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Lithuania: Telecom Privatisation Takes Key Step Forward

Vilnius, 10 July 1997 (RFE/RL) - Moves to privatise the Lithuanian telecom system enter an important phase on Monday (July 14), when Lithuanian privatisation officials open talks with an international consortium of consultants chosen to guide the privatisation.

The consulting group is led by the Union bank of Switzerland (UBS), and includes also the legal firms McDermott, Will & Emery, and Debevoice & Plimpton, as well as the audit company Arthur Andersen and the investment experts CIBC Wood Gundy of Canada.

The Lithuanian Privatisation Commission chose this consortium from among 24 participants in a public competition, to act as official consultants for Lithuanian Telecom's privatisation.

Kiron Sarkar, a director at CIBC Wood Gundy, told an RFE/RL correspondent in Vilnius that the winning consortium consists of what he described as the best forces that have already taken part in planning the privatisation of several other big telecom systems, namely those of Hungary, the Czech Republic and Serbia.

According to Lithuanian privatisation official Vytenis Junevicius, a comprehensive contract with the consortium is to be signed next month. Junevicius said that should any problems arise which prevent the signing of the contract, the government will instead negotiate with Deutche Morgan Grenfell, the consulting group which took second place in the competition.

Our correspondent notes that the chosen consultants must present a detailed plan for selling the larger part of the Lithuanian Telecom shares. She says the future of the Lithuanian telecommunications company will mostly depend on the consultants. That's because the Lithuanian government still has not created clear strategies for telecommunication licenses and tariffs, and the consultants will therefore have to take part in creating laws that regulate Lithuanian Telecom's activities.

The public sale of Lithuanian Telecom shares is expected to start at the end of 1997. Junevicius says at least 33 per cent of Telecom's shares will remain in state ownership. In addition, he says, half of the Telecom shares will be sold to a single strategic partner, who will be found with the help of consultants.

According to experts, Lithuanian Telecom is valued at about $37 million.

Junevicius says Lithuania is the last of the three Baltic states to partially privatise their telecom services. Estonia privatised its telecom in 1992, Latvia in 1994. In both those states the government owns 51 percent of telecom's shares. Neither Latvia nor Estonia organized a public competition to find the right advisers the way Lithuania has done - and that's why Lithuania is expected to be more successful, according to Junevicius.