23 February 2005
Belgacom SA and Swisscom Fixnet AG are to establish a joint venture in which Belgacom will own a 72% stake, while Swisscom Fixnet will contribute its international carrier business in exchange for a 28% stake. Headquarters will be located in Brussels with a satellite office in Switzerland. The Belgacom offices in Dubai, New York and Singapore will be maintained. While employment opportunities in the new company will be offered to Swisscom employees, approximately 100 of the 124 jobs in Switzerland are to be phased out within the next three years. The Swisscom affected employees will benefit from Swisscom's comprehensive social plan which is already in place. Belgacom International Carrier Services employment will not be affected by the transaction.
The international carrier business is affected by strong competition, overcapacity and the associated severe pressure on prices. This transaction will create a strong new player in the international carrier business. This increase in scale will improve the joint venture's competitive strength on the international market.In the joint venture, Belgacom and Swisscom Fixnet will capitalise on their existing strengths in the international wholesale voice business while reinforcing offerings that address the voice and data needs of mobile operators. All commitments and financial obligations towards customers and suppliers will be assumed by the joint venture.
The transaction is expected to be cash-flow positive for both shareholders as from completion. The Boards of Directors of Belgacom and Swisscom have unanimously approved this transaction, completion of which is subject to the approval of the relevant competition authorities.
Commenting on the deal, Bridget P. Cosgrave, CEO of Belgacom International Carrier Services, said: "Our customers will benefit from the reinforced size and scale of the combined entity together with our proven quality of service. In merging, we have fulfilled one of the strategic objectives of the Belgacom Group: We have taken a first step towards the consolidation of the international carrier segment, and are proud to be one of the leading international wholesale carriers worldwide."
According to Christoph Brand, Head of Swisscom Fixnet Wholesale, responsible for the national and international wireline networks and wholesale business, "The Joint Venture strengthens the competitiveness of the Swisscom Group while at the same time allowing Swisscom Fixnet to continue its focus on our core national network and wholesale business. Due to the joint venture's enhanced purchasing power, Swisscom Group companies will be able to obtain better prices for termination in foreign countries while maintaining the high quality standard for which Swisscom is universally renowned."
Brussels/Berne, February 23, 2005