Swiss Upper House Rejects Swisscom Privatization

ZURICH -(Dow Jones)- The Swiss upper house of parliament Wednesday voted against fully privatizing former monopoly telecommunications company Swisscom, following the lead of the lower house in May.

In autumn 2005, the Swiss government said it wanted to dispose of its majority stake in Swisscom to make it easier for the company to enter relatively risky deals to stay competitive. Some of these deals, like expansion abroad, wouldn't be suitable for a government-controlled company, Swiss cabinet argued.

According to Swiss law, the government must hold at least 50% of Swisscom. The parliamentary vote was necessary because selling stock below that threshold requires a change of that law.

Swisscom in a statement said it "understands both the Council of States' decision and the prior decision of the National Council as a demand to the political sphere to address the subject once more and to work out solutions that take account of the reservations expressed."

"For the further development of Swisscom, a complete or at least partial disposal of the Federation's holding makes sense, particularly in connection with the development of new business areas in Switzerland and abroad that is essential to the company," Swisscom said.

Wednesday's vote means the privatization issue is closed for the time being. It is unlikely to be revisited before the next national elections in 2007, analysts say.

Parliament Web site: http://www.parlament.ch

-By Hans Schoemaker, Dow Jones Newswires; +41-43-4438045; hans.schoemaker@dowjones.com

(END) Dow Jones Newswires "

Posted to the site on 7th June 2006