State to sell its majority share in Swisscom
Swisscom is on the road to full privatisation, following the government's announcement that it wishes to sell its majority stake in the telecommunications company.
The move is intended to give Switzerland’s leading telecoms operator the flexibility to expand its business operations and seek out new alliances.
The government considers that the current arrangement, where the state controls 66 per cent of Swisscom, representing a stock market value of SFr17 billion ($13 billion), is restricting the company’s strategic freedom of movement.
In a joint statement, the finance and communications ministries said that privatisation would allow Swisscom to enter alliances more easily in the medium term.
The government has now asked the finance ministry to initiate moves to revise the telecoms law.
No risk
“The state will no longer have to take on the risks to which the company is exposed,” the statement added.
The decision to change the telecoms law will ultimately be made by parliament.
Earlier this month, Swisscom confirmed it was in takeover talks for Ireland’s former state monopoly and principal provider of fixed-line services, Eircom.
The cash-rich Swiss company has made no secret of the fact that it has been looking to make acquisitions abroad. However, it has been unsuccessful in recent attempts to buy Telekom Austria and Cesky Telecom of the Czech Republic.
Swisscom is under pressure to find sources of income in its own home market, where it has been facing increasing pressure from companies such as Cablecom and TDC-controlled Sunrise.
Fluctuations
Swisscom has been listed on the stock market since 1998.
Issued at SFr340, the share price climbed to a high of SFr738 in the spring of 2000, on the back of general positive sentiment in the telecoms sector. But shares fell back again to a low of SFr340.30 one year later amid an overall slump.
According to the Swiss telecoms law, Swisscom is obliged to provide a full service to the Swiss public.
The company reported a turnover of SFr7.2 billion for the first nine months of 2005. It employs 15,300 full-time staff.
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The state currently holds 66 per cent of Swisscom, representing a market value of SFr17 billion.
Swisscom shares have earned the state Sfr9 billion since 1998.
There are almost 64,000 other shareholders, the vast majority of them in Switzerland. Of these, 12 shareholders hold more than 100,000 shares.
Switzerland would not be the first European country to give up its majority share in a former state telecoms monopoly.
Germany now holds 37 per cent of Deutsche Telecom, France Telecom is 33 per cent owned by the state and the level for Telekom Austria is 38 per cent.
At the end of 2002 there was no more participation of the state in Telecom Italia.
Swisscom lost its monopoly of the Swiss telecoms market eight years ago.
Since then the market has partially opened up and it is now possible to choose between several providers in the fixed-line and mobile phone sectors.
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