Swiss government takes first step to fully privatize national telecoms provider Swisscom
BERN, Switzerland – The Swiss government said Thursday it has taken the first step to fully privatize national telephone carrier Swisscom AG, but said the legal process may last two to three years.The Federal Council, or governing Cabinet, said it wanted to let Swisscom off the leash so that it can pursue growth and strike deals abroad.Swiss law prohibits the government from reducing its stake below 50 percent, so parliament and most likely the Swiss people still need to approve any such move.”Swisscom works in an increasingly competitive market. To do this well it has to grow and be able to take risks. As the government isn’t willing to fully share such risks, we are no longer the right shareholder for Swisscom,” Finance Minister Hans-Rudolf Merz told reporters.Merz referred specifically to the “relatively advanced” talks between Swisscom and Irish telecommunications company Eircom Group PLC. Swisscom is looking to expand abroad, but potential deals to buy Telekom Austria AG and Cesky Telecom AS of the Czech Republic have recently collapsed.Swisscom confirmed earlier this month that it has entered talks with Eircom, but it said there is no certainty that it will make an offer for the Irish group.At Swisscom’s current share price, the government’s stake is worth about 17 billion Swiss francs ($13 billion). The government is legally bound to use the money to pay off government debt, Merz said, adding that it would immediately start selling shares to reduce its stake to 50 percent. It does not need parliamentary consent for that first step.Depending on the change of the telecommunications law, the government may be left with a minority stake at the end of the process, Merz said.The government’s majority stake has fluctuated since 1998, but it currently holds 66.1 percent.