The Minister of Economics Ralph Nemiro (KPV LV) explained that the shareholders of both companies – the Ministry of Transport, the Ministry of Economics and Telia Company – discussed issues regarding the future prospects of Tet and LMT.
Nemiro said that the goal of the company’s shareholders is to increase the companies’ revenues, and the optimization of both companies could promote it, however, it is too early to judge the merger of Tet and LMT.
According to the Minister, several options for the future of “Tet” and LMT are currently being considered, namely, to maintain the current situation, merge companies or add one of the companies to another. Shareholders are expected to calculate the most profitable future business model for both companies by the end of May.
According to the Minister, a proposal on the future of both companies could reach the government in June or July.
In November 2017, the Cabinet of Ministers decided that “Tet” and LMT will not be merged.
In July 2018, the Prime Minister of the previous government, Maris Kučinskis (ZZS), and the President of Telia Company, Juan Dennelind, signed a memorandum of understanding on the further development of Tet and LMT.
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The signatories of the memorandum undertook to develop a joint Tet and LMT strategy for achieving synergies, including the development and implementation of a strategy for the next generation of communication systems, the creation of innovative excellence, and active cooperation with science in this process.
It is also reported that on August 23, 2018, Kučinskis issued an order establishing a working group to ensure the representation of Latvia’s interests in the development and implementation of a joint corporate strategy of “Tet” and LMT, as well as its financing.
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The draft order provided that the working group should prepare and submit to the State Chancellery Latvia’s position for negotiations with the co-owner of the company “Telia Company” on the further activities of both companies by November 15, 2018. However, this task was later postponed until 15 February 2019. The deadline for the working group to develop a plan for future work was also extended – the deadline for this task was postponed from 1 January 2019 to 1 April 2020.
Telia Company is the largest shareholder of LMT, where it directly and indirectly owns about 60% of the shares. Telia Company also owns 49% of Tet.
Tet’s consolidated turnover in 2017 was 195.67 million euros, which is 1.1% more than in 2016, while the group’s profit increased by 26.4%, reaching 40.7 million euros. The turnover of the LMT Group in 2017 reached 204.271 million euros, which is 7.6% more than in 2016, but the group’s profit last year was 33.534 million euros, which is an increase of 50%.
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