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As reported to LETA, last week, the government confirmed the official letter with the Lattelecom privatization offer that was sent to TeliaSonera.

The Lattelecom privatization option as proposed by the government, foresees exchanging state-owned Latvijas Mobilais telefons (LMT) shares for TeliaSonera's interest in Lattelecom.

The Latvian Privatization Agency in cooperation with Latvijas Valsts radio un televizijas centrs (Latvian State Radio and Television Center, LVRTC) will be assigned to prepare the regulations for selling 49% of Lattelecom shares and choosing the possible candidates. It will not be permitted to sell the 49% of Lattelecom shares further for a smaller price than that paid by LVRTC.

In case LVRTC would need additional assets for the implementation of the deal, the government could decide on allocating additional credit funding.

The chosen privatization framework previously was not supported by Cabinet ministers from For Fatherland and Freedom/LNNK.

The option approved by the government is to exchange the shares between LVRTC and TeliaSonera. The U.S. investment company Blackstone would also have the opportunity to participate in the privatization.

The agreement stipulates that LVRTC buys TeliaSonera's 49% interest in Lattelecom and immediately sells it to an investor, most likely, to Blackstone.

The government disagrees with the possible break up of Lattelecom into two enterprises, which is one of the conditions stipulated for the share exchange option by TeliaSonera. "A break up of Lattelecom into two enterprises is still one of TeliaSonera's main conditions for successful implementation of the deal.

However, if Latvia's government has other proposition, we are ready to consider them," TeliaSonera's press secretary Niklas Henrikson previously said.

LVRTC would act as a go-between in the deal, the deal would also meet TeliaSonera's requirement that it would only sell the shares to the state of Latvia. The Lattelecom privatization deal also envisages that LVRTC would sell the state-owned LMT shares to TeliaSonera, and that TeliaSonera would also acquire LMT shares held by Lattelecom.

TeliaSonera presently holds a 49% stake in Lattelecom, and the state of Latvia 51%. TeliaSonera also owns 49% of LMT shares, another 28% interest in LMT belongs to the state of Latvia (with a 23% interest held by LVRTC and 5% the Latvian Privatization Agency), and the remaining 23% of LMT shares belong to Lattelecom.

Transport Minister Ainars Slesers (LPP/LC) believes that if the deal is successful and the state manages to sell the 49% interest in Lattelecom, the state will receive a total of about LVL 270 million. The state would be paid at least LVL 30 million for its 5% interest in LMT, and at least LVL 240 million for the 49% of Lattelecom shares. As a result, the state would receive about LVL 270 million, and still hold a 51% interest in Lattelecom.