The Swiss government will block any acquisitions by Swisscom for at least 12 months, the finance ministry said today, effectively halting the group's plans to expand abroad and scuttling takeover talks with Eircom.
Traders assuming that Swisscom's expected takeover of Eircom would now fail sold Eircom shares, pushing their price down over 15 per cent to €1.94 this afternoon .
"We have told Swisscom that the government does not want them to get involved there [with Eircom]," Dieter Leutwyler, spokesman for the foreign ministry, said by telephone.
"The [government's] board representative has been instructed to vote against such an engagement," he added.
Switzerland's leading telecoms operator is in talks to buy Eircom and is courting Denmark's former telecoms monopoly TDC, valued at $11.5 billion, to offset weak growth at home.
But its expansion plans were put on hold today when a spokesman for the Swiss finance ministry said foreign acquisitions would be too risky for the government, which holds a 66 per cent stake in the cash-rich group.
"Swisscom needs to take risks, but we are not prepared to take the risks with our money," Mr Leutwyler said.
He added that the government would block any acquisitions as long as it remained the majority shareholder. "If the government's representative on the board says no and he holds 66 per cent of the shares, then it is blocked," he said.