A woman walks past TeliaSonera's logo.
A woman walks past TeliaSonera\'s logo.

Stockholm-based TeliaSonera has agreed to back a proposal by the Latvian government to merge fixed-line network operator Lattelecom and mobile operator Latvijas Mobilais Telefons (LMT).

Reuters believes TeliaSonera is keen to raise its stake in both companies. TeliaSonera was trading 0.42% higher before closing at 47.64 yesterday in Stockholm.

The Latvian government owns 51% of Lattelecom. The rest is owned by TeliaSonera, which also holds 60.3% of LMT through direct and indirect stakes, with the rest split between Lattelecom, the Latvian government and the Latvian State Radio and Television Centre.

Reuters reports Latvia is considering the merger following media speculation the government might be arranging a sale of its remaining stakes in the two companies.

Kennet Radne, TeliaSonera's Baltics mobility services head, said the company would like to reinforce its market position in Latvia, in order to boost potential growth.

"We believe there are synergies between these companies," Radne told Reuters, saying that from a customer perspective, the lines between fixed and mobile services were often blurred, "We believe there are opportunities to get these companies to work closer together."

In 2008, TeliaSonera made a bid for full ownership but that was rejected after the government feared an adverse impact on competition.

Radne said purchasing the rest of the companies remained a possible long-term goal, confirming, "We are interested in increasing our ownership in these companies."

Meanwhile, the Latvian government said privatisation of the companies was not being discussed.

On 8 August, Russia's Megafon announced the acquisition of domestic operator Scartel, 25.2% of which is owned by TeliaSonera.