The Belgian government yesterday finally removed the last remaining regulatory hurdles for a floatation of former monopoly operator Belgacom next year. The initial public offering (IPO) will value the operator at around EUR10 billion and the state will remain its majority shareholder, with 50% plus one share. Belgacom’s other investors – SingTel, Denmark’s TDC and SBC Communications of the US – have long been attempting to persuade the government to bring the telco to the market, but plans were only recently stepped up following the arrival of a new administration in May’s general election. The buy-back will leave Belgacom with up to 10% of treasury shares and involve a EUR1.4 billion payment to the state. It will raise the telco’s debt by around EUR1 billion, but Belgacom is confident that its credit rating will be unaffected. Details of the IPO have yet to be announced, though analysts’ predict that the floatation will be staggered, starting with a tranche early next year.
Belgacom was the monopoly operator in the Belgian fixed line sector until market liberalisation in 1998 when it faced competition from the likes of Telenet and UPC Belgium. It offers local, domestic long-distance and international voice services as well as a range of data-based offerings, internet access via its ISP Skynet, and mobile telephony through Belgacom Mobile. Despite the competition, it claimed 4.79 million local lines in service at the end of 2002, well over 90% of the total. It also controlled 61.6% of the international market and 41% of internet subscribers. It is keen to maintain its dominant position, and has been focusing on the broadband arena as a key area of development during 2002/03. At the end of 2002 it had 517,000 ADSL subscribers, up from 227,000 the previous year. It plans to have 750,000 connections by the end of 2003. In late 2002 Belgacom announced that it had paid off its entire EUR110 million debt, following a series of asset sales during the year, including its 100% stake in Belgacom France to LDCom in January 2002 and its 11% holding in Ben Nederland to Deutsche Telekom’s mobile arm T-Mobile. It is the only major telco in western Europe to have cash in the bank.