“At present, Telia has not received any information from the Latvian government regarding a potential offer for Telia to sell its shares in Tet and LMT to the Latvian state,” as BNN was told by Tobias Gyhlénius, Head of Group Communications at Telia.
“To find a structural solution around the ownership in LMT and Tet is long overdue and Telia has been clear that it either sees a scenario where the companies are merged and Telia would be a co-owner and equal partner with the Latvian government or, if the terms and conditions are right, Telia divest its shares to the Latvian state. If any potential offer does not represent the fair value of Tet and LMT, Telia would be open to discuss an acquisition of the shares of the Latvian state. scenario where status quo is maintained is the worst scenario and poses a real risk of eroding value for both shareholders,” Gyhlénius told BNN.
As confirmed by Minister of Economics Viktors Valainis, the Latvian Cabinet of Ministers has authorised the Ministry of Economics to present a repurchase offer to Telia in regards to capital shares of Tet and Latvijas Mobilais Telefons (LMT),
On the 19th of November, the government held a closed meeting and examined more than 30 different development scenarios for LMT and Tet. However, the final position was not adopted. Instead the government instructed the Ministry of Economics (EM) to clarify plans within three weeks.
According to unofficial information available to LETA, during the negotiations between the Latvian state and Telia, several possible options were discussed – from the merger of Tet and LMT to the preservation of the existing situation. The possibility of repurchasing both companies from Telia in whole or in part, as well as the separation of separate assets, has also been considered.
Publisko aktīvu pārvaldītājs (Possessor) LLC holds 51% of Tet shares on behalf of the Latvian state. Telia subsidiary Tilts Communications owns 49% of Tet shares. 49% of LMT capital is owned by Telia and its subsidiary Sonera Holding, 28% is owned by the Latvian state through Latvian State Radio and Television Centre and Possessor. Another 23% of LMT shares are owned by Tet.
This theoretically means that currently, through Tet, the share of Telia in the capital of LMT is 60.3%, and the share of the Latvian state is 39.7%. However, in practice this does not happen and in fact the state also has decisive control over LMT, as it has the majority in Tet. At the same time, it has slowed down a number of strategic decisions that require consensus.
Telia initially proposed a scenario in which LMT would acquire the telecommunications business of Tet for money, which would be distributed to a separate company (conditional Tet Telco), both existing Tet shareholders would be paid special dividends and Telia would sell its 49% Tet share to the state, while Tet would acquire the missing 1% LMT share, as a result of which the two main shareholders – the state and Telia – would each own 50% LMT. Later, an initial public offering (IPO) of the shares and 20% or more of the shares of LMT would be quoted on the stock exchange. In the public offering, both shareholders would sell a portion of their shares. As a result of the transaction, the top management of the companies would also be replaced.
Government officials have not formally commented on the offer, but have ruled out the possibility of the state selling its shares.
According to unofficial information available to LETA, during the negotiations between the Latvian state and Telia, several possible options were discussed – from the merger of Tet and LMT to the preservation of the existing situation. The possibility of repurchasing both companies from Telia in whole or in part, as well as the separation of separate assets, has also been considered.
Publisko aktīvu pārvaldītājs (Possessor) LLC holds 51% of Tet shares on behalf of the Latvian state. Telia subsidiary Tilts Communications owns 49% of Tet shares. 49% of LMT capital is owned by Telia and its subsidiary Sonera Holding, 28% is owned by the Latvian state through Latvian State Radio and Television Centre and Possessor. Another 23% of LMT shares are owned by Tet.
This theoretically means that currently, through Tet, the share of Telia in the capital of LMT is 60.3%, and the share of the Latvian state is 39.7%. However, in practice this does not happen and in fact the state also has decisive control over LMT, as it has the majority in Tet. At the same time, it has slowed down a number of strategic decisions that require consensus.
Telia initially proposed a scenario in which LMT would acquire the telecommunications business of Tet for money, which would be distributed to a separate company (conditional Tet Telco), both existing Tet shareholders would be paid special dividends and Telia would sell its 49% Tet share to the state, while Tet would acquire the missing 1% LMT share, as a result of which the two main shareholders – the state and Telia – would each own 50% LMT. Later, an initial public offering (IPO) of the shares and 20% or more of the shares of LMT would be quoted on the stock exchange. In the public offering, both shareholders would sell a portion of their shares. As a result of the transaction, the top management of the companies would also be replaced.
LVRTC, which currently manages the state-owned 23% stake in the LMT, has expressed readiness to financially engage in the acquisition of the Tet or its assets. This option was also supported by the President of LMT, indicating that in turn, the LMT could purchase the Tet customer portfolio.
In turn, Uldis Tatarčuks, Chairman of the Board of Tet, said that Tet could acquire the shares of LMT. In such a scenario, if the shareholder structure of Tet does not change, 51% of the merged company would be owned by the Latvian state and 49% by Telia.
At the same time, Maris Vainovskis, Member of the Board of the Foreign Investors Council in Latvia and senior partner of the law firm “Eversheds Sutherland”, previously said in an interview with TV3’s “900 seconds” that there are signals about the interest of John Tallis, co-owner and chairman of the board of the computer network equipment manufacturer Mikrotīkls LLC, to invest in Tet and LMT.