TeliaSonera poised to take over Latvian operations - but only once we've ridden out the downturn

My focus here tends to be on the telecoms sector in states to which we can, without too much controversy, attribute the sometimes contentious labels 'emerging markets' or 'developing countries'.

Not a great deal of time is spent here, therefore, discussing events in Europe - even the less-highly developed countries thereof. That said, I retain a strong personal interest in the Central and Eastern parts of the continent, not least because I lived and worked in Poland in the early-mid 1990s, a time of fast-paced socioeconomic change, the effects of which I felt at first hand. For me at least, a decade after I was travelling around the CEE region from my Polish base, the gaps between Western and Eastern Europe seem smaller all the time. I've often wondered for how much longer it will be meaningful to think in terms of there being a distinct CEE region.

One CEE state which I've not yet visited is Latvia, which is a glaring omission given that I have a distant family connection to the country. I daresay I will remedy this before too long. Until then, I follow telecoms sector developments there via the usefully informative blog maintained by Juris Kaža, am a Latvian-American journalist living in Latvia.

Today, Juris posted a very recent video interview with Kenneth Karlberg, President of Mobility Services for giant Scandinavian telco TeliaSonera, which owns a 49% stake in Latvia's incumbent fixed-line operator Lattelecom, which in turn owns 23% of LMT, the country's second-ranked mobile operator in terms of share of subscriptions. LMT's other shareholders are state-owned TV and radio broadcaster VAS Latvijas Valsts Radio un Televīzijas Centrs, a Latvian state privatisation fund and TeliaSonera. Again, I think I understand from the interview with Mr Karlberg that the Scandinavian telco would like to acquire any shares it does not already hold in the company:



When, then, might TeliaSonera be able to consolidate its position in Latvia? According to a recent article in Baltic Course magazine, any sale of Government telecoms assets will have to wait "until after the economic crisis is over." This view comes straight from Economy Minister Artis Kampars, who is also quoted as saying that "running a company, whose main goal is to generate as large a profit as possible for its owners, is not a government function". This does not mean, however, retreating from that function with undue haste, according to Mr Kampars who feels the sale of Lattelecom shares "must be organized so that it brings as much money as possible for the state." For Kampars, to do this will involve waiting for the Latvian (and global) economy to begin to recover from the current malaise. "In the meantime," says Kampars, "we have to streamline the company's management and expand the company's business also outside Latvia in order to increase the value of the company."

This streamlining, if carried out, seems set to hit the pockets of some senior people on the Latvian telecoms scene. The Baltic Course article states that in Kampars' opinion the current Lattelecom council, which has eleven members, needs to be downsized by reducing the number of council members elected by the state of Lavia as well as by TeliaSonera. Mr. Kampars also believes that the salary for Lattelecom board chairperson should not exceed the salaries paid to board chairpersons at other government-run companies. From that, I infer that there does exist some considerable gap.

TeliaSonera poised to take over Latvian operations - but only once we've ridden out the downturn