PM designate skeptical over state telecoms merger

The new government will have to decide on whether to merge the state-owned communications companies Lattelecom and Latvijas Mobilais Telefons (Latvian Mobile Telephone - LMT). PM designate - potentially the head of the incoming government - Māris Kučinskis is skeptical about the decision, reported Latvian Radio Wednesday.

The outgoing government has pondered the potential merger for several times and discussed the scenario with Swedish Telia Sonera, the second-largest shareholder of the state-owned companies. Telia Sonera wants to merge the two operators and acquire controlling interest in the resulting telecoms giant.

The state, currently the largest stockholder, is to decide over the matter.

"If there are two successful companies, the proposal to merge them seems like something artificial. As far as I know, the companies disagree on the merger. Elsewhere in the world [a merger] happens naturally, when the strongest eats the weakest, and grows, but it's a very important decision for the state, the benefits and costs of which should be measured seven times," said Māris Kučinskis.

The Swedish stockholder Telia Sonera has suggested three potential futures for the state-owned companies, Vladimirs Loginovs, the head of the Privatization Agency, the holder of the state-owned shares, told Latvian Radio.

"They suggest buying everything, or selling everything for the same price, or merging the companies and continuing to manage the joint company together. I think that Telia Sonera can accept all three scenarios. Judging from their strategical viewpoint, the merger is the most attractive option, but they are proposing other possibilities, which we are trying to evaluate," Loginovs said.

Juris Gulbis, the head of Lattelecom, thinks that the decision should be made forthwith as any delays are damaging.

"[..] It's important to make a decision, any decision, as the worst thing you can do in business is talking without any decision making. It has gone on for a long time already," Gulbis said.

Lattelecom supports the merger, pointing out that mobile and landline operators have already merged in many other European countries. LMT however is against it, together with the Competition Council, which has said that the merger would hinder competition and spark price increases in the long term. 

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