The business community and the political right have welcomed the government's plan to privatise Swisscom, but the left is strongly opposed.
Swisscom says the announcement by the cabinet on Thursday that it wants to sell its 66 per cent stake will have no direct impact on the company's business.
The political and financial stakes are high: the Swiss government's majority share in Swisscom is currently worth more than SFr17 billion ($12.9 billion).
The Social Democrats are strongly against privatisation, on the grounds that the investment is more useful to hold onto in the long term. They have threatened to block the move with a referendum.
"We are convinced that the majority of the population will not approve this project," Claudine Godat, spokeswoman for the Social Democrats said.
The Social Democrats believe that privatisation will ultimately lead to job losses, particularly in peripheral regions. They question the wisdom of offloading a healthy company for short-term gain.
"Declaration of war"
Even more vehement in its condemnation of the government decision was Communication, the main union representing employees in the telecommunications branch. It described the government plan as a "declaration of war" against the public sector.
The Swiss federation of trade unions accused the government of shortsightedness and said the decision was purely ideologically based.
The centre-right Christian Democrats are also clearly against selling off the national jewels, demanding that the state remain Swisscom's majority shareholder.
However, the centre-right Radicals and rightwing Swiss People's Party welcomed the announcement.
Both parties said the government's plan fulfilled one of their long-standing demands.
The Swiss Business Federation, economiesuisse, said the withdrawal of the state from the telecoms sector would enhance the freedom of the company and stimulate competition.
Economiesuisse also pointed out that the proceeds of the sale of Swisscom shares would be used to reduce the federal debt.
Swisscom itself has remained neutral, calling it a purely political decision that has no direct impact on the business.
Finance Minister Hans-Rudolf Merz said the government would prefer to cut all ties with Swisscom, rather than keep a minority holding in the company.
"The state is clearly no longer the most suitable shareholder," he said. Before the law is amended to allow the complete sale, the state will reduce its shareholding to the legal minimum of 50 per cent plus one share.
The initial sell-off of shares will take place soon, depending on market considerations, a finance ministry spokesman said. This should generate a return of SFr4.5 billion.
The sale of the remainder of the government's SFr17 billion stake will take place in two to three years' time.
swissinfo with agencies
The state currently owns 66 per cent of Swisscom.
The government intends to reduce this stake to 50 per cent plus one share in the near future.
The telecoms operator is obliged to satisfy the communications needs of the population.
In 2005, after seven years of competition, Swisscom is still the market leader in the Swiss telecoms sector.