Deutsche Post sale starts unwinding of Germany Inc
THE German government’s decision to offload its remaining 7.3% holding in Deutsche Post sparked headlines that Germany had finally washed its hands of the former state monopoly, but such stories are premature. In fact, nearly 45% of the company is still held by the government, and politicians remain in charge of a major portion of German telephony giant Deutsche Telekom, too.
The sale of the Post stake and a like-sized holding in Telekom was made to the Kreditanstalt fur Wiederaufbau, (KfW), a government-controlled reconstruction bank founded after the Seconsd World War with seed money from the Marshall Plan. Berlin earned some E5bn($6, GBP3.5bn) from the in-house transfer of shares without losing a jot of control over the two companies. Part of the deal entitles the German government to any additional profit from a sale on the open market over the price it charged the KfW.
In fact, the KfW – whose director is on the Post supervisory board – will retain its Post stake until mid May 2006 due to an agreement to keep the shares following a sale in June, when for the first time in the five years since privatisation began the majority of the company was no longer under state control.
For Post management, the quicker Berlin cedes control, the better. One Post official told The Business he welcomed any step that contributed to the privatisation of the company. The KfW has refused to release a timetable for further sales, but hopes at Post headquarters in Bonn are that it will happen sooner than later.
Telekom, too, remains to a large extent in government hands. The combined stakes of Berlin and the KfW total 37.5%, making the Federal Republic of Germany the company’s largest individual shareholder and its de facto director.
With elections in the autumn, the stake sales have provided plenty of ammunition for opposition politicians. As German tax income wanes, conservatives are accusing the administration of Chancellor Gerhard Schroder of using the money to stop fiscal gaps. One called the shifts of Post and Telekom shares to the KfW a “clearance sale for state assets”. While few believe that conservatives would halt the ongoing privatisation of both Post and Telekom, not every member of the German right is pushing for a free market.
Bavarian premier and erstwhile chancellor candidate Edmund Stoiber has in the past exerted backroom pressure to block business deals that would have cost his state jobs, and since both the companies are major employers in Germany, some conservatives may want to keep control in a time of rampant unemployment.
But in the end it makes no sense for Berlin, to hold on to these assets. The unwinding of “Germany Inc” is likely to continue, with federal, state and local stakes in companies such as airport operators Fraport and energy utilities EON and RWE as candidates for sell-offs
