Government faces fight to pull out of Swisscom

For how long will the government have a majority stake in Swisscom? Keystone

The government will face significant opposition from parliament to its plans to sell its majority share in Swisscom, a public-services expert tells swissinfo.

This content was published on November 24, 2005 - 11:47

The cabinet said on Thursday that its 66 per cent stake in Switzerland's leading telecoms operator was restricting Swisscom's ability to expand.

The main union representing employees in the Swiss telecommunications sector, Communication, described the move as a "declaration of war" on the public-service sector.

The union's Christian Levrat, who is a Social Democratic parliamentarian, said a government pull-out would be a "mistake with heavy consequences".

Matthias Finger, a professor at Lausanne's Federal Institute of Technology, believes the plan could prove to be a political minefield.

Finger is an expert on the liberalisation of Switzerland's public-services network.

swissinfo: Is it a good idea for the government to relinquish its majority stake in Swisscom?

Matthias Finger: Commercially it makes sense, but is it politically acceptable? That is another question. The declaration today is one thing, but what parliament has to say is quite another.

The parties on the political left will argue against it. Their arguments always relate to security of supply and they don't trust the market to provide it. They will want to know who will fulfil the universal service obligation once Swisscom is no longer owned by the government.

Parliament will not be so positive or favourable to this evolution so it is by no means a done deal.

swissinfo: Does it make sense for the government to partly own a telecoms company when they are reforming the market?

M.F.: There is a fundamental contradiction if you want to liberalise the market and then still want to own one of the operators. That is a contradiction that will be solved if the government gets out [of Swisscom].

The government could then focus solely on regulation of the sector and not just on one company. That is a logical evolution.

swissinfo: Will it speed up the process of reform if Swisscom is privatised?

M.F.: No, the process is already well underway. The debate today is about whether Swisscom should retain its monopoly of the so-called last mile [the copper-cable infrastructure connecting households to the nearest telephone exchange], but otherwise the telecoms sector has already been mostly reformed when you compare it to other infrastructure sectors.

swissinfo: What are the commercial benefits to Swisscom if the state pulls out?

M.F.: It will give Swisscom more freedom to take risks and make acquisitions. The market is getting tougher and there is more pressure on Swisscom to do something. They are still a small player compared to Vodafone and Orange so they have to look abroad.

Switzerland is too small a market and if you are historically the monopoly player you can only lose if you fail to look outside the country. But they are still a healthy player and are in a good position to do something given the freedom to do so.

swissinfo: What would be the consequences if parliament rejects the government plan to sell its majority stake in Swisscom?

M.F.: It would damage Swisscom very much because the restrictions on what they can do would remain. They would not be able to take so many risks because their strategy would be a political debate rather than a commercial one.

swissinfo-interview: Matthew Allen

Key facts

The government currently holds a 66 per cent majority stake in Swisscom.
Swisscom is in takeover talks with Irish telecoms operator Eircom after failing with previous bids to buy Telekom Austria and Cesky Telecom of the Czech Republic.
Swisscom lost its monopoly of the Swiss telecoms market eight years ago.

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