Swiss authorities said Friday they will block major foreign acquisitions by the telecommunications operator Swisscom because of financial risk to the state, which holds most of the company's shares.
Finance ministry spokesman Dieter Leutwyler said the position would remain unchanged as long the state holds its 66 percent stake in Swisscom, the country's largest telecommunications provider.
Swisscom is currently engaged in negotiations with its Irish counterpart Eircom about an acquisition or alliance, and has been scouting for other European acquisitions.
On Thursday, the Swiss government announced that it wanted to fully privatise Swisscom as swiftly as possible, but that could take at least three years under Switzerland's legislative process.
Authorities billed that as a way to give Swisscom more room for manoeuvre in the fast developing and competitive communications market as well as reducing the risks faced by the state.
Analysts said a key concern for the government would be a rise in Swisscom's debt if it bought into a foreign telecommunications operator.
Swisscom was spun off from the former national postal and telecommunications monopoly PTT in 1998.
The telecoms group has been gradually expanding abroad. Besides Eircom, it is also reportedly interested in the Danish company TDC. Last month, Swisscom completed the 293 million Swiss franc (198 million euro, 223 million dollar) purchase of a 75 percent stake in Antenna Hungaria, a Hungarian cable and satellite operator.
But it lost out in bidding for Cesky Telecom in the Czech Republic in April. It dropped unsuccessful talks with Telekom Austria last year. Draft legislation necessary to secure privatisation of Swisscom will be opened up for consultation early next year before it is presented to parliament, Swiss Finance Minister Hans-Rudolf Merz said Thursday.
The Swiss government is aiming to raise a total of 17 billion Swiss francs from the sale. Merz said he had not ruled out keeping a "golden share" in Swisscom, to provide the Swiss government with a strategic veto on management decisions.
Switzerland's communications union has said it would battle efforts to sell the government stake, saying it was essential to protect Swisscom's public service role. Opponents could force a nation-wide referendum on the sale under Switzerland's system of direct democracy.
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