RIGA, Aug. 10 (Xinhua) -- Latvia is mulling over a recommendation to merge its two leading telecommunications companies, Lattelecom landline operator and Latvijas Mobilais Telefons (LMT) mobile operator, and to list the newly-created company on a stock exchange.
KPMG Baltics (KPMG) audit firm presented its recommendations regarding the two companies at a news conference in Riga on Thursday.
The authors of the KPMG report note that as a result of technological development, operators' revenue from conventional telecommunications services like voice telephony has been dropping lately and that in Latvia this process has been even faster than elsewhere in Europe.
"Average revenue per user in the mobile services industry has declined both across Europe and in Latvia. The process has been caused by product bundling and other factors, such as cutting roaming fees," said KPMG consultation services director Evija Miezite.
Furthermore, Latvia is currently the only European country that still has not seen a consolidation of telecommunications operators.
Upon analyzing eight possible scenarios for the two telecommunications operators' future, KPMG advisers recommended merging Lattelecom and LMT as the best solution.
The report also recommends change on the ownership structure, said Vladimirs Loginovs, the head of the Latvian Privatization Agency, at the news conference.
"It has been proposed to create an integrated flagship telecommunications enterprise that could potentially become the largest telecommunications operator in the Baltics with a balanced shareholder structure. An IPO might be organized after the merger," Loginovs said.
The Latvian government and the telecoms' other shareholder, Scandinavian company TeliaSonera, have been advised to reduce their holdings in the integrated company to 35 percent each and to list the remaining 30 percent of shares to attract private shareholders and retirement funds.
KPMG believes that the merger would boost the companies' competitiveness and save money. The economic effect might reach up to 100 million euros (117 million U.S. dollars) in a few years' time, the consultant said.
On Tuesday, the government ordered the Privatization Agency to work out a strategy for further actions with the government-owned Lattelecom and LMT shares by Oct. 5 2017. Enditem
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