TeliaSonera to increase stake in Estonian telecoms firm

Estonia is set to sell its share of leading telecommunications provider, Eesti Telekom, to Nordic group TeliaSonera.

On Wednesday Estonia announced that it was set to sell its 27 percent stake in Eesti Telekom to the Nordic group TeliaSonera, which already owns 61 percent of the company.

“The general agreement on the deal has been reached by the government and the proposal will be discussed at the cabinet session on Thursday,” finance ministry spokeswoman Kristi Joesaar told reporters.

At the end of August, Swedish-Finnish telecommunication player TeliaSonera made a 5.1 billion-kroon ($482 million) bid for the remainder of Eesti Telekom.

The government itself owns 24 percent of Eesti Telekom, while the state-run

Estonian Development Fund holds three percent and the rest belongs to a range

of smaller shareholders.

TeliaSonera — which has assets across eastern Europe and Central Asia — first became involved with Eesti Telekom as a minority investor in the early 1990s.

“The state has no strategic interest in having a holding in one of the telecommunications companies, in fact the holding is at odds with the role of the government as a regulator and supervisor of fair competition,” Finance Minister Jurgen Ligi said in a statement Wednesday.

Ligi said the deal would inject around four billion kroons into state coffers over the coming three years, thanks to the cash-for-shares offer, extraordinary dividends and income tax on dividends.He underscored that the sale would aid Estonia amid a deep economic crisis.

“These funds would allow the state to borrow less or keep higher reserves. According to current forecasts there will be a saving on interest costs of 260

million kroons,” he explained.

Estonia, which shifted rapidly from a communist command economy to the free market after independence from the Soviet bloc in 1991, had enjoyed a reputation as a “tiger” in the European Union, which it joined in 2004.

But the country of 1.3 million people swung into a sharp recession in 2008 and its economy is forecast to shrink by 15.3 percent this year. The government has made repeated spending cuts to try to tackle the crisis. Splits over the savings drive sparked the collapse of Estonia’s centrist coalition in May.

Estonia’s left-wing opposition blasted the current centre-right minority cabinet over the Eesti Telekom move.

“In the longer term, the state’s share in Eesti Telekom is a stable source of income. Tackling the current financial situation by drawing a relatively small sum from the deal means the state’s giving up a regular income source in future,” said ex-finance minister Aivar Soerd.

Since 2004, the Estonian state has earned a 2.18 billion kroons in dividends from its Eesti Telekom shares, and 2.53 billion kroons in tax revenues on dividends, official data shows.

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.


Eerie reminder of Baltic maritime disaster washes ashore

More than two decades after the sinking of MS Estonia, which claimed the lives of 852 people, a life buoy believed to be from the shipwreck has been found.

Eerie reminder of Baltic maritime disaster washes ashore
The life buoy from Estonia. Photo: Tvärminne Zoological Station

The MS Estonia sank on September 28th 1994 on a crossing from Tallinn to Stockholm, carrying 989 people on board: 803 passengers and 186 crew. The vast majority died in the disaster, 501 of whom were Swedish.

What appears to be a sad reminder of the tragedy washed ashore on an island last weekend, when a team from Finland's forestry administration Metsähallitus/Forststyrelsen were out eradicating invasive rose bushes in the Finnish archipelago. They found the life buoy, believed to be from the shipwreck, south of Jussarö.

“It is likely that this styrofoam buoy has been crushed by the high pressure at 80m depth, where the wreck lies, and then returned to the surface 23 years later. An eerie reminder from the past,” wrote the Tvärminne Zoological Station, which published a picture of the life buoy on Facebook.

The buoy was found more than 100 kilometres from where the MS Estonia sank in one of the Baltics' worst peacetime disasters.

The bow doors salvaged from the sea in November 1994. Photo: Anders Wiklund/TT

An international probe in 1997 blamed faulty bow doors which gave way in a storm, but there have also been numerous claims from relatives, shipping experts and politicians that the ferry sank after an explosion caused by military equipment being transported on board.

The majority of the victims were Swedish and pressure was heaped on the Swedish government to raise the MS Estonia to recover the bodies and try to establish exactly what happened. However, those hopes were destroyed when the decision was taken to leave the vessel where it was and let the victims be buried at sea.

To ensure the site would not be tampered with the ship was covered in thousands of tonnes of gravel and a protection order was taken out. Many of the families affected by the tragedy still hold out hope there will be a fresh inquiry and that the ship will be raised, while others believe it should be preserved as a mass grave.