YOU ARE AT:Archived ArticlesAMERITECH BRANCHES OUT WITH TELE DANMARK STAKE

AMERITECH BRANCHES OUT WITH TELE DANMARK STAKE

Ameritech Corp. announced it will invest $3.2 billion to become a strategic partner in Tele Danmark, helping the company speed up its domestic and international growth.

Through a two-step transaction, Ameritech said it will acquire more than 40 percent of Tele Danmark stock and will nominate six of the 12 Tele Danmark directors.

Partially privatized in 1994, Tele Danmark is the principal provider of domestic and international phone services and is one of two cellular operators in Denmark. The company is part of a consortium that recently won a nationwide Global System for Mobile communications 1800 MHz license in Austria and is a partner with Ameritech in Belgian operator Belgacom. Tele Danmark also is involved in a number of other international investments in Hungary, Poland, Ukraine and Lithuania. In March, it was one of four companies to obtain a license in Denmark to operate a GSM 1800 network. It plans to integrate its 1800 MHz system with its current system.

“Denmark is the gateway to northern Europe, and Tele Danmark has the management expertise we need to create a platform for expansion in the European market,” said Richard Notebaert, chairman and chief executive officer of Ameritech. “Tele Danmark becomes our third major strategic partner in Europe along with Belgacom and Matav, and together we can build on the strengths of Tele Danmark, including its in-depth knowledge of European markets, its experience in international long distance and its abilities in managing international investments.”

Ameritech said the European telecom market is forecast to grow 13 percent annually, to $578 billion by 2001. With two additional carriers, Denmark, currently enjoying a 25-percent penetration rate, is expected to reach 67.4-percent penetration by 2005, said a report issued by Baskerville Communications Corp. in London.

Ameritech said it initially will invest the $3.2 billion to acquire 45 million shares from the Kingdom of Denmark for a 34.4-percent stake in Tele Danmark. Then Tele Danmark will buy back about $1.5 billion in shares from the Kingdom of Denmark and retire them. Ameritech will purchase any remaining government shares. After the completion of all transactions, Ameritech said its effective ownership will exceed 40 percent. The company expects the investment to add about 2 cents a share to its earnings in 1998 and contribute a growing share to earnings in future years.

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