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The Belgian government has revealed details of its flotation plans for the telecoms carrier Belgacom, much to relief of its minority shareholders who have been waiting to realize their investment in one of Europe's most financially robust telecom operators.

Bankers have valued Belgacom at $11.6 billion, after the Belgian government, a consortium of minority shareholders, and Belgacom itself signed an agreement on key objectives for the future development of Belgacom and on a series of transactions. This agreement paves the way for an IPO of Belgacom sometime next year.

Belgacom has one of strongest balance sheets of any European telco, with total debt at the end of 2002 of $560 million. An IPO and the proceeds it would generate would allow Belgacom to raise dividends or fund an expansion to combat its decline in fixed-line operations. It will also allow the carrier to sell the shares currently owned by the ADSB consortium to a broad base of public investors. Under the terms of the deal, Belgacom will be the first to buy back the shares held by the minority consortium.

At the moment, the Belgium government is the majority shareholder in Belgacom, with a 50.1% stake. The minority 49.9% stake is held by ADSB, which includes SBC Communications, Denmark's TDC, and Singapore Telecommunications.

SingTel especially looks set to benefit from its 12.15% stake, which it purchased for $487 million in 1996. If the IPO goes ahead, then SingTel's stake would be worth $1.56 billion. This would be a welcome boon to the carrier, which is in the process of disposing of non-core assets in order to reduce debt burden.

Meanwhile, US telecoms giant SBC Communications could raise approximately $2.1 billion from the sale of its 35% stake in Belgacom. It could add the cash raised to its war chest, or for share buybacks.

If the Belgian government decided to sell its majority stake, the proceeds would help reduce the massive state debt, which is in excess of its gross domestic product. However, last month the Belgian minister in charge of the state's majority stake reiterated that he would not reduce the state's 50.1% stake. Selling the carrier would help plug budget holes, as Belgium is one of several European countries cutting taxes to buoy an economy hovering on the brink of recession.

Source: Computerwire/Datamonitor

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