OREANDA-NEWS. On 27 March 2009 was announced, that Latvia’s leading provider of electronic communications services, Lattelecom, will focus most of its attention in 2009 on preserving employee numbers, improving client services, and developing the new product that is terrestrial television and optic Internet services. 2008 was a successful year for the company. The Lattelecom Group enjoyed record turnover in 2008 – LVL 160.4 million, with group profits of LVL 29.7 million.

2009: A year of challenges

“Last year the goal for Lattelecom was to ensure that each household in Latvia has a high-quality Internet connection. We worked on that throughout 2008 and will continue to do so in 2009. A broad step in pursuit of the goal was taken in January 2009, when Lattelecom began to install an optic network in the Rоga neighbourhood of Zolitыde. The company also started to offer mobile Internet services. The former of these services has substantially increased the speed of the Internet for clients who already are hooked up. The latter is of use to people who live in less-populated regions and can now use the Internet, too,” says the Lattelecom board chairman, Juris Gulbis.

A Lattelecom product which is in very high demand is interactive television. The number of clients increased substantially throughout 2008 – at the end of December it was four times higher than at the beginning of the year. On the basis of its technological and content platform, Lattelecom took part in a bid for tenders that was announced by the Transportation Ministry to win the right to offer digital terrestrial television services in all of Latvia. Testing of the necessary system began in March 2009, and it is expected that terrestrial TV will be available on a commercial basis and throughout Latvia in the autumn of this year. The first phase of the test involves a territory which covers a 30-kilometre radius around the city of Rоga. The services can be accessed free of charge by anyone who has a TV reception antenna and an MPEG-4 receiver.

By starting the installation of the infrastructure which is needed for rapid Internet services in Zolitыde, Lattelecom has begun expansion of its major “Future Network.” The relevant clients already receive the fastest Internet services in Europe – up to 100 Mb/s. In future, the connection speed will be increased to 10 Gb/s, which will make Internet usage opportunities virtually unlimited. Soon the network will also be installed in the Нengarags neighbourhood of Rоga, and then in other parts of Rоga and in other major cities in Latvia. In March, Lattelecom established the Optical Technology Business Division so as to expand the optic network as quickly as possible.

Also in January of this year, Lattelecom began to offer people mobile Internet services with a download speed of up to 3.1 Mb/s. Lattelecom mobile Internet services are already available in most of Latvia, and it is an alternative for those people who have not been able to access broadband Internet services with the use of cables.

Juris Gulbis says that in addition to new product development, this year the company will also devote particular attention to client services. A programme to improve client satisfaction has been introduced at the company. Its goal is to increase the level of client services and to improve the quality of services that are rendered. “Effectiveness is the most important parameter here, and that is why we are actively engaging in communications about the company’s overall goals. We’ve changed the way in which we set goals. We cascade responsibilities, involving managers at all levels, as well as each employee individually. This means enhanced responsibility, and all employees are personally involved in the attempt to achieve better results,” says Gulbis.

2008: A year of achievements

Despite the deterioration in Latvia’s economic situation in 2008, Lattelecom continued to see increasing numbers of broadband Internet connections. At year’s end, there were 183,500 Lattelecom Internet connections in Latvia – 23% more than at the end of the previous year.

The company was involved in several major projects in 2008 which were contracted back in 2007. The most important of these include a NATO maritime observation project in partnership with the Latvian Defence Ministry, the provision of Internet access infrastructure to Latvia’s libraries, the establishment, installation and maintenance of IP data transmission network solutions at Latvia’s diplomatic and consular offices, an agreement with the Lithuanian rail company Lietuvos Geleюinkeliai on the installation of the mySAP business administration system, as well as participation in a Latvian passport programme which involves the establishment of an IT system that is needed to produce biometric passports.

In January 2008, Lattelecom Technology, which is a company in the Lattelecom Group, signed an agreement with the National Cultural Information Systems Agency on the provision of computers and multifunctional systems to public libraries in Latvia. Over the subsequent five months, more than 800 libraries received modern computers. The total sum of the agreement is nearly LVL 3.3 million.

In early October, Lattelecom opened a new optic connection between Latvia and Lithuania – one that is based on the DWDM technology. Thanks to this new connection, existing international Lattelecom clients can increase data transmission capacity in the Lattelecom optical network. The new infrastructure permits transmission at a speed of up to 10 Gb/s. In future, that speed will increase to 40 Gb/s.   Registration of participants for the Rоga Marathon involved technologies developed by Lattelecom – the most modern database and participant registration system in the Baltic States. The new system is based on Internet solutions, which means that the list of participants can constantly be updated to present the very latest information.

Major sources of revenue

On March 19, the Lattelecom Council approved the group’s 2008 financial results, which show turnover of LVL 160.4 million for the Lattelecom Group in 2008 – the best result since ___. In 2008, revenue exceeded 2007 revenue by LVL 6.9 million, or 4.5%. In 2007, Lattelecom concluded the year with revenues of LVL 153.5 million.

The more rapid increase in income in 2008 was based on Internet services, where income increased by nearly LVL 5 million, or 23% on the year. Income from the wholesale provision of telecommunications services increased by 37%. Data transmission services were in high demand in 2008, and revenue increased by 11%. In terms of percentages, the highest growth was seen in the area of new services – income from interactive television services increased by 517% in 2008, while income from business consultations which Lattelecom provides rose by 400%.

Also in 2008, the Lattelecom Group set a new operating record in terms of paid taxes – LVL 36 million to the Latvian budget in all. Previously the highest amount in taxes paid by the group was in 2007, when the state received LVL 34.6 million in revenue from this source.

The Lattelecom Group made capital investments in 2008 of LVL 27 million, mostly in terms of the access and data networks so as to hook up new broadband Internet clients. The company’s highest level of capital investments occurred in 1998, when the sum was LVL 71.6 million. Between the launch of a modernisation programme in 1994 and the end of 2007, total Lattelecom Group capital investments amounted to more than LVL 590 million.

In 2008, the companies in the Lattelecom Group had profits of LVL 29.7 million.

“The reduced profits last year have mostly to do with the deterioration in Latvia’s economic situation. Also in 2008, Lattelecom Technology made investments in the development of its business abroad, but those investments did not yield the anticipated returns. Lower profits also relate to Universal Service obligations which, between 2006 and 2008, inclusive, cost the company LVL 3.7 million. The law says that the government has to repay that sum, but so far that has not happened,” explains Juris Gulbis.

“Lattelecom shareholders welcome the results that were achieved by employees of the Lattelecom Group in 2008, particularly in terms of their ability to increase revenue and ensure a high level of profits at a time of an economic crisis. We must continue with this work this year, particularly focusing on client satisfaction and improvements to services,” says the chairman of the Lattelecom Council. He added that decisions on profit distribution will be taken at a later date.

Lattelecom is the leading provider of electronic communications services in Latvia. The company offers integrated electronic communications and IT services, as well as telecommunications, network design and installation services. Lattelecom also provides data transmission and IT infrastructure services, Internet and contact centre services, as well as outsourced business process services. There are five companies in the Lattelecom Group – SIA Lattelecom, Lattelecom BPO, Citrus Solutions, Lattelecom Technology and its subsidiary, the Baltic Computer Academy. Lattelecom was established in 1994 as a joint venture. 51% of capital shares belong to the republic of Latvia, and 49% belong to the TILTS Communications consortium which, in turn, belongs to the Sonera Corporations subsidiary Sonera Holdings B.V. 99.4% of shares in Sonera Corporations belong to Telia Sonera AB.