The Latvian government is holding advanced negotiations with 23 potential investors over participation in the planned acquisition of LMT (Latvijas Mobilais Telefons) and Tet shares from Swedish telecommunications company Telia, Minister of Economics Viktors Valainis (Union of Greens and Farmers – Zaļo un Zemnieku savienība, ZZS) said on Friday.
Speaking after an extraordinary Cabinet meeting, Valainis said the identities of the investors cannot yet be disclosed but noted that strong international interest would allow the government to choose the partner whose offer and long-term vision best serve Latvia’s interests.
Regarding the potential value of the transaction, Valainis explained that detailed due diligence of the companies is still underway. Once the valuation process is completed, the government expects to receive the first validated binding offers from investors. He stressed that the transaction involves substantial financial sums.
The minister added that Latvia’s security authorities will conduct thorough background checks on all prospective investors before they gain access to sensitive information.
According to Valainis, the transaction is progressing largely according to schedule. The government was presented with a comprehensive overview of developments since 1998, as well as the negotiations held over the past year and a half with both the previous and current shareholders. He said there is broad political consensus that the current ownership situation cannot continue, as it may reduce the value and development potential of both companies.
The government’s objective is for LMT and Tet to become key drivers of Latvia’s technology sector, exports and economic growth. Valainis also noted that the governance of both companies has already been strengthened and their business plans updated in line with international standards.
Prime Minister Andris Kulbergs (United List – Apvienotais Saraksts, AS) described the planned transaction as one of the country’s largest corporate deals in more than 15 years. He said the new government needed to review the mandate previously granted to the Ministry of Economics and fully understand the history and structure of the proposed transaction.
Kulbergs stressed that the process must be transparent and firmly aligned with Latvia’s national interests. Referring to earlier public debate, he said the government had to determine whether the deal would become “the deal of the century” or “the scam of the century”.
The Prime Minister said he trusts the work carried out by Valainis and expects the Ministry of Economics together with financial adviser J.P. Morgan to present concrete proposals, including strategic investors and a clear assessment of the financial and strategic benefits for the state.
He added that Latvia should seek a strong strategic investor capable of contributing international expertise, technological development and long-term value to both companies, while cautioning against committing public funds without a sustainable investment structure.
No final decision was made during Friday’s meeting, although the government issued additional tasks to its advisers. Kulbergs stressed that the issue should not become politicised and that the ultimate goal is to ensure the best outcome for the Latvian state.
As previously reported, Latvia selected a consortium led by J.P. Morgan to advise on the acquisition of Telia’s stakes in LMT and Tet. The advisory team also includes A&O Shearman, Walless, Deloitte, Tegos and Hardiman Telecommunications.
The advisers are responsible for structuring the transaction, conducting investor selection, overseeing the acquisition process, carrying out due diligence and preparing a long-term development strategy for both companies.
Under the current ownership structure, the state-owned Possessor owns 51% of Tet, while Telia’s subsidiary Tilts Communications owns the remaining 49%. In LMT, Telia and Sonera Holding together own 49%, while Latvia’s interests are held by the Latvian State Radio and Television Centre (LVRTC) with 23%, Tet with 23%, and Possessor with 5%.
Following the acquisition of Telia’s shares and the entry of a strategic investor, Latvenergo, LVRTC, Possessor and the new strategic investor are each expected to own approximately 25% of both companies.
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