OREANDA-NEWS. On April 14, 2008 the government approved a "Lattelecom" privatization strategy that envisages exchanging state-owned "Latvijas Mobilais telefons (LMT) shares for "TeliaSonera's" interest in "Lattelecom".

The government approved the privatization strategy in principle, but the matter was not put to vote.

Prime Minister Ivars Godmanis (Latvia's First Party/Latvia's Way, LPP/LC) will tell the press more after the Cabinet of Ministers committee's meeting.

The option approved by the government is to exchange the shares between the state-owned "Latvijas Valsts radio un televizijas centrs" (Latvian State Radio and Television Center, LVRTC) and "TeliaSonera". The U.S. investment company "Blackstone" would also have an opportunity to participate in the privatization.

The agreement stipulates that LVRTC buys "TeliaSonera's" 49 percent interest in "Lattelecom" and immediately sells it to an investor, most likely, to "Blackstone".

LVRTC would act as a go-between in the deal, the deal would also meet "TeliaSonera's" requirement that it would only sell the shares to the state of Latvia. The "Lattelecom" privatization deal also envisages that LVRTC would sell the state-owned "Latvijas Mobilais telefons" (LMT) shares to "TeliaSonera", and that "TeliaSonera" would also acquire LMT shares held by "Lattelecom".

The government today turned down another proposal for "Lattelecom" privatization, offered by the Economy Ministry, which called for a 100 percent of "Lattelecom's" shares to be sold at auction, both by the state and "TeliaSonera".

"TeliaSonera" presently holds a 49 percent stake in "Lattelecom", and the state of Latvia 51 percent. "TeliaSonera" also owns 49 percent of LMT shares, another 28 percent interest in LMT belongs to the state of Latvia (with a 23 percent interest held by LVRTC and 5 percent the Latvian Privatization Agency), and the remaining 23 percent of LMT shares belong to "Lattelecom".

As reported, the question of "Lattelecom" and LMT privatization has been actively debated since the second half of the last year, however the government still has not made the final decision regarding the best privatization scheme.

Transport Minister Ainars Slesers (LPP/LC) believes that if the deal is successful and the state manages to sell the 49 percent interest in "Lattelecom", the state will receive a total of about LVL 270 million. The state would be paid at least LVL 30 million for its 5 percent interest in LMT, and at least LVL 240 million for the 49 percent of "Lattelecom" shares. As a result, the state would receive about LVL 270 million, and still hold a 51 percent interest in "Lattelecom".