Lade Inhalt...
Titel: Critical Evaluation of the Strategies of Privatization and Public Offerings

Critical Evaluation of the Strategies of Privatization and Public Offerings

Illustrated by Examples of Deutsche Telekom

von Björn Schlüter (Autor:in) Lea-Maria Hohmann (Autor:in) Sylvia Albers (Autor:in)
©2001 Seminararbeit 97 Seiten
BWL - Sonstiges

Zusammenfassung

Inhaltsangabe:Abstract:
The following chapters contents can be divided into two parts. One part shall provide an overall view on the schedule of an IPO. Certain hints that are given during that part are further described later on. To let you know which other arrangements are thinkable, the other part focusses on the theoretical possibilities to realize an IPO. To make the explanations more plastic, examples with Deutsche Telekom AG will come up. To realize this complex structure, first of all, the actual situation of Deutsche Telekom AG will be explained with all its business fields and networks of cooperation activities, and, of course, strategies already executed.
A central question in the corporate convergence debate is the extent to which parties will settle on a shareholder capitalism model, in which managerial accountability will be measured against a public shareholder wealth maximization criterion. This paper evaluates one spectacular event for the impact on German corporate governance: the privatization of Deutsche Telekom. This outstanding transaction had symbolic impact, because it made many Germans shareholders for the first time, but the terms of the transaction substantially protected these shareholders against equity risk and deprived them of governance rights.

Inhaltsverzeichnis:Table of Contents:
INDEX OF ILLUSTRATIONS6
1.FOREWORD7
2.ABSTRACT OVERVIEW7
3.COMPANY PROFILE: DEUTSCHE TELEKOM AG7
3.1Internet Services9
3.2Data and IP Systems Solutions10
3.3Access/Networks10
3.4T-Mobile International AG10
3.4.1T-Mobile in Germany11
3.4.2T-Mobile in UK12
3.4.3T-Mobile in Austria13
3.4.4T-Mobile in the Netherlands13
3.4.5T-Mobile Investments in Eastern and Central Europe13
3.4.6T-Mobile investments in the USA14
3.5Services14
3.6Partnerships15
4.INTRODUCTION IPO15
4.1Reasons for Transformation18
4.2Targets of Transformation19
5.SCHEDULE OF AN IPO19
6.THEORETICAL POSSIBILITIES FOR AN IPO21
6.1IPO Feasibility22
6.1.1Changing the Statutes of the Company23
6.1.2Capital Need27
6.1.3Responsible Authority for the IPO Decision27
6.1.4Increase of Capital29
7.CHOICE OF THE MARKET SEGMENT34
7.1“Amtlicher Handel“36
7.1.1Characteristics36
7.1.2Admittance Requirements36
7.1.3Post-IPO Publicity Duties37
7.2“Geregelter Markt“37
7.2.1Characteristics37
7.2.2Admittance Prerequisites38
7.2.3Post-IPO Publicity Duties39
7.3“Freiverkehr“39
7.3.1Characteristics39
7.3.2Admittance Requirements39
7.3.3Post-IPO Publicity […]

Leseprobe

Inhaltsverzeichnis


ID 4939
Schlüter, Björn / Krenzer, Armin / Scharf, Gregor / Filsinger, Karl / Hohmann,
Lea-Maria / Albers, Sylvia: Critical Evaluation of the Strategies of Privatization and Public
Offerings: Illustrated by Examples of Deutsche Telekom / Schlüter, Björn / Krenzer,
Armin / Scharf, Gregor / Filsinger, Karl / Hohmann, Lea-Maria / Albers, Sylvia -
Hamburg: Diplomica GmbH, 2002
Zugl.: BA Economics, 2001
Dieses Werk ist urheberrechtlich geschützt. Die dadurch begründeten Rechte,
insbesondere die der Übersetzung, des Nachdrucks, des Vortrags, der Entnahme von
Abbildungen und Tabellen, der Funksendung, der Mikroverfilmung oder der
Vervielfältigung auf anderen Wegen und der Speicherung in Datenverarbeitungsanlagen,
bleiben, auch bei nur auszugsweiser Verwertung, vorbehalten. Eine Vervielfältigung
dieses Werkes oder von Teilen dieses Werkes ist auch im Einzelfall nur in den Grenzen
der gesetzlichen Bestimmungen des Urheberrechtsgesetzes der Bundesrepublik
Deutschland in der jeweils geltenden Fassung zulässig. Sie ist grundsätzlich
vergütungspflichtig. Zuwiderhandlungen unterliegen den Strafbestimmungen des
Urheberrechtes.
Die Wiedergabe von Gebrauchsnamen, Handelsnamen, Warenbezeichnungen usw. in
diesem Werk berechtigt auch ohne besondere Kennzeichnung nicht zu der Annahme,
dass solche Namen im Sinne der Warenzeichen- und Markenschutz-Gesetzgebung als frei
zu betrachten wären und daher von jedermann benutzt werden dürften.
Die Informationen in diesem Werk wurden mit Sorgfalt erarbeitet. Dennoch können
Fehler nicht vollständig ausgeschlossen werden, und die Diplomarbeiten Agentur, die
Autoren oder Übersetzer übernehmen keine juristische Verantwortung oder irgendeine
Haftung für evtl. verbliebene fehlerhafte Angaben und deren Folgen.
Diplomica GmbH
http://www.diplom.de, Hamburg 2002
Printed in Germany
Wissensquellen gewinnbringend nutzen
Qualität, Praxisrelevanz und Aktualität zeichnen unsere Studien aus. Wir
bieten Ihnen im Auftrag unserer Autorinnen und Autoren Wirtschafts-
studien und wissenschaftliche Abschlussarbeiten ­ Dissertationen,
Diplomarbeiten, Magisterarbeiten, Staatsexamensarbeiten und Studien-
arbeiten zum Kauf. Sie wurden an deutschen Universitäten, Fachhoch-
schulen, Akademien oder vergleichbaren Institutionen der Europäischen
Union geschrieben. Der Notendurchschnitt liegt bei 1,5.
Wettbewerbsvorteile verschaffen ­ Vergleichen Sie den Preis unserer
Studien mit den Honoraren externer Berater. Um dieses Wissen selbst
zusammenzutragen, müssten Sie viel Zeit und Geld aufbringen.
http://www.diplom.de bietet Ihnen unser vollständiges Lieferprogramm
mit mehreren tausend Studien im Internet. Neben dem Online-Katalog und
der Online-Suchmaschine für Ihre Recherche steht Ihnen auch eine Online-
Bestellfunktion zur Verfügung. Inhaltliche Zusammenfassungen und
Inhaltsverzeichnisse zu jeder Studie sind im Internet einsehbar.
Individueller Service
­
Gerne senden wir Ihnen auch unseren Papier-
katalog zu. Bitte fordern Sie Ihr individuelles Exemplar bei uns an. Für
Fragen, Anregungen und individuelle Anfragen stehen wir Ihnen gerne zur
Verfügung. Wir freuen uns auf eine gute Zusammenarbeit.
Ihr Team der Diplomarbeiten Agentur
Page 2
INDEX
INDEX OF ILLUSTRATIONS... 6
1 FOREWORD ... 7
2 ABSTRACT OVERVIEW ... 7
3 COMPANY PROFILE: DEUTSCHE TELEKOM AG... 7
3.1
Internet Services...9
3.2
Data and IP Systems Solutions...10
3.3
Access/Networks ...10
3.4
T-Mobile International AG...10
3.4.1
T-Mobile in Germany...11
3.4.2
T-Mobile in UK...12
3.4.3
T-Mobile in Austria ...13
3.4.4
T-Mobile in the Netherlands...13
3.4.5
T-Mobile Investments in Eastern and Central Europe...13
3.4.6
T-Mobile investments in the USA...14
3.5
Services ...14
3.6
Partnerships...15
4 INTRODUCTION IPO... 15
4.1
Reasons for Transformation...18
4.2
Targets of Transformation ...19
5 SCHEDULE OF AN IPO... 19
6 THEORETICAL POSSIBILITIES FOR AN IPO ... 21
6.1
IPO Feasibility...22
6.1.1
Changing the Statutes of the Company...23
6.1.2
Capital Need...27
6.1.3
Responsible Authority for the IPO Decision ...27
Page 3
6.1.4
Increase of Capital ...29
7 CHOICE OF THE MARKET SEGMENT ... 34
7.1
"Amtlicher Handel"...36
7.1.1
Characteristics:...36
7.1.2
Admittance Requirements...36
7.1.3
Post-IPO Publicity Duties...37
7.2
"Geregelter Markt" ...37
7.2.1
Characteristics...37
7.2.2
Admittance Prerequisites...38
7.2.3
Post-IPO Publicity Duties...39
7.3
"Freiverkehr" ...39
7.3.1
Characteristics...39
7.3.2
Admittance Requirements...39
7.3.3
Post-IPO Publicity Duties...40
7.4
"Neuer Markt"...40
7.4.1
Characteristics...40
7.4.2
Admittance Requirements...41
7.4.3
Post-IPO Publicity Duties...42
7.4.4
The Leadmanager...46
7.4.5
Selected Contract Details ...46
8 PERFORMANCE... 49
9 DISTRIBUTION ... 49
10
AFTERMARKET ... 50
10.1
Syndicate - Composition of a bank consortium for the IPO...50
10.1.1
Bought Deal...52
10.1.2
Other Contract Details ...53
10.1.3
Due Diligence...53
10.1.4
Investor Relations ...54
10.1.5
Mandatory Investor Relations Activities during the IPO Process...55
10.1.6
Voluntary Investor Relations Activities during the IPO Process...56
Page 4
10.1.7
Mandatory Investor Relations Activities after the IPO Process...56
10.1.8
Voluntary Investor Relations Activities after the IPO...57
11
TEMPORARY SALES PROSPECTUS... 59
12
SALES PROSPECTUS ... 60
12.1
Research Studies...61
12.2
Pricing methods ...62
12.2.1
Bookbuilding...62
12.2.2
Greenshoe...64
12.2.3
Fixed-Price Method...65
12.2.4
Offer by tender...66
13
GOING PUBLIC OF DEUTSCHE TELEKOM... 66
13.1
The initial public offering in 1996...66
13.2
The second public offering in 1999...69
13.3
The third public offering in 2000 ...71
14
DEUTSCHE TELEKOM SHARES AND PLACES OF QUOTATION
... 72
14.1
Underwriting syndicate...72
14.2
Issuing price...73
14.3
Bonus Shares Program...74
14.4
Employee offering ...74
15
DIVIDEND POLICY ... 75
16
INVESTOR RELATIONS ... 76
17
POST-IPO... 78
17.1
Publicity Duties...78
17.2
Post-IPO Investor Relations ...79
Page 5
18
DOES DEUTSCHE TELEKOM´S STRATEGIES FINALLY
SUCCEED?... 81
18.1
Influence of UMTS-License Ownership...81
18.2
International Market Comparision...82
18.3
Consequences of Deregulation for the German Market ...83
18.4
Coorporation in Building the 3G Net...84
18.5
Development of Prices...85
18.6
Real Estate...86
18.7
Legal Considerations ...87
18.8
A closer look to the predicted year 2001 result ...89
18.9
Conclusion ...89
19
DIRECTORY OF SOURCES... 90
Page 6
INDEX OF ILLUSTRATIONS
ILLUSTRATION 1: T-MOBILE
11
ILLUSTRATION 2: T-MOBILE CUSTOMER STRUCTURES
12
ILLUSTRATION 3: SCHEDULE OF AN IPO
21
ILLUSTRATION 4: LEGAL FORM STRUCTURES OF AG AND KG AA
24
ILLUSTRATION 5: CHANGING A COMPANY´S LEGAL FORM
25
ILLUSTRATION 6: THE FOUR MARKET SEGMENTS
34
ILLUSTRATION 7: TABLEU DESCRIPTION OF SHARES
44
ILLUSTRATION 8: TABLEAU OF INVESTOR RELATIONS ACTIVITIES
59
ILLUSTRATION 9: VALUATION METHODS FOR FINANCIAL DUE DILIGENCE
62
ILLUSTRATION 10: SCHEDULE BOOKBUILDING
63
ILLUSTRATION 11: ALLOCATION OF SHARES
69
ILLUSTRATION 12: TABLEAU UMTS-LICENSES
81
ILLUSTRATION 13: PRICES LONG-DISTANCE CALLS
85
ILLUSTRATION 14: INTERNATIONAL COMPETITION
86
Page 7
1
FOREWORD
The following chapters contents can be divided into two parts. One part shall provide
an overall view on the schedule of an IPO. Certain hints that are given during that part
are further described later on. To let you know which other arrangements are thinkable,
the other part focusses on the theoretical possibilities to realize an IPO. To make the
explanations more plastic, examples with Deutsche Telekom AG will come up. To
realize this complex structure, first of all, the actual situation of Deutsche Telekom AG
will be explained with all its business fields and networks of cooperation activities, and,
of course, strategies already executed.
2
ABSTRACT OVERVIEW
A central question in the corporate convergence debate is the extent to which parties
will settle on a shareholder capitalism model, in which managerial accountability will be
measured against a public shareholder wealth maximization criterion. This paper
evaluates one spectacular event for the impact on German corporate governance: the
privatization of Deutsche Telekom. This outstanding transaction had symbolic impact,
because it made many Germans shareholders for the first time, but the terms of the
transaction substantially protected these shareholders against equity risk and deprived
them of governance rights.
3
COMPANY PROFILE: DEUTSCHE TELEKOM AG
Actually, Deutsche Telekom AG is the largest provider of telecommunications services
in Germany and one of the world's largest telecommunications companies, measured
in terms of 1999 consolidated net revenues. In Germany, Deutsche Telekom AG is the
largest provider of fixed-line voice telephony services to the public, providing over 48
million access lines to subscribers at March 31, 2000. More than 14 million of these
lines were ISDN lines, making Deutsche Telekom the world's leading ISDN operator.
Deutsche Telekom is Germany's second largest provider of mobile telephone
subscribers, with approximately 10.9 million digital subscribers as of March 31, 2000.
Deutsche Telekom has substantial mobile telephony operations and investments in the
United Kingdom, Austria and other countries. Deutsche Telekom is the leading data
Page 8
communications provider and one of the leading providers of data communications
systems solutions in Germany. Through its rapidly growing T-Online business,
Deutsche Telekom owns a substantial majority interest in Europe's largest internet
online service provider and access gateway, with approximately 7 million subscribers.
Deutsche Telekom still has its main markets in Germany, although it is, as the
telecommunications business in general, becoming international. As Europe's largest
telecommunications company and one of world's largest telecommunications
companies it is measured in terms of revenues.
Deutsche Telekom itself defines its business as follows: "Deutsche Telekom focuses
on providing innovative and high-quality telecommunications services while at the
same time taking advantage of its large and technologically advanced networks.
Deutsche Telekom's staff of experts and technicians enables the company to offer
communications solutions to our customers that take advantage of the increasing
convergence of information technology with telecommunications."
To continue to secure a leading position within the global telecoms market, Deutsche
Telekom has sharpened its corporate focus on four strategic pillars:
·
mobile telecommunications,
·
internet services,
·
data/IP and system solutions,
·
and network access.
Deutsche Telekom has also American and Asian-Pacific regional units and holdings in
addition to Europe, and is operating totally in more than 65 countries all over the world.
The Central and Eastern Europe market has been Deutsche Telekom's main business
areas and it practically operates in all key countries, including Poland, the Czech
Republic, Hungary, Slovakia, and Russia.
Deutsche Telekom names its subsidiaries and associated partners in their website to
be:
Page 9
·
T-Mobile International
·
T-Mobile
·
T-Online
·
T-Systems
·
DeTeMedien
·
DeTeCSM
·
Matáv
·
max.mobil
·
one 2 one
·
Siris
·
Detecon
·
DeteImmobilien
·
Kabel Deutschland
·
Media Services
·
DeTeSystem
·
DeTeAssekuranz
·
DeTeLine
·
Multimedia Software GmbH Dresden
·
DeTeSat
·
DeTeKabelService
·
T-Data
·
The Danet group
·
T-Venture (T-Telematik Venture Holding GmbH)
·
RadioMobil
3.1
Internet Services
Deutsche Telekom's business segment, the Internet services, is in the T-Online
International. It serves over 7 million customers only in Germany. And it performs also
in Austria, Switzerland, France, Spain and Portugal.
Page 10
3.2
Data and IP Systems Solutions
Deutsche Telekom is constructing a global systems solutions company under the aegis
of T-Systems and acts in the area of e.g. e-business, consulting, systems integration,
project services, desktop services, computing and network services. It has
approximately 40,000 employees and the T-Systems company units attained revenues
exceeding 11 billion Euro in 1999.
3.3
Access/Networks
Deutsche Telekom works also in the network business, i.e. in the field of fixed
networks, telecommunications infrastructure and cable TV.
3.4
T-Mobile International AG
T-Mobile is Deutsche Telekom's mobile business unit established in January 2000. In
to T-Mobile, Deutsche Telekom has bundled its T-Mobil shareholdings and several
other European mobile activities, including "one 2 one" and "max.mobile". The mobile
business unit is located in Bonn, and its holding company is officially named T-Mobile
International AG.
Mobile communications actually is the major growth driver among Deutsche Telekom`s
four business areas and a major focus of its international strategy. Deutsche Telekom
has committed to the growing in its main business areas especially in mobile markets
in Central and Eastern Europe. It has acquired a majority stake in several eastern
European countries.
In 1999, T-Mobile's mobile communications business generated revenues of 3.9 billion
Euro (11% of the Deutsche Telekom consolidated revenues) and income before taxes
was 1.0 billion Euro.
During the first half of the financial year 2000, the mobile communications recorded
subscriber growth of almost 7 million new additions so that the total amount of
customers served by majority-controlled companies growth to 23.5 million. In Germany
the number of T-Mobil customers increased from 4.3 million to 13.4 million. Overall,
Page 11
Deutsche Telekom's mobile communications companies gained more than 1 million
new subscribers per month during this period.
Illustration 1: T-Mobile
3.4.1 T-Mobile in Germany
As a German based company, Deutsche Telekom´s - or in the case of mobile business
T-Mobile´s - home market is still in Germany. T-Mobile has the unit called T-Mobil in
Germany, where it acts also as a "mobile phone 2G" operator.
T-Mobil is growing fast if measured by the number of customers. In 1999 T-Mobil
expanded the number of its mobile phone customers by approximately 65.1% on a
year-on-year basis, from 5.5 to 9.1 million users. In the year 2000 it had growth of 10.1
million or 111 percent from the previous year (9.07 million). In the year 2001 (more
precisely 2001-02-08), T-Mobil braked its 20 millionth customer level. T-Mobil's target
is 60 million cellular phone customers in Germany by the end of the year 2001. They
will get a market penetration of 70 percent by the end of the year.
Page 12
T-Mobil is physically located in Bonn and in addition, T -Mobil has three central
locations in Germany: Darmstadt, Mannheim and Münster, as well as several
subsidiaries.
0,00
10,00
20,00
30,00
40,00
50,00
60,00
End of
1998
End of
1999
End of
2000
End of
2001
Millions of
customers
Illustration 2: T-Mobile Customer Structures
3.4.2 T-Mobile in UK
T-Mobile is present in the United Kingdom in the form of the operator One 2 One. In
autumn 1999, Deutsche Telekom acquired One 2 One, which is the fourth largest
provider of mobile communications services, practically 2G-operator, in the United
Kingdom.
Deutsche Telekom actually bought it before and bundled One 2 One also to T-Mobile
group, when it was established. One 2 One is now fully owned by Deutsche Telekom
and part of the T-Mobile International Group.
At year-end 1999, One 2 One had approximately 4.2 million subscribers, which means
a 17 percent share of the wireless markets in the UK, in 2000 it doubled its customer
base up to 8.32 million subscribers.
One 2 One also holds the retailer Pocket Phone Shop and 50% of Virgin Mobile.
Page 13
3.4.3 T-Mobile in Austria
In Austria, T-Mobile has also entered by buying a mobile phone operator. In February
1999, Deutsche Telekom increased its 25% share of max.mobil to 81%, in November
1999 Deutsche Telecom increased its 81% max.mobil share to 91% and in mid-April, it
raised its stake in max.mobil to 100%. Now max.mobile belongs to the T-Mobile
International AG in its entirety.
At year-end 1999, the company had approximately 1.5 million GSM customers,
representing about 38% market share in Austria, and in the end of the year 2000 about
2.0 million customers.
Max.mobil also owns Austrian retailer Niedermeyer as well as parts of UC.AG
In addition, the mobile business in the T-Mobile Group max.mobil also co-operates with
Deutsche Telekom in other fields of telecommunication business. For example, it has
launched an online service business via a joint venture with T-Online, Deutsche
Telekom's internet subsidiary.
3.4.4 T-Mobile in the Netherlands
Deutsche Telekom does not own an operator in the Netherlands, but it is acting very
actively there. It entered into the Netherlands when it wanted to acquire a 3G licence.
T-Mobile established in to the Netherlands a joint venture Ben, where T-Mobile creates
a partnership with Tele Danmark and Belgacom.
As said, T-Mobile made originally a consortium with Ben, a Dutch mobile operator, to
bit for 3G licences under the name 3-G Blue. According to the contract, Ben would
have been holding 50% plus one share of 3-G Blue and Deutsche Telekom 50% minus
1 share. Ben was originally owned by Belgacom (70.6%) and by Tele Danmark
(29.4%), but in 2000, T-Mobile acquired the 50% stake minus 1 share in Ben.
3.4.5 T-Mobile Investments in Eastern and Central Europe
T-Mobile is, as mentioned earlier already, acting actively also in other European
countries. It has several ownerships especially in the Eastern European countries.
Page 14
In the Czech Republic, T-Mobile owns a 42,8% share of Radiomobil. In Poland,
Deutsche Telekom's has a 45 percent stake in Polska Telefonia Cyfrowa (PTC),
operating the fastest growing GSM network in the region. Half of the share is actually
owned by Deutsche Telekom, the other half by T-Mobile. In Slovakia, Deutsche
Telekom holds a 51-percent stake in Slovenske telekommunikacie, while in Croatia it
holds a 35 percent stake in the Hrvatske telekommunikacije.
In Russia, Deutsche Telekom also holds approximately 46 percent of MTS, a Russian
mobile company.
In Hungary, Deutsche Telekom owns a 49 percent stake in Westel 900, the leading
digital cellular phone network operator in Hungary, and a 49 percent stake in Westel
Radiotelefon, the Hungarian analog cellular network operator.
3.4.6 T-Mobile investments in the USA
On 23th of July 2000, T-Mobile and American GSM operator Voicestream entered into
a definitive merger agreement. VoiceStream is supposed to become a part of the
international T-Mobile group in early 2001. The merging of VoiceStream has actually
caused a delay for Deutsche Telekom to list its best part in the stock exchange.
3.5
Services
Deutsche Telekom instead has combined already all its mobile multimedia activities in
the London-based company T-Motion plc., a joint venture of T-Mobile International AG
(60 percent) and T-Online International AG (40 percent).
T-Motion supports both companies in developing mobile services altough T-Motion's
services will be aimed primarily at customers looking to access the internet from mobile
phones and are tailored to the use of the mobile terminal equipments.
T-Motion tries to create commercially successful mobile internet applications that will
maximize the 3G mobile business opportunities. It will develop value-added services to
mobile phones, i.e. T-Motion's role is primary to produce platforms and applications for
mobile phones, but not the information that is used in those platforms.
Page 15
In addition, T-Mobile has bought mobile phone stores. One 2 One has its own chain of
mobile phone stores. It was the UK's fastest growing independent mobile phone
retailer, The Pocket Phone Shop.
In Deutsche Telekom there is anyway quite a lot different companies, so if needed,
probably it will be easy to find competence also for 3G development.
3.6
Partnerships
T-Mobil has entered into strategic alliances with capable partners in the information
technology sector. Collaborations like those, such as those with Microsoft and
Compaq, are intended to ensure that the most common hardware and software
platforms used in the world of corporate communications are also available on the T-
D1 network.
Well, this is the actual situation or the situation one year ago, explaining the strategic
network, Deutsche Telekom has build up. In the following, we will find out, which
strategies made the Deutsche Telekom AG becoming more or less successful.
4
INTRODUCTION IPO
In November 1996, Deutsche Telekom Aktiengesellschaft ("DTAG"), the - at that time -
government-owned German telephone company, sold common stock representing
approximately 25 % of the company in a global stock offering that raised approximately
DM 20 billion (US $13 billion), the largest equity offering ever in Europe. In selling off
this equity stake, the German government had a number of motives. First, the sale was
an important step in converting a government-run telephone monopoly into a nimble
competitor in the emerging European and world telecommunications market. In
anticipation of a fully competitive European telecommunications regime by 1998, DT
was separated out from the Deutsche Bundespost­Germany's postal, telephone, and
telegraph authority­as a private lawstock corporation owned 100% by the government.
Sale of the initial 25% tranche was the first stage of an eventual privatization of the
entire company. At the time of the offering, DTAG's outstanding debt was
approximately DM 110 billion (US $73 billion), and a significant objective of the sale
was to recapitalize the company.
Page 16
During the fifteen months following October 1996, approximately DM 16 billion of debt
was to come due, bearing an average interest of 6.6%, which management intended to
replace with the new equity.
Second, the sale was also part of an effort to establish an entrepreneurial culture at
DTAG. This meant downsizing the workforce, from 230,000 at year-end, 1994, to a
targeted 170,000 by 2000 (through traditional German means of attrition and early
retirement rather than layoffs), and reorganizing the business on functional lines. In
addition, approximately 3.3% of the offering ­ nearly 1% of the company's equity­was
sold to employees under various preferential arrangements designed to "increase
employee identification" 22 with the company, a particular challenge since nearly half
the workforce are tenured civil service employees whose salaries and benefits are set
by government regulation. Another major goal of the privatization was the promotion of
a German shareholder culture. This was reflected in the vigor with which the offering
was marketed to the German public. Although the transaction was a "global offering,"
two thirds was eventually allocated to German investors and institutions, approximately
40% of the total went to retail purchasers. More than three million retail investors
signed up to get information about the issue, and the offering was several times
oversubscribed.
Nevertheless, the Deutsche Telekom offering seems an unlikely preparation for a
shareholding culture. Indeed, it may undermine one, both because it replicates public
shareholder passivity and sets unrealistic standards for stability of value. The DT initial
public offering is, of course, only a partial privatization; the government held on to 74%,
making it the dominant shareholder. Under the Stock Corporation Law of 1965, a 50%
holder has the power to elect all the shareholder representatives of the supervisory
board and controls the disposition of all other routine matters that come before the
shareholders meeting, including ratification of the acts of the management board and
the supervisory board. A 75% holder has distinctive powers, including the right to recall
a member of the supervisory board, and the right to amend the articles of incorporation.
Many of these powers are subject to alternative specification in the articles, but the
DTAG articles do not provide for any such limitation.
Many aspects of the transaction assure that the government will remain the dominant
holder for a substantial period of time, and that the management is substantially
Page 17
entrenched. The privatization legislation restricts the government from further public
stock sales until 2000 in order to give DTAG priority on public market access. Under
pressure to meet the Maastricht budgetary criteria for economic and monetary union,
the government subsequently decided to sell off a 25% stake in DT to the state
development loan agency, the Kreditanstalt fuer Wiederaufbau, which will eventually
place the shares with "strategic investors," including potential international business
partners, but not before 2000. Even after this sale, issuance by DTAG of all of the
remaining authorized but unissued shares would still leave the government a 44%
holder. Supervisory board members were elected upon DTAG's formation in 1995; their
five year terms will extend until 2000. The government also agreed to give the
management board a veto over its sale of shares to "strategic investors." Moreover, the
availability of a DM 0.50 per share discount for German retail investors is conditioned
on purchase through a bank account, making it likely that "public" share ownership has
been folded into the bank's proxy voting system. Thus, certainly in the short term,
DTAG is unlikely to present the occasion for significant public shareholder involvement
in serious governance or control questions.
The offer has a number of unusual features designed to encourage and sustain
widespread public ownership. First, the economics have been shaped in a way that will
minimize, at least in the short term, the volatility often associated with equity
ownership. In connection with the offering, DT announced that it expected to pay a 2%
dividend in 1997 and a 4% dividend in 1998 (measured against the offering price), a
somewhat remarkable undertaking for a company in the midst of a fundamental
business change. A substantial part of DTAG's business is the monopoly provision of
public fixed-link voice telephony which will be regulated by a new administrative
agency, the Regulatory Authority for Telecommunications and Post ("Regulatory
Authority"). A prospective shareholder could well find in these dividend arrangements
an implicit promise that the Regulatory Authority will set a rate structure so as to permit
payment of a regular dividend regardless of the profitability of DTAG's other business
activities. The offer also contains special incentives for widespread share ownership, a
DM 0.50 discount for share purchases up to 300 shares and a special 1/10 share
bonus for shares continuously held for three years after the initial public offering (up to
30 bonus shares). This incentive is presumably based on the experience of the
Volkswagen privatization in the 1960s, in which public investors bought shares at a
Page 18
discount and promptly resold them. Finally, the stock exchange was pressured to give
DTAG a disproportionate weighting in the DAX-30, which will help support the price
and liquidity of the offering. All of these extra elements were designed to make the
offering successful, at least through the medium term. This result has been achieved,
in part because of favorable macroeconomic conditions in Germany and Europe. The
stock has generally traded at a premium over the Initial Public Offering ("IPO") price.
As of October, 1998, the gain was approximately 50% on a total return basis, a very
substantial two year return. The partial privatization was successful, but the explicit and
tacit assurances of dividend protection and the ownership and governance structure
are far from a robust version of shareholder capitalism. But why did DTAG decide to
change their business strategy at all? Why did they privatize? The next chapters will
provide further answers to this questions.
4.1
Reasons for Transformation
The German telecommunication sector was decontroled increasingly shortly before the
year of 1996; then in 1996 the telecommunication regulations (TKG) became effective.
In agreement with the requests of the European Union the telecommunication market
should be decontroled completely until January 1st, 1998.
Before, offering public telecommunication services in Germany were a governmental
monopoly and the competences of Deutsche Telekom formed a unite dependent
component of Deutsche Bundes-Post, the former German federal mail and
telecommunications authority. Since 1989, a number of reforms in associated fields of
the telecommunication sector have taken place in Germany. First of all, competences
of Deutsche Telekom were separated from activities of Deutsche Bundes-Post. In a
second step, the transformation of Deutsche Telekom into a civil law share company
(Deutsche Telekom Aktiengesellschaft) was carried out with effect to January 1st,
1995. At the same time, numerous markets, Deutsche Telekom was active in, were
opened up for competition gradually. For example business fields like text and data
transmission services, sale and services of terminal equipment, mobile
radiocommunications as well as voice mode telephone services for closed user groups.
Page 19
According to the TKG, the net operation business for all forms of telecommunication,
except the public voice mode telephone services within the fixed network had to face
competition since August 1st, 1996. At that time, the most important business area for
Deutsche Telekom, the domestic as well as the international public language telephone
service within fixed networks, was opened up completely for competition on January
1st, 1998.
4.2
Targets of Transformation
Targets pursued by Deutsche Telekom´s privatization were to consolidate their position
as leading supplier of telecommunication services in Germany and moreover, to
expand their international presence. Growth of sales volume, cash flow and profit got
striven, structure of balance sheet should be improved and attractive profits for
shareholders should be gained.
With the complete decontrol of the German telecommunication market taking place and
furthermore, the fast development within fields of information technology, Deutsche
Telekom was confronted with a number of competitional challenges in 1996.
To be armed for these challenges and accomplish the targets mentioned, the
enterprise was forced to increase customer´s satisfaction and loyalty, to lower the costs
and increase the productivity as well as to introduce new services by making use of
their highly developed net and to expand specifically at the worldwide
telecommunication market.
5
SCHEDULE OF AN IPO
Going public is based on preceded reflections concerning the finance strategy of the
aspirant. Even a professional project management cannot accelerate an IPO earlier
than within one year. The time can be lengthened depending on the existing
organisation and management instruments. Furthermore, the complex cooperation
among the banks, the economic advisors, PR-specialists, the tax consultants and
attorneys has an impact on the duration.

Details

Seiten
Erscheinungsform
Originalausgabe
Erscheinungsjahr
2001
ISBN (eBook)
9783832449391
ISBN (Paperback)
9783838649399
DOI
10.3239/9783832449391
Dateigröße
2.3 MB
Sprache
Englisch
Institution / Hochschule
Hogeschool Zeeland – Economics
Erscheinungsdatum
2002 (Januar)
Note
2,2
Schlagworte
privatization telekom share quotation investor relations
Produktsicherheit
Diplom.de

Autoren

Zurück

Titel: Critical Evaluation of the Strategies of Privatization and Public Offerings
Cookie-Einstellungen