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Last Updated: Thursday, 22 December 2005, 10:22 GMT
Swiss rethink on telecoms deals
Swisscom customer
Ministers fear domestic users will lose out if Swisscom buys abroad
Telecoms group Swisscom has been told it may buy foreign firms, reversing a previous order by the Swiss government.

Switzerland's leading telecoms firm was forced to abandon takeover talks with Ireland's Eircom earlier this month, after ministers objected to the deal.

The Swiss government currently controls Swisscom and argues foreign expansion could limit domestic investment.

While the new ruling will permit Swisscom to seek deals abroad, it comes with strict conditions.

'Tight corset'

The government said Swisscom would not be allowed to take over foreign firms which are a provider of basic telecoms services in another country.

Swisscom will also only be permitted to borrow up to 1.5 times its total earnings to fund deals - equivalent to 5bn Swiss francs ($3.83bn; 2.1bn).

"The new goals aim to allow Swisscom to take stakes in foreign telecommunications companies as long as they support the company's core business at home, or have another strategic-industrial logic," said Swiss transportation and communications minister Moritz Leuenberger.

"It's a tight corset, but we have decided to privatise the company in the long term, and there would be no sense in following another strategy in the meantime," he said.

Swisscom has been looking to develop abroad, arguing that its potential for domestic growth is limited and that Swiss customers will benefit from international tie-ups.

It approached Eircom - Ireland's largest telecoms firm - about a potential deal in November, although no formal bid was made.

The Swiss government owns almost 63% of Swisscom, following the company's part-privatisation in 1998.

Swisscom forced to drop Irish bid
05 Dec 05 |  Business
Swiss firm confirms Eircom talks
09 Nov 05 |  Business

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