Government Delays Final Decision on TET and LMT Future
On March 25,the government has not yet reached a final decision regarding the future of technology companies SIA “TET” and SIA “Latvijas Mobilais Telefons” (LMT). Economy Minister Viktors Valainis (ZZS) stated at a press conference following the government meeting that an offer is expected to be presented to the other shareholder, Swedish company “Telia,” in mid- to late April.Valainis indicated that the government and Telia are progressing towards a mutual understanding, emphasizing that any future scenarios will not be funded by the state budget.The goal, he said, is to foster long-term growth, possibly increasing the companies’ value to several billion in the coming years and establishing them as regional leaders. Achieving this requires careful consideration and agreement between the two shareholders.
Valainis dismissed unofficial scenarios involving the redemption of TET and LMT shares as “far from latvian scenarios.” He confirmed that all options remain open, including the possibility of Telia retaining its stake in both companies, and that negotiations are ongoing. He also noted that a formulated government position to present to Telia is still being finalized.
Prime Minister Evika Siliņa (JV) echoed these sentiments, stating that the government aims to enhance the competitiveness of TET and LMT in Latvia and the Baltics. She cautioned against speculation regarding scenarios that may not have Telia’s consent, emphasizing the importance of maintaining a positive negotiating environment. Siliņa specifically refuted suggestions of investment from second-pillar pension funds, stating no such offer exists.
Siliņa stressed the government’s desire for both companies to be profitable and competitive, acknowledging that the current shareholder agreement from the nineties is unsustainable. She expressed optimism that both sides are willing to change the current situation and work towards a future with a clear and promising outlook, and increased market share.”We do not want third parties to get involved and gain the benefits or the opportunities that the main partner is primarily entitled to in the country,” said Valainis.It has already been reported that on december 18, 2024, the Cabinet of Ministers authorized the Ministry of Economy (EM) to offer Telia to buy all its “TET” and LMT shares.
Unofficial information available to LETA indicates that Telia’s proposals for further progress of LMT and TET are no longer seriously discussed,but two basic scenarios are being discussed regarding how to redeem the parts owned by Telia.
Valainis refused to comment to LETA on whether there were two or more options for further action and what they anticipate.
Unofficial information available to LETA indicates that the first option stipulates that the parts owned by Telia are redeemed by the state with the large companies “Latvijas Valsts meži” and “latvenergo,” but approximately EUR 200 million in this case may also have to be allocated directly from the state budget. It is not yet clear whether the Ministry of Finance supports such options, but Prime Minister Evika Siliņa (JV) has previously promised that the redemption will not impact the government budget.
If this option were implemented, LMT and TET’s united company would likely be overseen by a state-controlled capital company, possibly owned by the EM’s “Public Active Board” (Posessor), which already manages the country’s share in both companies – 51% of “TET” and 5% of LMT. The combined LMT and TET company would be prepared for stock exchange shares.
It is understood that, at least initially, the united company would continue to manage the optical network infrastructure currently owned by TET, which was previously separated from JSC “Latvian State Radio and Television Center” (LVRTC), and would be ready to assume the management of the whole country’s critical infrastructure in the field of information and communication technologies (ICT).
LETA failed to ascertain the fate of this variant for the engineering system design and construction company “CITRUS SOLUTIONS” Ltd.
The other option, on the other hand, provides for the transaction to establish a special purpose vehicle (SPV), which would buy LMT and “TET” from “Telia.” This SPV’s funds would be invested in commercial banks and second-pillar pension funds, and it would also issue bonds worth around €200 million, allowing other investors to invest.The owners of the united company would be the country and this new SPV.
This option is supported by the Ministry of Transport (SM).Unofficial information, however, shows that some politicians are opposed to the direct participation of Latvian entrepreneurs in the management of LMT and “TET,” which would be implemented through the SPV. It has previously been publicly stated that computer network equipment manufacturer SIA “Mikrotīkls” co-owner and board chairman John Tallie has expressed interest in “TET” and LMT, and representatives of “Draugiem Group” have also been unofficially mentioned as potential investors.if this scenario were implemented, the optical network infrastructure owned by TET would likely be redeemed by the LVRTC, but the interest…