Belgacom Stake at Stake

3:00 PM -- The Belgian state's majority stake in national carrier Belgacom SA (Euronext: BELG) could soon be a thing of the past, according to a report from Belgian daily newspaper De Tijd.

It reports that the prospective new Christian Democrat-led coalition government plans to repeal the current law that requires the Belgian state to hold a majority stake in the national carrier.

That's a radical suggestion for Belgium, home to the European Commission 's headquarters and 10 million-plus people who eat Mayonnaise with their frites.

Currently, the Belgian government owns a 53.5 percent stake in the carrier, with the rest publicly traded or held by Belgacom.

De Tijd reports that the new government would be prepared to sell part of its stake if Belgacom found a merger partner.

Europe has been awash with service provider M&A deals for the past few years, so it's not inconceivable that Belgacom could be involved in the ongoing consolidation process, though its earnings are more likely to attract the attention of the private equity market. (See Belgacom Reports Q1 and Belgacom Reports '06.)

Rumors emerged last year of possible merger talks between Belgacom and its neighbor KPN Telecom NV (NYSE: KPN), though the speculation was denied. KPN also used to be controlled by its government, but that changed in late 2005. (See Dutch Put KPN on the Block.)

If the new government (once formed) does make this decision, though, it's likely to be a further 12 to 24 months before the law could be scrapped, as any such move is likely to face massive workers' union opposition.

Belgacom's share price dipped more than 2 percent today to €29.18 on the Brussels Euronext exchange.

The Christian Democrats emerged as Belgium's leading political force in June this year having pledged to shake things up considerably in the small European nation by pledging to devolve power to the country's two main regions, Flanders in the North and Wallonia in the south. See this BBC report for more details.

— Ray Le Maistre, Phlegmish News Editor, Light Reading

hmcg_1 12/5/2012 | 3:04:22 PM
re: Belgacom Stake at Stake Belgium's huge national debt and sky high taxes (investors call it 'tax hell') mean that for the new government to fulfil any of its promises it is forced to sell the family silver. No harm though as Belgacom is hardly a much loved institution. I've heard it referred to as Belgacom-edy by many Belgians. You can certainly expect a lot of trouble from the very militant unions as it is an over-staffed incumbent. Still, as in the past, the Belgian government will probably go all soft and privide a soft landing at tax payers expense. Plus ca change...
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