Investor seeking out strategic opportunities with Tet and LMT requires understanding of the telecommunications sector - Silina
The Latvian government is actively seeking a strategic investor for technology companies Latvijas Mobilais Telefons (LMT) and Tet, with the aim of acquiring a 25% stake in both companies [1]. The identity of the potential investor has yet to be disclosed, but the government is working closely with the companies to attract foreign or strategic capital.
The Prime Minister, Evika Silina, has emphasised the importance of LMT and Tet for the country, suggesting that the ideal investor should bring a substantial amount of equity capital and an international brand, similar to Lufthansa's investment in airBaltic [2].
The ownership structure of these companies is complex. Telia and its subsidiary Sonera Holding own a combined 49% of LMT, with the Latvian state holding 28% through LVRTC and Possessor (5%), and Tet owning another 23% [3]. However, the Latvian state effectively controls LMT, as it is also a majority shareholder of Tet, owning 51% through Public Asset Manager Possessor, while Telia's subsidiary Tilts Communications owns 49% of Tet [4].
This complex ownership scheme has hindered several strategic projects requiring unanimity, and negotiations between the Latvian state and Telia on the future of LMT and Tet have been ongoing, with representatives from the Ministry of Economics involved [5].
In addition to LMT and Tet, Latvenergo and the Latvian State Radio and Television Center (LVRTC) have also been authorised to make offers to buy shares. The competition in the telecommunications market is intense, and quick decision-making is crucial [6].
The decision-making on both companies is not just financially significant, but also critical from an infrastructure point of view. Both LMT and Tet provide important security functions for the country [7].
The potential value of these Latvian companies could reach a billion euros [8]. Several options have been discussed in the negotiations, including a merger of Tet and LMT, maintaining the status quo, a full or partial buy-out, and the divestment of certain assets [9].
A memorandum of understanding has been signed between Telia, Latvenergo, and LVRTC, with the aim of finalising the agreement by the end of 2025 and closing the transaction in the first half of 2026 [10]. The initiative to get involved in the sale of LMT and Tet came from LVRTC and Latvenergo themselves [11].
The failure of previous governments to make decisive decisions on the further development of these companies has not contributed to an increase in their value [12]. The government's role in this process appears to be facilitative and regulatory, aimed at strengthening the investment climate in Latvia and attracting foreign capital.
The government's emphasis on finding a strategic investor for LMT and Tet underscores the significant role technology plays in the business sector of Latvia. The potential investor, having the capacity to bring substantial equity capital and an international brand, could significantly boost the value of these technology companies.
In light of the intense competition in the telecommunications market and the immense potential value of LMT and Tet, quick decision-making is crucial, with the aim of improving the infrastructure of the country and enhancing its security functions.
