Another Euro CEO Quits
Swisscom AG (NYSE: SCM) CEO Jans Alder has resigned with immediate effect, only days after the chief executive of neighboring Telekom Austria AG (NYSE: TKA; Vienna: TKA) stepped down. Friction with national government agencies over merger and acquisition (M&A) activities is believed to be behind both resignations. (See Swisscom Has New CEO and Telekom Austria CEO Quits.)
Alder's decision comes only weeks after the Swiss government, which still owns 62 percent of the carrier, stepped in to halt the CEO's plans to acquire Irish incumbent eircom . (See Swisscom Ends Eircom Talks.)
Unusually, the carrier's official statement on his resignation suggests he took that intervention to heart. "At his own request, Jens Alder is standing down as Swisscom CEO as of 20 January 2006. In so doing, he is drawing personal conclusions from the change in international expansion plans prompted by the Federal Council. The new corporate strategy currently being drawn up will be implemented by his successor." Ouch.
His replacement is Carsten Schloter, currently CEO of the carrier's wireless unit Swisscom Mobile AG . Schloter is tasked with helping Swisscom to expand both domestically, where it is facing increasing pressure from its main competitors UPC Cablecom and sunrise , and internationally, with particular focus on enterprise customers. The carrier has already been making acquisitions and forging partnerships to boost its presence in the corporate services market. (See Cablecom, Sunrise Team Up, Liberty Intercepts Cablecom IPO, Swisscom Buys Cybernet, and Swisscom, Vanco Ally.)
"Growth options are being examined in particular in the Swiss core business and related activities, with special emphasis on the national and international business customer segment in order to strengthen Switzerland's position in this area. Growth opportunities are also being evaluated abroad," says the carrier's press release.
Analysts at Lehman Brothers , who say Alder was "very popular with investors," note that Schloter faces the same constraints as his predecessor when looking at acquisition possibilities. "The ban on targeting another incumbent remains," notes the Lehman team.
Swisscom, which generates significant though decreasing profits, also announced that, following its recent share buyback program, it will return a further 1.5 billion Swiss francs ($1.165 billion) to its shareholders by 2009, "in the form of share buy-backs or special dividends, or a combination of the two." (See Swisscom Completes Buyback and Swisscom Reports Q3.)
But while the Lehman team views this move "positively," they still see Swisscom's shares underperforming the market "given a tough domestic outlook."
Swisscom's share price rose by 1.3 percent this morning on the Swiss stock exchange to CHF399.75.
Late last week, Heinz Sundt announced he was stepping down as Telekom Austria's CEO at the carrier's annual general meeting on May 23. Mirroring Swisscom, he will be replaced by the current CEO of the carrier's mobile business, Boris Nemsic.
In an emailed research note, Ovum Ltd. analyst Dan Bieler writes that Sundt's decision "is most likely politically motivated. For a long time, Sundt was known to have different opinions to various government agencies," particularly around M&A issues. The Austrian government, which still owns more than 30 percent of the carrier, blocked a merger with Swisscom, negotiated between Sundt and his neighboring CEO Alder, in August 2004. (See Euro Megamerger in the Offing and No Merger for Euro Carriers).
Like Swisscom, Telekom Austria is looking outside its domestic market for growth opportunities, and sees the East European mobile sector as an area of significant potential growth. (See TA Speeds Slovenian Buy, TA Closes Bulgarian Acquisition, and Telekom Austria Eyes Serbia.)
— Ray Le Maistre, International News Editor, Light Reading