LETA bases this information on a letter it has seen, authored by Telia Senior Vice President Robert Andersson and sent to the Latvian government.
Meanwhile Latvian Prime Minister Maris Kucinskis has promised to provide a response toTelia Company in November, while Economics Minister Arvils Aseradens (Unity) has called on the government to carefully weigh Telia's position.
If the government rejects Telia's recommendations, the letter reads, Telia will finally have to accept that after over a decade of trying and offering every possible solution, it can no longer positively affect the strategy of the companies, as has especially been highlighted recently in both the behavior from the management as well as the recent unworkable deadlocks in the Supervisory Council of LMT, Andersson writes in the letter.
Telia will have to reconsider the status of the companies within the formal structure of its group of companies, as it no longer has the possibility to strategically guide the companies. Telia would also then have to reassess its assets and transfer them from strategic holdings to financial holdings. This means Telia's approach to both LMT and Lattelecom will be forced to change.
Telia cannot place shareholders' capital into long term counterproductive and ill placed strategic bets. This is an everyday reality for a public listed company like Telia, which has a fiduciary responsibility to its shareholders. Therefore, Telia's representation on the Supervisory Councils will be adjusted to ensure that short-term shareholder benefits over long term strategic investment is prioritized, says the letter.
Telia must also begin the process of assessing the value of the assets at hand; this would require a full overview of the strategy of all shareholders as well as an audit from both a financial and an ethics and compliance perspective so Telia can accurately assess the value and the options for the two companies as well as any liabilities. This will be the beginning of the process of placing the shares under strategic review and ultimately seeking a buyer for Telia's stake in the two companies.
In this scenario of selling the shares, Telia Company will naturally honor its agreements with Latvian co-owners as well as all provisions of Latvian laws, says the letter.
Andersson also says in the letter that Telia is proud of two decades of being the leading foreign investor in Latvia and its hope and heartfelt aspiration is for that to continue. Telia's preference is to be a part of Latvia's digital future. Telia believes strongly in its Nordic and Baltic strategy and very much wants Latvia to be a leading light in that strategic vision, but it cannot be at the expense of Telia shareholder's long term interests and equally at the expense of the best interests of Latvian citizens.
As reported, the Scandinavian telecommunications group TeliaSonera, which also holds shares in Lattelecom and LMT, proposed on November 20, 2015 that both companies should be merged. However, the Latvian government decided in April 2016 that LMT and Lattelecom would continue operations as two separate entities.
The government also decided to hire an independent consultant to perform macroeconomic, microeconomic and socioeconomic analysis of further actions concerning state-owned shares in Lattelecom and LMT. KMPG Baltics was then selected to help the government develop a strategy on state-owned shares in Lattelecom and LMT.
The KPMG audit company has analyzed further actions concerning the state-owned shares in Lattelecom and LMT and suggested that the two companies should be 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 51% of Lattelecom shares, and Latvian Privatization Agency the other 49%.
