In negotiations with Swedish Telia Company (Telia) about the future of telecommunications company Tet and mobile communications and technologies company Latvijas mobilais telefons (LMT), Latvia cannot afford to end up in a dead end, said Minister of Economics Viktors Valainis in an interview to TV3 programme 900 seconds.
“We cannot afford a situation in which we end up in a dead end,” said the minister, commenting on discussions held by the government behind closed doors on the 16th of July about the future scenarios in negotiations with Tet and LMT second shareholder Telia.
Valainis also mentioned that so far negotiations have successfully resulted in Telia changing its position and taking Latvia’s position on the matter more seriously.
“I believe that this time, with such a government consensus on this issue and with our instruments, and I will not hide, these are the instruments of strength with which we are going in these negotiations, it will be possible to achieve the solution that is most appropriate for the interests of the Latvian state,” said the minister.
He mentioned that the existing government agrees that this issue needs to be resolved. “This is perhaps different from other times when there were quite different opinions directly between the political parties of the government, what should then be done with these companies,” added Valainis.
The minister also mentioned that in their current state, Tet and LMT will not be competitive.
“These companies will not be able to compete with global companies that are now entering the Latvian market,” said Valainis.
LETA previously reported that on Tuesday, the 16th of July, the government agreed on future steps in negotiations with Tet and LMT second shareholder – Telia. The government has also outlined directions to discuss with Telia in the future. The Ministry of Economics is given green light to start negotiations.
Valainis previously mentioned that it is planned to work with scenarios that promote the role of the state in companies, as well as develop their competitiveness on global markets.
The Ministry of Economics has until the 15th of October to prepare a report for the government, as well as information as to what both shareholders have agreed upon and the path the companies in question intend on taking.
In November 2017 the Cabinet of Ministers decided Tet and LMT would not be merged. In July 2018 then the Prime Minister Māris Kučinskis and Telia President Johan Dennelind signed a memorandum regarding the future development of Tet and LMT.
The signatories to the memorandum undertook to develop a unified operational strategy of Tet and LMT to achieve synergies, including the development and implementation of a strategy for the next generation of communication systems, the development of innovative excellence, in the process of actively cooperating with science.
On the 23rd of August, 2018, Kučinskis issued an order establishing a working group to ensure the representation of Latvian interests in the development and implementation of a unified enterprise strategy of Tet and LMT, as well as in its financing. A year and a half later, the coalition forming the government at the time decided not to address the issue of the future of Tet and LMT for the time being.
Last year, Tet Group worked with a turnover of EUR 295.753 million, which is 9.5% less than a year earlier, but the group’s profit decreased by 40.1% to EUR 15.226 million. At the same time, the turnover of Tet itself in 2023 was EUR 187.204 million, which is 19.1% less than in 2022, but the company’s profit decreased by 21.1% and amounted to EUR 18.987 million.
Meanwhile, the LMT Group last year worked with a turnover of EUR 310.269 million, which was 6.7% more than a year earlier, while the group’s profit increased by 0.6% and amounted to EUR 32.069 million. The turnover of the parent company of the Group in 2023 was EUR 175.062 million, which is 5.9% more than a year earlier, but the company’s profit increased by 20.6% and amounted to EUR 34.864 million.
The state, in the person of Public Asset Management Company “Possessor” LLC (“Possessor”), owns 51% of “Tet” shares, while “Telia” subsidiary “Tilts Communications” owns 49% of “Tet” shares. In turn, 49% of LMT’s capital is owned by Telia and its subsidiary Sonera Holding, 28% is owned by the Latvian state through the Latvian State Radio and Television Centre (23%) and Possessor (5%), while another 23% of LMT’s shares are owned by Tet.