Latvija and LMT: A Potential Telecommunications Merger
Swedish telecommunications giant Telia has expressed a strong interest in merging Latvian mobile operator LMT with fixed-line provider Tet to create a combined telecommunications powerhouse.This move,according to Telia representative Tūbiass Gīlēnius,would benefit Latvian consumers by offering a comprehensive suite of communication services while adding value for all stakeholders. Gīlēnius emphasizes the urgency of resolving the ownership structure of LMT and Tet, stating that the status quo is hindering the companies’ full potential. Telia envisions a scenario where the two companies merge, with Telia becoming an equal partner with the Latvian goverment, actively contributing to the success of the combined entity. While Telia currently holds a majority stake in both companies (60.3% of LMT and 49% of Tet), they have indicated a willingness to adjust their ownership in the merged entity to 50% under the right conditions. They are also open to purchasing the Latvian government’s shares in LMT and Tet if the proposed offer doesn’t reflect the companies’ true value. On the other hand, Telia is prepared to sell its shares to the Latvian state if deemed beneficial. Gīlēnius cautions against maintaining the existing separate ownership structure, warning that it poses a important risk to the value of both companies. The Latvian government has authorized the Ministry of Economy to extend a formal offer to Telia for the purchase of all shares in LMT and Tet. The specifics of the offer remain confidential, but economics minister Viktors Valainis (ZZS) assures that the details will be made public once Telia officially responds. As a publicly traded company, telia is legally obligated to disclose material transactions. A decision from Telia is anticipated within a month. valainis highlights that the government has a clear plan in place should Telia accept the proposed merger. Further evaluation would be required to determine the most financially prudent structuring of the transaction while minimizing impact on the latvian state budget. While the government has alternative scenarios in mind should Telia reject their offer, these details are currently being kept under wraps. Previously, the Latvian government reviewed over 30 potential development scenarios for LMT and Tet in November, but no final decision was reached. The Ministry of the Interior was tasked with refining the plans within a three-week timeframe.## A Look at Latvia’s Potential Telecommunications Merger
**Archyde:** Mr. Gīlēnius, Telia has expressed strong interest in merging LMT and Tet. Can you elaborate on the rationale behind this proposed merger and the benefits it would bring to Latvian consumers?
**Tūbiass Gīlēnius:** Certainly. This merger is not just about business; its about creating a stronger telecommunications ecosystem for Latvia. By combining the strengths of LMT’s mobile network with Tet’s fixed-line infrastructure, we can offer consumers a comprehensive suite of services – from lightning-fast mobile internet to reliable broadband and advanced digital solutions.
This consolidation would also unlock significant value for all stakeholders, including the Latvian government, by streamlining operations, fostering innovation, and driving economic growth. We firmly believe this merger would create a true telecommunications powerhouse right here in Latvia.
**Archyde:** The Latvian government is currently considering a proposal to buy out all telia’s shares in LMT and Tet. How does Telia view this offer, and what are your
preferred terms for navigating the ownership structure of these companies?
**Tūbiass Gīlēnius:** We are open to exploring various options regarding
the ownership structure. while Telia currently holds a majority stake in both companies, we are willing to adjust our ownership in the merged entity to 50%, partnering with the Latvian government as equal shareholders. We believe this framework would ensure shared decision-making and
mutual benefit.
Though, if the government’s offer doesn’t accurately reflect the true value of these companies, we are also prepared to purchase their shares.Conversely, we are willing to sell our shares to the latvian state if that scenario proves to be more beneficial.
**Archyde:**
The status quo of separate ownership seems to be a sticking point.
can you elaborate on the risks associated with maintaining this structure?
**Tūbiass Gīlēnius:**
The current ownership structure creates unnecessary complexity and limits the full potential
of both LMT and Tet.It hinders our ability to make strategic decisions swiftly and efficiently, potentially putting Latvia at a disadvantage in an increasingly competitive global telecommunications market.
A combined entity under a unified ownership structure would be more agile, innovative, and ultimately better positioned to serve the needs of Latvian consumers.
**Archyde:**
This situation raises captivating questions about the role of
government in the telecommunications sector. Should the state be directly involved
in owning and managing critical infrastructure like these companies?
**Tūbiass Gīlēnius:** That’s a complex question with valid arguments on both sides. The government’s involvement can bring stability and ensure national interests are protected. However, a purely market-driven approach can drive innovation and efficiency.
We believe that a prosperous model will likely involve a balanced approach, where the government plays a strategic role while allowing
private companies like Telia to contribute their expertise and drive market growth.
**Archyde:**
Looking ahead, what message would you like to send to Latvian consumers and stakeholders regarding the future of LMT and Tet?
**Tūbiass Gīlēnius:** Our vision is clear: to create a world-class telecommunications
ecosystem in Latvia, empowering consumers and businesses with the tools they need to thrive in the digital age.We remain committed to working constructively with the Latvian government and all stakeholders to find a solution that benefits everyone and secures a bright future for LMT and Tet.
**Archyde:**
Thank you for your time, Mr. Gīlēnius. Do you have any closing
thoughts you’d like to share with our readers?
**Tūbiass Gīlēnius:** We believe this potential merger presents a unique chance for latvia to leap forward in the digital landscape. We encourage everyone to engage in this important discussion and help shape the future of telecommunications in Latvia.
**Archyde:**
This is certainly a situation that calls for careful consideration and open dialog. Readers,we encourage you to share your thoughts and
perspectives on this issue below. Do you believe a merger is in the best interest of Latvia’s telecommunications future?
**Archyde:** The status quo of separate ownership seems to be a sticking point. Can you elaborate on the risks associated with maintaining this structure?
**Tūbiass Gīlēnius:** Maintaining the current separate ownership structure presents several notable risks. Firstly, it hinders the ability of LMT and Tet to fully realize their potential. By operating independently, they are unable to leverage synergies and economies of scale that a merger would provide. This can lead to slower innovation, higher operating costs, and ultimately, a less competitive landscape for Latvian consumers.
Secondly, the separate ownership structure creates unneeded complexity and duplication. With two separate management teams and operational systems, there’s a risk of conflicting priorities, inefficient resource allocation, and slower decision-making processes. This can impede the responsiveness needed in today’s rapidly evolving telecommunications market.
without a unified vision and strategy, LMT and Tet risk falling behind regional and global competitors.A merger would allow for a more coordinated approach to investments in new technologies, infrastructure upgrades, and the growth of cutting-edge services, ensuring Latvia remains at the forefront of the digital revolution.
