Lithuanian mobile operator Bitë GSM and Latvian company Alina, owned by the entrepreneur Peteris Smidre, have submitted applications for Latvia’s third mobile operator licence. According to the Transport Ministry, several other groups also expressed an interest in bidding for the combined GSM/UMTS licence but it has refused to divulge the number or names of them. It concedes however, that the level of interest was lower than hoped for, and said it was likely that the country’s small population and existing high levels of cellular penetration had put some potential bidders off. Currently, Latvia is home to two mobile operators – Lavijas Mobilais Telefons, which is owned by the government and TeliaSonera, and Sweden’s Tele2 – and the Ministry hopes a new entrant will bolster competition and help drive down prices.
The Riga government has set an initial asking price of LVL1.3 million (EUR1.87 million) for the licence and has set a pre-condition that the winner invest a minimum EUR150 million in rolling out its own network infrastructure. The Ministry plans to publish the names of the short-listed bidders on 14 March/15 March, ahead of the auction which is due to start on 31 March. Bitë GSM, which is owned by TDC of Denmark, has committed to ensuring increased competition if it is successful with its bid. Its managing director Jesper Theill Eriksen said the company was ‘fully prepared to make a very competitive offer to the market, at the same time providing high-quality services.’ Although cellular penetration is running at around 60%, Bitë GSM believes there is sizeable potential in a market which has the second lowest penetration rate in the EU.
Meanwhile, Peteris Smidre has also confirmed that Alina has placed a bid in partnership with the US investment fund MVC Capital. Smidre’s company was formerly a shareholder in Baltkom GSM, the mobile operator that was renamed Tele2 after it was sold to Tele2. In February 2005 Alina requested that the Transport Ministry extend the application deadline, but the government refused, claiming that the request centred on disagreements over interconnection with fixed line operator Lattelkom, and that it was largely irrelevant to the tender. The government expects that the final bidding price will most likely exceed the initial asking price for the concession.