Government Undecided on Tet, LMT Futures
- RIGA, Latvia (AP) — The Latvian government has yet to finalize its strategy regarding the future of technology companies SIA TET and SIA Latvijas Mobilais Telefons (LMT).Economy Minister...
- According to Valainis, discussions are ongoing with Telia, the Swedish company holding a critically important share in both TET and LMT.The Ministry of Economics had presented potential future...
- "We are at the same stage we were before the government meeting," Valainis told reporters.
Latvian Government Weighs Options for Telco Firms TET and LMT
Table of Contents
RIGA, Latvia (AP) — The Latvian government has yet to finalize its strategy regarding the future of technology companies SIA TET and SIA Latvijas Mobilais Telefons (LMT).Economy Minister Viktors Valainis (ZZS) addressed the situation Tuesday,following a closed-door government meeting.
Negotiations with Telia Continue
According to Valainis, discussions are ongoing with Telia, the Swedish company holding a critically important share in both TET and LMT.The Ministry of Economics had presented potential future scenarios for the companies, but no concrete decisions were made.
“We are at the same stage we were before the government meeting,” Valainis told reporters. he emphasized that the government has a defined plan for continued negotiations with Telia.
Valainis also stated the government is unified in its vision for the future of TET and LMT, dismissing any suggestions of internal disagreements.
all Options on the Table?
When questioned about the possibility of maintaining the current structure of TET and LMT, Valainis acknowledged it was “difficult to imagine,” but stressed that “everything is possible” given the nature of shareholder discussions.”Even if we really want something,” he added,implying the final decision rests on negotiations.
valainis did not provide a specific timeline for reaching a decision, stating, “There is nothing burning that pushes something abnormally quickly.” Though, he acknowledged the negotiations, which have been ongoing in their current format for nearly a year, cannot continue indefinitely.
“Given that these talks are 20 years, we have come far,”
– Viktors Valainis, Economy Minister
Potential Scenarios
Several options have been explored in discussions between the Latvian state and Telia.These range from a complete merger of TET and LMT to maintaining the status quo. The government is also considering purchasing Telia’s stake in either or both companies, and also the possibility of separating individual assets.
A complex management structure has historically intricate decision-making for TET and LMT, requiring consensus between the Latvian state and Telia.
Ownership Structure
Currently,Possessor owns 51% of TET,while Telia’s subsidiary,Tilt Communications,holds the remaining 49%. LMT’s ownership is divided as follows: 49% by Telia and its subsidiary Sonera Holding, 28% by the Latvian state through LVRTC and Possessor (5%), and 23% by TET.
In theory, Telia’s total share in LMT is 60.3% through TET, compared to the Latvian state’s 39.7%.Though, the state maintains decisive control due to its majority stake in TET, which has, at times, hindered strategic decisions requiring unanimous agreement.
Past Proposals
Telia previously proposed a scenario where LMT would acquire TET’s telecommunications business, forming a separate entity (“Tet Telco”). Under this plan, both TET shareholders would receive special dividends and Telia would sell its 49% stake in TET. The resulting company would see both major shareholders – the state and Telia – owning 50% of LMT. An initial public offering (IPO) of 20% or more of LMT shares was also suggested. Public officials did not officially comment on this offer but rejected the possibility of the state selling its shares.
LVRTC has expressed interest in investing in TET’s optical network infrastructure. LMT President Juris Binde has also supported the idea of LMT acquiring TET’s customer portfolio. TET Chairman of the Board Uldis Tatarčuks previously suggested TET could purchase shares in LMT.
Financial Performance
In 2023, the TET concern reported a turnover of EUR 295.753 million, a 9.5% decrease from the previous year. The group’s profit fell by 40.1% to EUR 15.226 million. TET’s own turnover in 2023 was EUR 187.204 million, down 19.1% from 2022, with a profit decrease of 21.1% to EUR 18.987 million.
Conversely, the LMT Group saw a turnover of EUR 310.269 million in 2023, a 6.7% increase year-over-year. The group’s profit rose by 0.6% to EUR 32.069 million. The parent company’s turnover was EUR 175.062 million, a 5.9% increase, and profit increased by 20.6% to EUR 34.864 million.
Preliminary data indicates the LMT Group’s turnover for last year was EUR 309.6 million, a 0.5% increase from 2023. The company also reported an EBITDA (earnings before interest, taxes, depreciation, and amortization) of EUR 93.6 million, a 3.9% increase.
TET has not yet released its financial performance data for 2024.
Government Revenue
Data from the State Revenue Service (SRS) shows TET’s total payments to the general government budget last year were EUR 35.958 million, a 6.7% decrease from 2023. LMT, on the other hand, contributed EUR 38.454 million, a 5.7% increase.
Absolutely! Here’s a Q&A-style blog post based on the provided article, designed for SEO and user engagement:
Latvian Telecom Titans: Answering Your Questions About TET and LMT
Intro:
The Latvian telecommunications landscape might be on the brink of significant change. The Latvian government is currently navigating complex negotiations surrounding the future of two major players: SIA TET and SIA Latvijas Mobilais Telefons (LMT). With discussions ongoing, and various scenarios being considered, it’s a dynamic situation. In this article, we delve into the world of TET and LMT, answering the most pressing questions about their operations, the ongoing negotiations, and potential future scenarios.
Q&A Section:
Q: What are TET and LMT?
A: TET and LMT are two of the largest technology and telecommunications companies in Latvia.Think of them in the same vein of importance and presence of major telecom providers in other countries.
SIA TET: Focuses on providing telecommunication services, including fixed-line, internet, and data transmission services.
SIA Latvijas Mobilais Telefons (LMT): Specializes in mobile telecommunications.
Q: Why is the Latvian government involved with these companies?
A: The Latvian government has stakes in both TET and LMT, making it a key stakeholder in decisions affecting their future.Public officials are involved in the governance of the telecom providers through minority and majority stakes.
Q: Who owns TET and LMT?
A: Here’s a breakdown:
TET:
possessor: 51%
Tilt Communications (Telia’s subsidiary): 49%
LMT:
Telia and its subsidiary Sonera Holding: 49%
Latvian state (through LVRTC and Possessor): 28% + 5%
TET: 23%
Q: What is the issue the Latvian government is currently addressing?
A: The Latvian government is in negotiations with the swedish company Telia, which holds a significant stake in both TET and LMT. the primary focus is on the future of these companies, exploring different strategic options, including mergers, acquisitions, maintaining the current structure, and potential asset separation.
Q: What are the potential scenarios being discussed?
A: several options are on the table:
Merger: A complete merger of TET and LMT.
Status Quo: Keeping the companies as they currently are.
Acquisition: The government purchasing Telia’s stake in either or both companies.
Asset Separation: Separating individual assets.
Q: Who is Telia and why is its involvement so critical?
A: Telia is a major Swedish telecommunications company. Telia’s ownership in both TET and LMT gives it a key role in the decision-making process.The negotiations between the Latvian government and Telia are essential to establish the course of the companies’s future.
Q: What has been discussed as potential arrangements?
A: Telia has previously proposed a scenario where LMT would acquire TET’s telecommunications business. Under the plan,both TET shareholders would receive special dividends,and Telia would sell its 49% stake in TET.The resulting company would see both major shareholders – the state and Telia- owning 50% of LMT. An initial public offering (IPO) of 20% or more of LMT shares was also suggested. Public officials did not officially comment on this offer but rejected the possibility of the state selling its shares.
Q: What is the current financial performance of TET and LMT?
A: Here’s a quick financial snapshot based on the provided data:
TET (2023):
Turnover: EUR 295.753 million (down 9.5% year-over-year)
Profit: EUR 15.226 million (down 40.1% year-over-year)
TET’s own turnover: EUR 187.204 million.
TET’s own profit: EUR 18.987 million.
LMT (2023):
Turnover: EUR 310.269 million (up 6.7% year-over-year)
Profit: EUR 32.069 million (up 0.6%)
Parent company’s turnover: EUR 175.062 million
Parent company’s profit: EUR 34.864 million.
LMT (Preliminary 2024 Data):
Turnover: EUR 309.6 million (up 0.5%)
EBITDA: EUR 93.6 million (up 3.9%).
TET has not yet released its 2024 financial data.
Q: how much do TET and LMT contribute to the Latvian government’s revenue?
A:
TET: Contributed EUR 35.958 million last year, a 6.7% decrease from 2023.
* LMT: Contributed EUR 38.454 million, a 5.7% increase.
Q: What’s the significance of “EBITDA”?
A: EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is a metric used to assess a company’s operational profitability, excluding the effects of financing decisions, accounting and depreciation charges, and taxes. It’s a useful indicator of core business performance.
Q: What is the current timeline for a decision regarding TET and LMT?
A: Economy Minister Viktors Valainis has stated that there is no urgent deadline. The negotiations have been ongoing for nearly a year but he acknowledged they cannot continue indefinitely.
Conclusion:
The future of TET and LMT is currently being actively shaped by the Latvian government and Telia.With a variety of scenarios under consideration, the final outcome could have a major impact on the Latvian telecommunications landscape.As discussions progress, we will keep you updated on any developments.