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Baltics: Scandinavians Snap Up Lithuanian Mobile Phone System

By Monika Garbaciauskiete

Vilnius, 21 July 1998 (RFE/RL) -- Amber Teleholdings, the Scandinavian consortium which has just taken a controlling stake in Lithuania's national telecom system, is now also buying Lithuania's biggest mobile phone company.

Amber Teleholdings consists of Sweden's Telia and Finland's Sonera telecommunications companies.

The price this consortium is paying for a 55 percent share in the Lithuanian Omnitel mobile phone network has not yet been disclosed. But financial sources say it probably lies between $150 million and $200 million.

Omnitel President Viktoras Gediminas Gruodis told RFE/RL that the deal still has to be approved by Omnitel's main creditors, which include the Finnish bank Merita and U.S. interests. But no particular difficulties are foreseen, and Gruodis said Omnitel is satisfied to have Amber as a strategic partner.

The Scandinavian consortium's new controlling purchase is in addition to the 30 percent stake it already holds in Bite GSM, Omnitel's rival on the Lithuanian mobile phone market.

The latest acquisition by Amber Teleholdings, if approved, will put it in a commanding position on the Lithuanian market. Last month it purchased for over $500 million a majority stake in Lithuanian Telecom, the country's monopoly provider of fixed-line telecommunications, which is being privatized.

Now it looks set to control most of the local mobile telecommunications network also. And outside Lithuania, Amber is an increasingly visible player in the Baltic region generally, with plans to expand next to Poland.

Before its privatization, Lithuanian Telecom had acquired a GSM license at considerable expense -- $450,000 -- from the government in Vilnius, and was going to create its own separate mobile communications network.

However, Telecom later decided that it would be cheaper to buy an existing company with an established market presence than to set up a new network. It's not clear what Telecom now plans to do with its superfluous license.

Experts say that in any case, creating a new network would be a very expensive process, not so much because of the equipment but because of the difficulty of finding new clients. Analysts say that Lithuania is too small for the third GSM operator, and that prices of mobile communications would have gone down if a third operator had appeared.

Since starting its activities in Lithuania Omnitel has invested more than $66 million to develop a business base, and its competitor Bite GSM has put in some $50 million.