Swiss Government Targets Small Investors In Swisscom Sale

by Ulrika Lomas, Tax-News.com, Brussels

27 January 2006

The Swiss Federal Council has published the consultation document for the disposal of the Swiss federal government's majority holding in Swisscom.

A six-week consultation period was opened by the government on Wednesday, marking the first step towards privatisation of the former state monopoly.

A draft consultation paper allowing the state to dispose of its entire 62% holding in the company has been approved by the cabinet, which has let it be known that it wants its shares spread "as widely as possible" to allow small investors to acquire a stake in the firm.

"The cabinet wants to ensure that in disposing of the shares, they should be spread as widely as possible. In addition, small shareholders should be made an offer, in the spirit of a 'people's share'," stated Finance Minister Hans-Rudolf Merz

"In doing so, the cabinet is consciously foregoing a sale at the highest possible price and creates good conditions for Swisscom being able to remain independent," he added.

Swisscom has stated that it will examine the consultation document and accompanying measures in detail before responding.

However, the company said that it views the proposal as "positive overall" and expects the political issue to be "rapidly resolved".

Swisscom's Board of Directors has identified seven factors as core criteria for the company: long-term returns for shareholders (total shareholder return over 10 years); customer satisfaction; competitiveness; innovativeness; corporate flexibility; the ability to make acquisitions and form alliances, and attractiveness as an employer.

In addition, the company wants the government to respect Swiss company law by not granting itself any special rights with regards to the share sale.

Swisscom also says that is "firmly against" any separation of its networks and services by the creation of a special network operating company, arguing that the industry trend is moving in the opposite direction.

"Swisscom considers it would be virtually impossible to implement a demerger and that it would have highly detrimental consequences for Swisscom's competitiveness compared with its rivals and destroy value for shareholders," the company commented.

The consultation period is set to expire in March, following which the cabinet will draft a formal law. This is likely to be submitted to parliament mid-way through the year.

The Swisscom board of directors last week named Carsten Schloter as the new chief executive officer.

Mr Schloter replaces former CEO Jens Alder who had a public falling out with the government over its approval of a four year plan limiting the company’s activities abroad.

Alder had been a keen advocate of expansion into foreign markets.

Recommended