EU – Baltic States, Latvia, Legislation, Markets and Companies, Mergers and take-overs, Technology, Telecomunications

He indicated at the same time that from Telia Company’s perspective, it is too early to comment on the recommendations of the KPMG report, as the company has not yet had the possibility to study them in detail nor had received any concrete proposals in this regard from the Latvian government.

“Telia Company nonetheless understands that the report recognizes the current ownership structure as not optimal and advocates for combining LMT and Lattelecom - an approach the company has been encouraging for a long time as the only solution to ensure their sustainable future,” Andersson said.

As reported, considering the current market position of Latvian telecommunications companies Lattelecom and Latvijas Mobilais Telefons (LMT), the market development trends and potential effects on the competition and prices for services, KPMG Baltics audit company recommend creating a leading, listed and integrated Baltic telecommunications operator with a balanced shareholder structure, taking into account the interests of Latvia's population.

KPMG Baltics recommends creating an integrated company with current shareholders - the Latvian state and the Scandinavian telecommunications group Telia - each holding an equal number of shares (30-40%) in the new company while 30% of shares are to be offered to private shareholders and pension funds on the stock exchange.

This scenario will enable the Latvian state to retain significant influence in the new company and will increase the value of the government's investments through the resulting synergies.

If Lattelecom and LMT are not merged, there is a major risk that other market players would create an integrated operator which might take away from Lattelecom and LMT their market share, KPMG Baltics warned.

According to Firmas.lv business information website, the Netherlands-registered Sonera Holding B.V. owns 24.5% of LMT shares, Telia Company AB - 24.5%, Lattelecom - 23%, state-owned company Latvijas Radio un Televizijas Centrs - 23%, and Latvian Privatization Agency - 5%.

At the same time, 51% of Lattelecom shares belong to the Privatization Agency and the other 49% to TeliaSonera's Danish subsidiary, Tilts Communications.