Direct Speech, Latvia, Technology, Telecomunications

Janis Lelis

Even though the parties involved will claim that the merger will not result in a monopoly, everyone else realizes that the merger will lead to a super monopoly in the telecommunications industry. Other companies will have slim chances of competing with it, emphasizes Lelis.

If LMT and Lattelecom merge, they will dictate market prices, as opposed to competition. The company will do as it pleases. At the moment, there is fierce competition in Latvia and companies operate in competitive environment. Nevertheless, this can change quickly, and the merger of LMT and Lattelecom must not be allowed, says Lelis.

If the situation requires changes, it is necessary to privatize all Lattelecom shares. However, LMT or Telia Sonera must not participate in Lattelecom privatization. Both companies must belong to different owners. It is important for these investors to be independent and compete with each other. The state will not gain a single santim from the merger, adds Lelis.

As reported, LMT and Lattelecom could be merged next year, magazine "Ir" reports, 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.

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.