EU – Baltic States, Markets and Companies, Telecomunications

The signing of the memorandum has been approved by the Cabinet of Ministers. The prime minister’s representatives said that the memorandum cannot be considered an international agreement and it does not entail any legal consequences for any of the parties as the document essentially is a protocol of intent. It is a commitment to sit down at the negotiations table to work out a mutually agreeable strategy for further cooperation and development of Lattelecom and LMT.

Disagreements that may arise in the process of the memorandum’s implementation will be solved through talks.

Kucinskis indicated that such a memorandum was necessary to ensure a successful development of the telecommunication companies and cooperation between them also in the future.

“In November last year the Cabinet of Ministers decided that Lattelecom and LMT will not be merged, and now both their owners – Latvia and Telia Company – must work together to develop these companies. By drawing up and signing the memorandum of understanding, the companies’ shareholders will clearly affirm their willingness to work in Latvia, doing everything to ensure that these companies develop successfully, promoting the development of information and communication technologies and thus contributing even more to the economy as a whole,” Kucinskis said.

It was also stressed that the commitment to working together on the two companies’ strategic cooperation is important in terms of Latvia’s national security interests.

By signing the memorandum, the parties pledge to work out a single Lattelecom and LMT strategy aimed at achieving synergy between the two companies as they phase in the next generation communication systems and strive for innovative excellence.

The Cross-Sectoral Coordination Center of Latvia has been put in charge of the memorandum’s coordination.

In April this year, Kennet Radne, the new regional head of Telia Company in Latvia, told  that it is the priority of Swedish telecommunication concern Telia Company in negotiations on the future of Latvijas Mobilais Telefons (LMT) and Lattelecom to stay in Latvia’s market.

"Our wish and priority is to stay in Latvia," said Radne when asked about the company’s strategy.

At the same time, it is not excluded that Telia Company might sell all its shares in both LMT and Lattelecom.

"There is no yet decision on what to do with Telia Company’s shares in LMT and Lattelecom," he said, adding that the company is constantly assessing its strategy.

According to Radne, Telia Compay will not insist on the merger of LMT and Lattelecom, but will focus on cooperation between both companies. "That is what customers want," he said.

Telia Company also wishes to make sure it shares goals with the Latvian government, and to strengthen administration of LMT and Lattelecom.

As reported, the Latvian government decided in November 2017 not to back the plan to merge LMT and Lattelecom.

Scandinavia's Telia Company had warned the Latvian government that it could sell its shares in LMT and Lattelecom if the two companies are not merged.

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 49% of Lattelecom shares, and Latvian Privatization Agency the other 51%.