Swisscom slams cabinet over acquisition ban

Is time running out for Alder at the helm of Swisscom? Keystone

The country's leading telecoms operator, Swisscom, has criticised a ban on investments abroad by the cabinet but has pledged to abide by the rules.

This content was published on December 5, 2005

The board of directors said it would prepare a business strategy in line with government guidelines to be presented before the end of the year.

Swisscom said that until then there would be no major changes in the company's management and board.

The firm's leadership said they would abide by the government guidelines, after last month's ban on foreign acquisitions scuppered a planned takeover of Ireland's Eircom.

"Swisscom needs binding goals so that the company can operate and act on the market," chairman Markus Rauh told a news conference in Zurich.

He added that a breakdown in communications between the firm's biggest shareholder and Swisscom's management had hurt the company's image.


The firm said it expected clear-cut statements from the government before the end of the year after the souring of relations, adding it would closely examine the plans before deciding to implement them.

Chief executive Jens Alder spoke of a "crisis" between the board and the government - which holds a 66 per cent stake in the former state monopoly – but senior managers were committed to staying in place until the government's proposals were tabled.

"When we have the government's goals, we will analyse them and ask the necessary questions as to who would be the right people to undertake them," Rauh added. "For the moment there will be no resignations."

Analysts said management's hands continued to be tied and that investors were wary of rules governing the firm's future, which may keep it on too short a leash.

Public service

Last Friday the government said Swisscom was not permitted to buy any overseas telecoms firms that had a public service function in both fixed-line and mobile services at least until December 21.

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

The talks with Eircom have now broken off, Swisscom said on Monday. "Under the circumstances Swisscom sees no possibility of a takeover bid," Swisscom said.

Swisscom will continue to invest in Switzerland, Alder said, but foreign acquisitions were integral to the company's future and could cost it upwards of SFr1 billion ($0.76 billion).

The company has repeatedly said it was looking to expand abroad because of the tough competition at home from the likes of Cablecom and Sunrise, a subsidiary of Denmark's TDC.

Swisscom was thwarted in recent attempts to buy Cesky Telecom and Telekom Austria.

swissinfo with agencies

In brief

Ten days ago the government announced it wanted to sell off its 66.1% stake in Swisscom in a bid to privatise the former state monopoly.

The government also banned any foreign acquisitions as long as the state is still the main shareholder.

The two statements caused a series of contradictory remarks by cabinet ministers. Parliament is due to discuss Swisscom during the current winter session.

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