Deutsche Telekom AG has agreed to let the German government sell some of its remaining shares as a way to assist the country’s bid for European monetary union. Under the terms of the deal, the government will transfer 25% of its total capital in Telekom in two steps to the state development agency Kreditanstalt fuer Wiederaufbau (KfW). KfW will be charged with selling the shares to strategic investors. In this way the government will dispose of its majority stake in Deutsche Telekom sooner than planned, increasing the company’s flexibility in order to develop into a global player on the world market, Telekom chairman Ron Sommer said in a regulatory statement. None of the remaining stock will be sold on capital markets before 2000. The deal allows Telekom to search for strategic investors for some of the shares the government plans to sell. As strategic investors, we are looking at current and future partners in the international telecommunications business, Sommer said. The move could earn the German government an estimated $1.45bn to aid its attempts to rein in its deficit in time to qualify for economic and monetary union. In the run up to Deutsche Telekom’s partial privatization last year, the German government said that it would not dispose of its shares before the year 2000, but the law privatizing Telekom states that none can be sold directly on the market before then.
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