference is to be a part of Latvia's digital future. Telia believes strongly in its Nordic and Baltic strategy and very much wants Latvia to be a leading light in that strategic vision, but it cannot be at the expense of Telia shareholder's long term interests and equally at the expense of the best interests of Latvian citizens.

Telia Group companies Sonera Holding and Telia Company own 49% of LMT shares altogether, while Latvian Radio and Television Center and Latvian Privatization Agency - 28%. Lattelecom, which belongs to Telia and the state of Latvia, owns 23% of LMT shares.

Telia Group company Tilts Communications owns 51% of Lattelecom shares, and Latvian Privatization Agency the other 49%.

LETA also reported that the government decided to hire an independent consultant to perform macroeconomic, microeconomic and socioeconomic analysis of further actions concerning state-owned shares in Lattelecom and LMT. KMPG Baltics was then selected to help the government develop a strategy on state-owned shares in Lattelecom and LMT.

KPMG audit company has analyzed further actions concerning the state-owned shares in Lattelecom and LMT and suggested that the two companies should be merged.

Latvian Prime Minister Maris Kucinskis (Greens/Farmers) has promised to provide the response to Scandinavian telecommunications company Telia Company (Telia) on its proposal for the possible merger of Latvian Lattelecom and Latvijas Mobilais Telefons (LMT) companies in November.