In a world telecoms first, the Chicago, Illinois-based US Baby Bell Ameritech Corp is buying a $3.2bn controlling interest in the Danish national Telco Tele Danmark As, with yearly revenues of $3.6bn. This is the first sale of a controlling interest in an ex-state owned monopoly telco to a foreign company. In response to the news, Tele Danmark’s common shares jumped 11% to 390 Danish Crowns. Both companies are planning to increase their presence in the deregulated European telecoms market, and consolidate their holdings in a number of European Telecoms ventures. The move is predicted to add two cents to Ameritech’s earnings per share in 1998. The deal has no regulatory hurdles to hamper it as the European Union is unlikely to block the sale and, as the Danish government is selling its stake, it is unlikely to dictate any further non-financial terms. The deal gives Ameritech, which turned over $4bn in the last nine months, a foothold in the Europe market which is growing at an estimated 11% per year and Tele Danmark has already declared a strategy to expand aggressively by become a competitive operator in the major European countries come deregulation in January 1 1997.
Largest in Europe
Ameritech is getting control of a highly advanced telecoms company. This deal will make Ameritech a multi-billion dollar player in the European telecoms industry. It already owns stakes in a number of companies; a 33.5% stake in former Hungarian state operator, Matav Rt and a 17.5% stake in Belgian state phone company Belgacom SA, in which Tele Danmark owns a further 16.5%. Tele Denmark also owns a German mobile telephone operator Talkline Gmbh and a 20.8% stake in the Czech Republic’s Ceske Radiokomunikace. With Ameritech’s other international stakes, the deal will bring Ameritech’s non-US investments to a total of $8bn, which makes it the largest US telecoms player in Europe. Ameritech is to pay 467 Danish Crowns per class A share, for 45 million shares, a total of 21bn crowns, which will give Ameritech a 34.4% share-holding of the company and the right to elect six of the 12 board directors. The shares will be purchased from the Danish Government’s 51.75% stake, and Tele Denmark will buy back 10bn Danish Crowns worth of its shares (CI No 3,243) from the government and retire the shares, upping Ameritech’s overall stake to over 42%. Ameritech will also buy any outstanding government shares after Tele Danmark’s buy back which could take its holding to more than 50%.
