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Swisscom buys back mobile stake from Vodafone

Swisscom CEO Schloter faces increasing competition on the home market

(Keystone)

The telecoms company Swisscom is to repurchase a 25 per cent stake in its mobile unit from British mobile phone company Vodafone.

The long-awaited deal, which is worth SFr4.25 billion ($3.5 billion), is expected to boost Swisscom's home market position.

"It was the right thing to complete the transaction before the end of the year," said Swisscom chief executive Carsten Schloter on Tuesday.

The acquisition means that Swisscom will not have to pay SFr300 million in dividends to Vodafone for this year and that the Swiss company's annual profit will increase by around SFr180 million compared with 2007.

The deal, which will be fully debt financed and includes net cash of SFr200 million, should be completed on Wednesday, a Swisscom statement said.

But analysts say the purchase price was about SFr0.6 billion higher than expected.

Domestic market

The deal will enable Swisscom, which is still majority held by the state, to strengthen its domestic position after the government blocked foreign takeovers.

"The successful partnership between Swisscom and Vodafone will continue unchanged, in the form of a long-term exclusivity agreement which will continue to provide benefits for Swisscom customers," the statement added.

Vodafone had acquired the 25 per cent holding in Swisscom Mobile in 2001 for SFr4.5 billion.

The deal comes as Swisscom faces increasing competition - including from cable operator Cablecom - and falling prices, making it difficult for the cash-rich company to grow in its home market.

swissinfo with agencies

Key facts

Swisscom Mobile turnover (2005): SFr4.1 billion (-4.3% on 2004)
Swisscom turnover (2005): SFr9.7 billion (-3% on 2004)
Swisscom Mobile is the country's leading provider in mobile telephony.
Swisscom Mobile customers are Europe's biggest spenders with average monthly bills of SFr78.

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In brief

Swisscom is the dominant player in the Swiss telecommunications market.

It had a monopoly until 1998.

In November 2005 the government announced it wanted to sell its 62% stake. It also banned Swisscom from buying foreign companies, pulling the rug out from under a proposed takeover of Ireland's Eircom.

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