Germany paves way for pounds 36bn sell-off: Privatisation poised to transform Telekom

GERMANY cleared the way for the privatisation of its telecommunications and postal services with parliamentary approval yesterday for the postal reform bill.

It will transform the national telephone monopoly, Telekom, and its banking and mail service counterparts, Postbank and Postdienst, into joint stock companies at the beginning of 1995 as the first step to one of the world's biggest market flotations.

'We have opened the gate for liberalisation in harmony with our European partners,' Wolfgang Botsch, the Posts and Telecommunications Minister, told parliament yesterday.

But the bill drew sharp criticism from regulators and competitors for doing little to break Telekom's monopoly grip on the large German market.

Its passage ended two years of political haggling with the opposition Social Democrats, whose support was needed for the two- thirds parliamentary majority required for the constitutional change allowing privatisation.

The final debate coincided with continuing strikes by postal workers worried about loss of benefits and privileges when their legal status changes from public to private employees. Telekom, whose market capitalisation is estimated at DM80bn ( pounds 32.6bn) plans a first tranche of shares, worth about DM20bn, on international stock markets by mid-1996, with a second to follow in 1998.

The government will retain its share until the year 2000, but before then will see its stake diluted by not subscribing to new issues.

The first to offer shares will be Postbank, where the government plans to keep a blocking majority of 25.1 per cent. The mail service will wait until 1998 for its sell-off.

With a 1998 deadline for liberalising Europe's telecommunications services, German Telekom needs to be in a position to raise fresh capital to support its ambitious international expansion plans.

The German carrier is building a global alliance with France Telecom and Sprint Corp of the US, to rival other so-called mega- carriers based around AT&T and Britain's BT. Telekom is also investing heavily in eastern Europe.

The postal reform bill was greeted with bitter criticism, however, from industry competitors.