Swisscom has said it expects to be taken over when the Swiss government sells its majority stake.
Telecoms group Swisscom told the Financial Times on Thursday that as soon as the Swiss government sells its majority stake in the company, it expects another majority partner to emerge. It may well be right.
The government is expected to reduce its 65.5% stake to a minority holding when it is legally allowed to in two years’ time – or sooner, if the relevant law is abolished by parliament next year. At this point, Swisscom would become an attractive target for several telecoms firms.
Swisscom is dominant in the Swiss fixed-line and mobile telecoms markets, and owns 92.2% of German mobile provider Debitel. It also has a big pile of cash, believed to be somewhere in the region of $3-6 billion. Swisscom didn’t take part in the recent telecoms acquisition blitz; according to Mr Alder, companies do not live up to our demands.
But even with a cash mountain and a captive home market, Swisscom is too small to establish itself as a major player in Europe. And European telecoms is increasingly a market where companies are either predators or prey. Ireland’s Eircom, another locally dominant firm with little international presence, soon found itself broken up and taken over.
A similar fate seems likely for Swisscom. Its Swiss mobile operations would be a useful addition to Vodafone, which already owns 25% of the unit. Meanwhile, the Swiss fixed-line business is a safe cash-generating asset, which would be best sold to a financial group looking for a low-risk investment.
Debitel could be attractive to an existing German operator, since the company has 8.6 million customers and no network, instead acting as a mobile virtual network operator (MVNO). However, Vodafone already has over 20 million customers in Germany and so could well be prevented from buying it. A better candidate would be a group with a network but a limited customer base such as Mobilcom or MMO2 – but neither operator is in the peak of financial health at the moment.
