LMT and Tet hope to agree on a deal model by end of November
LMT vice president Ingmārs Pūķis says the government's task of presenting a first outline for buying out Telia's stakes by 17 November can be met. The companies hope to agree on a model at the strategic level by year-end.
Ingmārs Pūķis, vice president of the Latvian mobile operator LMT (Latvijas mobilais telefons), told the news agency LETA that the government's task of preparing a proposal to buy out the LMT and Tet shares held by the telecommunications group Telia can be completed by the 17 November deadline. The deal matters because it will determine how the ownership of two critical-infrastructure companies changes.
Timeline
Pūķis said the companies want to show the government a first vision of the deal and, possibly, the first interested investors. He forecast that a model could be agreed at the strategic level by the end of the year. This would be followed by reviews by the Competition Council and security authorities and the drafting of shareholder agreements, which usually takes months. Legally, the process could be completed next year.
According to him, in the first three weeks after receiving the government's task, LMT held talks with a sufficiently broad range of potential investors. It is also talking with Tet, since in the ideal scenario both companies would submit a joint proposal to the government.
Investor role and funding
Pūķis stressed that the previous attempt at a deal was complicated, and the strategic investor's financial role in it was small. The current political approach is looser and gives private investors more room. He said the state should remain a shareholder but does not have to control the entire company. In his view, state financial participation in the deal is not needed, and funds would come from commercial sources. Based on valuations by the Nasdaq Riga exchange, the required amount would be roughly half a billion euros.
Background
Prime Minister Andris Kulbergs (AS) announced on 13 October that the government was inviting LMT and Tet to assess buying out Telia's shares. If that fails, the companies are planned to be merged. By 24 November the state-owned Possessor will compile the proposals, and the Ministry of Economics must inform the government of the results by 1 December.
Currently the state owns 51% of Tet through Possessor, while 49% belongs to Telia's subsidiary Tilts Communications. In LMT's capital, 49% belongs to Telia and Sonera Holding, 23% to LVRTC, 23% to Tet and 5% to Possessor.
