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

Daniels Pavluts

LMT and Lattelecom face strong competition in voice communications, data transmission and television services, and the merger will not reduce competition, explained the minister.

In Lithuania and Estonia, where similar companies were merged, the market did not suffer. Moreover, Lithuania's telecommunication services are the cheapest in Europe, emphasized Pavluts.

It is necessary to strengthen the synergy between LMT and Lattelecom and the companies should not compete with each other, since they belong to the same owner, pointed out the minister.

If both companies are merged, their value will increase. The state, as their owner, will also benefit from it, added Pavluts.

According to Pavluts, LMT and Lattelecom could be merged within a year and a half.

As reported, LMT and Lattelecom could be merged next year, magazine "Ir" reported last week, referring to a secret report submitted to the government.

The government will review the report in the near future.

LMT and Lattelecom privatization is currently not being discussed, but potential management models are being evaluated to ensure increases in both companies' value, save up assets, reduce administrative costs and improve client service, the Economy Ministry informed the business information portal "Nozare.lv".

Initial expert conclusions indicate that LMT and Lattelecom long-term development and value increases are hindered by restrictions set in their founding agreements, which do not allow the companies to come up development strategies matching the latest trends of electronic communications and telecommunications technology. This poses a threat for a decrease in LMT and Lattelecom value in the long term, points out the Economy Ministry

According to the report, LMT value has been constantly reducing since 2008 and could amount to LVL 149 million in 2013. Lattelecom value, however, has been stable and could reach LVL 238 million this year.

The Economy Ministry points out that the Privatization Agency has evaluated various LMT and Lattelecom management models, including consolidation with the state maintaining its controlling interest.