Swisscom accepts government decisions

Swisscom CEO Jens Alder is not about to resign Keystone

Swiss telecoms group Swisscom has bowed to pressure from the government – its majority shareholder - and given up plans to take over Ireland's Eircom.

The former state monopoly said management and the board of directors would not consider resigning until a new strategy is in effect by the end of the year.

Swisscom broke off talks with Irish operator Eircom after the government blocked it from making foreign acquisitions and effectively torpedoed any deal.

The company said in a statement on Monday that it would not seek any acquisitions abroad for the time being.

“In view of the decisions taken on Friday by the government and its own assessment … Swisscom has assured the government that it will not make any decisions on acquisitions of holdings on foreign telecoms companies with a public service mandate until the strategic goals for 2006-2009 have come into force,” Swisscom said.

The telecoms operator added though that it expected clear statements from the government and that it would closely examine the plans before implementing them.

Foreign acquisitions

The government said late on Friday that the company was not permitted to take over any overseas telecoms firms that had a public service function in both fixed-line and mobile services at least until December 21, after which it would publish a plan for the next four years.

The statement opened the possibility that the government could roll back its ban on foreign acquisitions under the new guidelines, after its actions unsettled investors and raised questions about Swisscom’s strategy abroad.

The ban on foreign acquisitions came shortly after the finance minister, Hans-Rudolf Merz, announced that the state wanted to get rid of part of or its entire Swisscom stake. It holds a 66-per-cent stake in the Bern-based company.

Some analysts believe the government wants to hold the operator on a shorter leash than before, and force CEO Jens Alder to review his expansion plans.

Swisscom has repeatedly said it was looking to expand abroad as tough competition at home from the likes of Cablecom and Sunrise, a subsidiary of Denmark’s TDC, squeezes margins.

It was thwarted in recent attempts to buy Cesky Telecom and Telekom Austria, but the Austrian telecoms operator may be on the block again soon.

swissinfo with agencies

Key facts

The Swiss state holds a 66% share in Swisscom, worth around SFr17 billion ($12.9 billion).
This stake has earned the government SFr9 billion since 1998, when the operator lost its monopoly and went public.
Swisscom has 64,000 shareholders, most of them Swiss.
The German government owns 37% of Deutsche Telekom.
The French government owns 33% of France Telecom.