Telia sale of LMT and Tet stakes in Latvia could be signed by year’s end / Article

As previously reported by LSM, the Latvian government and Sweden’s Telia have reached an agreement in principle about Telia selling its stakes in both LMT and Tet to the Latvian state.

Latvenergo, the state-owned energy company that is being used as a vehicle to complete the deal, said in a media in a statement that it plans to attract an international investor with significant experience in the field of technology.

“It is planned to attract an international investor with significant experience in the field of technology. To attract the investor, an international consultant will be engaged in an open competition, whose task will be to offer the best possible transaction solution and financial investor… The companies’ future strategy and development plan will be developed with the aim of publicly listing a portion of the state-owned shares on the stock exchange in the long term,” said the statement.

However, the deal remains a long way from being done and Latvenergo Chairman of the Board Mārtiņš Čakste emphasized at a press conference on Friday, July 18, that the signed memorandum of understanding means that the various parties involved have agreed on the next steps and goals, but that there was still scope for things to change.

The Chairman of the Board of the Latvian State Radio and Television Centre (LVRTC, another party to the deal), Ģirts Ozols, also pointed out that the memorandum means that the parties 100% believe that they can reach an agreement, and the first half of next year will be the time to steer the process to a final positive outcome.

While that gives a timeframe of the loosest possible kind to the deal, it would be by no means unusual if it ended up taking considerably longer than predicted, particularly with the international financial markets in a fairly volatile mood.

In turn, Andreas Ekström, Director of Mergers and Acquisitions at Telia, emphasized that the company is pleased with the understanding reached and is determined to complete the process of selling its stakes.

But no-one was mentioning how much of the companies would be offered to the theoretical future investor, nor what the price might be, let alone the more technical specifics of the potential deal.

Representatives of both LVRTC and Latvenergo indicated that they will raise funds for the acquisition of Tet and LMT shares from their own investment budgets and will not need additional money from the state.

Čakste explained at the press conference that Latvenergo sees development potential as the energy sector moves closer to the technology sector. He pointed out that, for example, data centers are increasingly becoming the largest consumers of electricity.

“The intertwining of energy and telecommunications is a natural development cycle that we will engage in,” Čakste said in a statement to the media – comments that suggest Latvenergo may keep a significant stake.

Čakste also stated that merging “Tet” and LMT into one company would create other value and benefits, and the customer would also benefit in the future, as they would receive the services they need in one place – which runs conveniently contrary to the argument that the customer benefits from more competition. 

Patrik Hofbauer, Telia Company President and CEO said of the deal: “We are pleased to have reached a common view on the best way forward for these great Latvian companies. We have agreed to proceed towards the intended transaction, where our offer to divest our shares reflects a fair market value of Tet and LMT. The complex holding structure of Tet and LMT has slowed value creation. This MoU is therefore a milestone for us and for Tet and LMT, who will now have the possibility to develop further under a new ownership model, in turn benefitting their customers and all stakeholders.”

“The parties aim to sign a final agreement by the end of 2025, and are targeting a closing of the transaction in H1 2026,” reiterated a Telia statement.

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