Finland to Sell Sonera Shares, Competitor Seen Buying.
Helsinki, March 7 (Bloomberg) -- The Finnish government said
it seeks authority to sell the rest of its shares in Sonera Oyj,
the nation's biggest telephone company, as the country seeks to
reduce its debt, prompting expectations a rival could buy a
stake.
The government currently has permission from parliament to
cut its 57.9 percent stake, worth 39 billion euros ($37 billion),
to 34 percent. The state said it has already started preparations
to sell at least 12 million shares, or 1.7 percent of the
company. The shares fell as much as 4.3 percent.
``This is good news for Finland,' said Mika Heikkilae, a
fund manager at Conventum Funds, who already holds a maximum
portion of Sonera shares in his portfolio. ``The state could sell
a stake to some international phone company.'
Investors were keen to buy stock in Sonera last year when
the state held a second sale, worth 3 billion euros, because of
its stakes in cellular operators like Turkey's largest cell phone
operator, Turkcell Iletisim Hizmetleri AS, and as VoiceStream
Wireless Corp. of the U.S. Investors also are betting its
cellular Internet products will beat the competition.
Selling the 12 million shares, or more, would cut the
state's stake in Sonera to as low as 54.5 percent, depending on
demand, the company said. The book-building period will start
immediately and Merrill Lynch & Co. will manage the sale.
Mobile Phone Service
While the current planned stake sale is small, analysts say
the state could sell more to some other operator, such as the
world's largest mobile phone service provider Vodafone AirTouch
Plc. Government representatives weren't immediately available for
comments. Vodafone declined to comment.
``There might be a large international phone company that
the Finnish state would be interested in selling a large stake
to,' said Jussi Hyoety, an analyst at Mandatum Stockbrokers.
Sonera Chief Executive Aulis Salin has earlier signaled that
unnamed phone operators have contacted his company. Last month,
Sonera licensed its cellular Internet portal, the Zed, to
Germany's Hutchison Telecom GmbH, a unit of Vodafone's Orange
Plc.
Some politicians, such as Social Democrat Klaus Hellberg,
have argued that the state should sell its stake to pay off debt
as the stock skyrockets. Selling the entire stake would more than
halve the country's debt, currently standing at 71 billion euros.
Before today's announcement, the state has said it plans to pay
back debt worth a net 1.2 billion euros this year, the second
year in a row.
Share Performance
Sonera shares have risen 12-fold since the initial offering
in November 1998, boosting the company's market value past such
giants as carmaker DaimlerChrysler AG. Still, Sonera, the 19th
most-valuable company in Europe, has just 1.2 percent of the
sales of DaimlerChrysler.
The Helsinki-based company has gained from the Finns' craze
for cellular phones, investors said. In Finland, home to top
cellular phonemaker Nokia Oyj, two out of three citizens use a
cellular phone, more than any other country.
Shares in Sonera have been boosted by the company's
innovations in cellular Internet. The company has pioneered the
cellular Internet portal and cellular Internet encryption. It is
expected to list its encryption unit Smarttrust Oy this year.
At the same time, the company is seeking permission to start
a next-generation cellular network in the U.K. It is leading a
group of investors, including Virgin Ltd, the Berkshire Group and
Quantum Industrial Partners. It already has received permission
for Finland.
Sonera also said last month it will seek approval from
shareholders to issue shares worth 1.9 billion euros to finance
future acquisitions and to boost the operations and marketing of
Smarttrust and Zed, the encryption and cellular Internet portal
unit respectively.
Sonera's shares recently traded down 3.04 euros, or 3.18
percent, to 92.45 euros.
Source: Bloomberg News/By Jonas Dromberg
quote.bloomberg.com
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