Sonera to sell DT stake

August 21, 2001 Posted: 1004 GMT

LONDON (CNN) -- Sonera, Finland's largest telecoms operator, has said it is seeking to sell its stake in beleaguered German peer Deutsche Telekom.

The news is a further blow to Telekom, which has seen its shares fall more than a quarter after Deutsche Bank sold 44 million of the phone company's shares two weeks ago on behalf of Hong Kong-based Hutchison Whampoa.

Sonera, like many of its European rivals, is burdened by debts as a result of purchasing expensive licences to operate third-generation (3G) mobile phone services.

Sonera spokesman Samppa Seppala told Reuters: "When the time is right... Sonera will sell its DT shares and use the proceeds to

service its debt, but no timetable has been set."

The sale of Deutsche Telekom stock by Deutsche Bank sparked a public row between the bank and Telekom and raised fears among investors that millions more shares could soon be offloaded.

Many U.S. holders of Deutsche Telekom shares are thought to be looking to sell their holdings, which they acquired when Telekom paid in shares for its $24 billion takeover of U.S. wireless operator VoiceStream in May. They agreed not to sell their shares before certain deadlines, the first of which expires on September 1.

Flood of share sales possible

Analysts estimate up to 232 million Telekom shares could come on to the market in September when one lock-up period ends, and a further 289 million may be sold in December.

The Financial Times Deutschland quoted Seppala on Tuesday saying Sonera would sell all of its 72 million shares in DT this year. Sonera can sell 34 million shares at the start of September and the rest at the start of December.

Seppala also hinted Sonera may not hit its end-year net debt goal of 2.5 billion euros, adding: "We are not forced to reach that figure, it is self-imposed. To reach that type of substantial debt reduction requires the DT shares be sold."

The Finnish company has 3.25 billion euros of short-term debt falling due at the end of October.

Deutsche Telekom shares topped the loser board in Frankfurt in late morning trading on Tuesday, down 2.6 percent at 16.85 euros against a positive sector index.

Sonera shares, which touched an all time-low on Monday amid grim European markets, were up by nearly 2 percent at 5.60 euros on a positive Helsinki bourse.

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