The estimated value of the buyout deal for the telecommunications companies Latvijas Mobilais Telefons (LMT) and Tet may reach approximately 550–600 million euros, according to unofficial information obtained by the LETA news agency.
Economics Minister Viktors Valainis (ZZS) declined to comment on the sum, stating that the mentioned figures are speculative.
On Tuesday, the government is expected to make a confidential decision regarding the LMT and Tet buyout deal, during which the Minister of Economics will present a progress report on the past three months. Although Valainis refrained from confirming whether the cabinet would discuss the buyout at all, LETA has learned that the issue is included in the agenda under an informative report titled “On the Implementation of the Cabinet Protocol Decision.”
As previously reported, on the 18th of December 2024, the Cabinet of Ministers authorized the Ministry of Economics to make an offer to Telia to buy out all of its shares in Tet and LMT.
According to LETA’s unofficial sources, Telia’s counterproposals regarding future development are no longer being seriously considered. Instead, two primary scenarios are being discussed on how to execute the buyout and manage the combined company thereafter.
Valainis declined to comment on the number or content of the scenarios under consideration.
Scenario one: state-led buyout
In the first scenario, Telia’s shares would be purchased by the state with the help of large state-owned enterprises such as Latvijas Valsts Meži (LVM) and Latvenergo. Around 200 million euros may still need to come directly from the state budget. However, it remains unclear whether the Ministry of Finance would support this approach. Prime Minister Evika Siliņa (JV) has previously promised that no state budget funds would be used for the buyout.
If this scenario is implemented, the merged LMT and Tet entity would likely be overseen by a state-owned capital company—possibly Possessor, which currently manages the state’s stakes: 51% in Tet and 5% in LMT. The new company would be prepared for stock exchange listing.
The combined company would initially retain control over Tet’s fiber-optic infrastructure, although Latvijas Valsts radio un televīzijas centrs (LVRTC) has previously advocated for its separation and is ready to manage the country’s critical ICT infrastructure.
It’s unclear what would happen to Citrus Solutions, a Tet Group company specializing in engineering system design and construction, under this scenario.
Scenario two: SPV buyout
The second scenario involves creating a special purpose vehicle (SPV) to purchase Telia’s shares in LMT and Tet. This SPV would be funded by commercial banks, second-pillar pension funds, and issue bonds worth approximately 200 million euros, allowing other investors to participate. The joint company’s ownership would be shared between the state and the new SPV.
This scenario is reportedly supported by the Ministry of Transport. However, some politicians oppose the direct involvement of Latvian private investors in LMT and Tet’s governance. Previously, it has been publicly reported that John Talley, co-owner and chairman of the board of the computer network equipment manufacturer Mikrotīkls SIA, has expressed interest in investing in Tet and LMT; other potential investors have been unofficially mentioned as representatives of Draugiem Group, among others.
If this scenario is pursued, LVRTC would likely purchase Tet’s optical network infrastructure, and Sadales tīkls (a subsidiary of Latvenergo) has expressed interest in acquiring Citrus Solutions.
IPO and Market Entry
Support for listing the merged LMT/Tet entity on capital markets was voiced this month by Latvijas Banka President Mārtiņš Kazāks, who discussed it with capital markets expert Māris Vainovskis and Kristīne Bērziņa, head of the Latvian Private and Venture Capital Association (LVCA) and co-founder of Livonia Partners.
Kazāks wrote on social media that a public listing of LMT/Tet could serve as a strong example for other state- or municipality-owned enterprises. He highlighted benefits such as investment opportunities for Latvian pension funds, additional budget revenue (including for national security), stimulus for military and export sector growth.
“We expect the government to seriously and swiftly evaluate this opportunity and give the green light,” Kazāks wrote.
Background and ownership structure
Negotiations between the Latvian state and Telia have considered various options, including merging Tet and LMT, maintaining the current structure, partial or full buyout, or asset separation.
The complicated ownership structure has been a barrier to agreement. The Latvian state, via Possessor, owns 51% of Tet, while Telia’s subsidiary Tilts Communications owns the remaining 49%. In LMT, 49% is held by Telia and its subsidiary Sonera Holding, 28% by the Latvian state (via LVRTC and Possessor), and 23% by Tet.
This means Telia effectively controls 60.3% of LMT, while the state controls 39.7%. However, in practice, due to majority ownership of Tet, the state has decisive influence. Still, this structure has hindered strategic decisions requiring unanimity.
Telia previously proposed that LMT acquire Tet’s telecom operations, separated into a new entity (“Tet Telco”), pay special dividends to both shareholders, and then sell its 49% Tet stake to the state, while acquiring the remaining 1% in LMT from Tet. Both shareholders would then hold 50% of LMT, followed by an IPO offering 20% or more of LMT shares. Both shareholders would sell shares during the public offering, and senior management would be changed.
This offer was not officially commented on by state officials but was rejected due to unwillingness to sell state-held shares.
LVRTC has expressed readiness to invest financially in Tet or its optical infrastructure. This idea is supported by LMT president Juris Binde, who suggested LMT could acquire Tet’s customer portfolio. Tet’s chairman Uldis Tatarčuks has previously stated that Tet could purchase LMT shares.
Financial results
In 2023, the Tet Group had a turnover of 295.8 million euros, down 9.5% year-over-year. Profit fell 40.1% to 15.2 million euros. Tet itself had a turnover of 187.2 million euros (down 19.1%) and a profit of 19 million euros (down 21.1%).
Meanwhile, LMT reported 310.3 million euros in revenue (up 6.7%) and 32.1 million euros in profit (up 0.6%). The parent company’s turnover was 175.1 million euros (up 5.9%), and profit increased 20.6% to 34.9 million euros.
Preliminary data shows LMT Group’s 2024 revenue was 309.6 million euros, up 0.5%. EBITDA reached 93.6 million euros, an increase of 3.9% from the previous year.
Tet, however, has stopped publishing preliminary financial results, and its performance in 2024 remains unknown.