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Monday 18.11.2019 | Name days: Doloresa, Aleksandrs

Experts: telecommunication companies should be privatized first

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The telecommunication companies Lattelecom and Latvijas mobilais telefons (LMT), on which there have been lengthy discussions in the society and government, should be privatized entirely as the first from the state-owned companies, such view was expressed during the business portal organized experts discussions about the management of the public undertakings.

«LMT should definitely be privatised. The company is ready for it. If the privatisation is not carried out, the enterprise value will reduce. Lattelecom could be a more prospective asset in the medium term,» said the investment fund Prudentia partner Girts Rungainis (Ģirts Rungainis).

The Ministry of Economy (ME) State Secretary and the Head of the working group, which prepares a perspective outlook on the future of the state and local government-owned company management, Juris Puce (Juris Pūce) reminded the privatisation of Lattelecom and LMT has been already decided since the late 90’s.

Lattelecom has been a subject of privatisation since 1997, LMT – since 1998. There are several pre-emptive contracts that make it difficult to agree on the price, although there have been attempts to reach an agreement. TeliaSonera’s offer in 2007 was one of the best,» maintained Puce, referring to TeliaSonera offer to purchase 100% shares in both companies for 500 million lats.

When expressing his viewpoint, Puce said, «as regards Lattelecom, it must be assessed whether this is a strategic asset. I personally, as Riga resident, can see that the market here has a very active competition, and it should be maintained. The state’s participation in this sector does not promote this. Lattelecom state-owned share confiscation, which began in 1997, has to stop.»

At the present moment, the state owns 51% of Lattelecom and directly owns 5% of LMT. 23% of the mobile communications operator shares belong to the Latvian State Radio and Television Centre (LVRTC) and 23% of shares belong to Lattelecom.

It was also mentioned during the discussion that the state-owned heat supply utility Rīgas siltums should be immediately privatized. The independent energy expert Juris Ozolins (Juris Ozoliņš) supported this proposal.

«Rīgas siltums could be privatized already tomorrow by trading to the state its shares or through the stock exchange, or otherwise. The sooner the better. This way income would be gained and the management improvement achieved,» stated Ozolins.

The independent energy expert believes, in the long run, at least part of the holding company Latvenergo shares has to be privatized. He also expressed the opinion that the average inhabitant would be ready to invest in the shares of Latvenergo if the enterprise quoted on the stock exchange.

When asked which companies he would like to see privatized through the stock exchange, the Deputy Chairman of NASDAQ OMX Riga Board Ingars Ascuks (Ingars Aščuks) replied he would like to quote «all large companies». Yet not all of them are ready for the stock exchange. We can see the big energy utilities and telecommunication companies are in the bourse. The financial companies, in general, are well organised for the stock exchange, even the airports. There is wide range of companies».

«If the major companies in Latvia quoted on the stock exchange, it would give positive signals to both the investors and the companies’ executives. The added value of the stock exchange, in terms of management, is greater transparency. The enterprises that are in the bourse are pressed to comply with the best management practices, to prepare reports and publish them every two or four months, and not every seven months as many companies do it,» explained Ascuks.

«As concerns the question which enterprises should the first ones to be privatised, then they would be the telecommunications companies that have been prepared for sale,» Ascuks told.

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