November 11, 2014 / 11:54 AM / 3 years ago

Exclusive: Germany eyes windfall from sale of Telekom, Post stakes

BERLIN (Reuters) - The German government is considering selling its stakes in Deutsche Telekom DTEGn.DE and Deutsche Post DPWGn.DE, a move which could bring up to 24 billion euros into state coffers at a time when Berlin faces pressure to spend more on infrastructure.

The logo of German company Deutsche Telekom is pictured at the CeBit computer fair in this file photo taken in Hanover, March, 6, 2012. REUTERS/Fabian Bimmer

A finance ministry document seen by Reuters, which is due to be approved by Chancellor Angela Merkel’s cabinet on Wednesday, sketches out plans to reduce government holdings in a range of companies, the most politically sensitive being rail operator Deutsche Bahn.

The government had wanted to sell a minority stake in Deutsche Bahn in Merkel’s first term, but canceled the plan when the global financial crisis hit in 2008. Any sale now would depend on market conditions, the document said.

Merkel’s “grand coalition” government has promised to balance the federal budget next year for the first time since 1969 and a share sale could help it do that at a time of slowing growth and reduced tax revenues.

It could also free up cash for public investments as Merkel is under pressure from European partners and domestic industry to spend more to stimulate the economy and shore up Germany’s crumbling infrastructure.

At Monday’s closing share price, the government’s 31.7 percent stake in Deutsche Telekom -- which includes a 14.3 percent direct stake and a 17.4 percent indirect holding via state bank KfW -- was worth over 17 billion euros.

Its 21 percent stake in Deutsche Post, held by KfW, was worth over 6 billion euros. Together, the stakes could fetch roughly 24 billion euros, although the government could choose to sell a portion, rather than all of its shares in the firms.

BAHN BACKLASH

The document, signed by Finance Minister Wolfgang Schaeuble, says a sale of the Deutsche Telekom stake should be “carefully examined”, suggesting it may be one of the first priorities.

Reuters reported back in February, citing sources, that KfW had invited banks to make proposals for a placement of Telekom shares, which have risen roughly 50 percent since early 2013. Deutsche Post shares are up 67 percent over the same period.

Late last year, a monopolies commission urged the government to sell both the Telekom and Post stakes to avoid conflicts of interest which might arise from its role as a guarantor of fair competition in the sectors where these firms operate.

The Berlin/Brandenburg, Cologne/Bonn and Munich airports were also listed in the document as privatization candidates.

A sale of Deutsche Bahn, which has been struggling to cope with a train drivers strike in recent weeks, might prove the most difficult because of political sensitivities about putting a vital public service - which is heavily unionized - into private hands.

After Reuters reported the existence of the document, the transport ministry issued a statement saying that a rail privatization was “not currently on the political agenda”.

“When a horse is dead, it’s time to get off,” said Hubertus Heil, a senior member of the center-left Social Democrats (SPD), who share power with Merkel’s conservatives. He was referring to the decision to abandon an initial public offering of the rail operator in 2008.

In the document, the finance ministry said any rail privatization would exclude the company’s infrastructure. It did not set out a timetable for any of the share sales.

Deutsche Telekom shares were up 2 percent at 12.5 euros after the Reuters report on Tuesday, outperforming a flat DAX .GDAXI index of German blue chips.

Additional reporting by Victoria Bryan; Writing by Noah Barkin; Editing by Robin Pomeroy

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