SZ Nr 164 / page 16 - , 11./12. August 2001
The subject of the week
Telekom’s hide and seek
by Judith Raupp
Of all the stocks it’s been the T-share, the absolute darling of small investors, that’s been falling fastest lately. This week the price of the German Telekom fell to its lowest level in three years, because institutional investors sold their holdings on a large scale. The little investors on the street ask themselves, why are the big ones getting out. Have they lost the confidence, because it goes steep down with the German Telekom?
That is not the case. It is nearly certain that it’s the Finnish Sonera and Hutchison Whampoa from Hong Kong who sold their Telekom share packages, which the Bonn company used to pay the purchase of the American mobile enterprise Voicestream. These two telecommunications companies behave like private shareholders, who sell in order to be able to go for a larger acquisition from securities. Sonera and Hutchison Whampoa both urgently need cash: The Fins must pay down their high debts; the Chinese need capital to finance their future growth. What would be more appropriate for them than hock their German Telekom shares?
The management of the German Telekom can do nothing to stop large investors from selling. But the example again illuminates the problem of the magenta-coloured giant: its information policy is not transparent enough and often it rather confuses instead of illuminating. When the German Telekom recently took over the American mobile enterprise Voicestream for 30 billion dollar, it paid a part of the purchase price with its shares. Ron Sommer, the boss of the German Telekom, resisted reproaches, that this step would water down the T-share. He hinted that there’s certain retaining periods for the new shareholders, that Telekom has the grasp of the situation. However, he did not explicitly mention the danger that enormous blocks of shares could land in hands of investors, who could have little interest for the German Telekom and could thus soon sell them.
Credibility suffers
It makes much sense for Telekom to pursue an open information policy. After all it carries a special responsibility as the issuer of a widows’ and orphans’ shares. It makes a bad impression, if Sommer does not put all facts on the desk or if he does warn well enough in advance of possible threats. Let us mention just those surprisingly high real estate write-offs, that happened just a week or two after the results for the year 2000 have been published. Analysts also deplore the fact that Telekom (again and again) publishes numbers, which can not be compared against each other. Such policy destroys the credibility and is in the long term dangerous: The investors could easily start doubting the future prospects of the German Telekom, as presented by Sommer.
The cards do not look bad at all for the enterprise with its home in the previous German capital Bonn. In the telecommunications industry, shuttled by crises, Telekom ranks among those, which are about to make money soon again. The expensive UMTS license and the high debt load of 6'7 billion euros weighs on the company; but the debt-revenue ratio of the German Telekom compares favourably to other telecommunications companies. It still owns real estates and parts of other companies that it could sell to reduce its debt. The IPO of its mobile daughter will bring in additional capital the next year. Others - for instance the Netherlands KPN - may be in danger because of their excessive commitments, but German Telekom’s debt surely does not make it a take-over candidate.
Chances in USA
The disputed Voicestream deal seems also to have advantages: the purchase price for the money-losing enterprise was high. But from strategic view the acquisition will pay off. Contrary to other American mobile phone companies Voicestream uses the same technical standard (GSM) as the European enterprises Telekom will thus save expensive integration costs; and it can offer same handies and services both in Europe and the United States.
The growth chances in USA are considered to be splendid. After all people the other side of Atlantic own, relatively speaking, far less mobile telephones than Europeans. The Voicestream purchase, however, will not pay for itself over night. Until the new customers have been acquired, Telekom has much to invest in marketing.
Telekom, mainly due to its quasi monopoly in the German local area networks, possesses a clear lead over the competition in the broadband business (DSL), which permits a fast data communication and is considered to be the growth carrier in the fixed network segment. Analysts think that the German Telekom is capable of becoming the market leader in the DSL business world-wide before the year is over. The good prospects, however, will not help much the T-share, as long as investors, large and small, feel Telekom board is not showing them all its cards.
Translated DJ 11.07 |
