Germany’s ruling conservatives oppose selling the state’s holding in Deutsche Telekom to raise billions of euros for a national broadband upgrade, preferring instead to divest stock in Deutsche Post, a senior source said.
“Can we privatise companies to this end? Yes we can,” said the source, from Chancellor Angela Merkel’s Christian Democratic Union. “But I wouldn’t necessarily start with Telekom.”
The source added that “if we were to think at all” about selling off government interests, state-held shares in Deutsche Post could go first as that company is less sensitive to national security concerns.
The CDU’s position is in stark contrast with calls by two smaller parties in talks to form a coalition government to sell down the state’s 31.9 per cent holding in Deutsche Telekom to invest in a national rollout of ultra-fast glass-fibre to homes and businesses.
The liberal Free Democrats want to sell off the entire holding. The Greens, meanwhile, propose parking the 14.5 per cent of Telekom that is directly controlled by Berlin at a state development bank, raising €10 billion.
A second CDU source dismissed the Greens’ proposal as a “book-keeping trick”.
The disagreement comes as Germany, Europe’s industrial powerhouse, seeks billions to upgrade its creaking internet infrastructure and keep its factories competitive.
Twelve years after Merkel first took power, just two per cent of internet connections in Germany are super-fast glass fibre, the OECD estimates. That compares to 74 per cent in South Korea and 75 per cent in Japan.
Analysts, investors and CEO Tim Hoettges warn that, without the government as an anchor owner, Telekom could draw an unwelcome foreign takeover bid.
Telekom called off an attempt to merge its T-Mobile US unit with Sprint Corp. at the weekend. With that deal off the table, concerns are turning to the risk that a large slug of Telekom shares could hit the stock market.
“This could be highly negative for the Deutsche Telekom share price in our view,” Credit Suisse analyst Justin Funnell said in a note yesterday, adding that investors would only want to buy the shares at a steep discount.