The federal government is once again using the KfW development bank to monetize part of its Telekom shares. Given the empty coffers, the money is urgently needed for the restructuring of the ailing Deutsche Bahn.
The state development bank KfW is once again selling Telekom shares and raising billions for the federal government. According to the Federal Ministry of Finance, the money will benefit the railway. “The federal government will use the net proceeds from the transaction to strengthen the equity of Deutsche Bahn AG and to expand the railway infrastructure in Germany in a forward-looking manner,” the Ministry of Finance announced on Monday evening. The shares went to large investors.
Development bank sells 110 million shares
On Monday, after the stock market closed, KfW announced the sale of 110 million shares in the DAX group Deutsche Telekom to institutional investors. “Due to the receptive stock market environment, the placement was successful,” explained the Ministry of Finance. The shares were placed at a price of 22.13 euros. In total, the development bank raised around 2.43 billion euros from the sale. The joint share in Deutsche Telekom AG held directly by KfW and the federal government fell to around 27.8 percent.
Federal government remains Telekom’s largest shareholder
The federal government is thus continuing its responsible privatization policy, the ministry announced. “In view of the federal government’s continued interest, the federal government and KfW will remain jointly the main shareholder of Deutsche Telekom AG and will maintain the necessary level of participation.” In the next three months, KfW will not be allowed to sell any more Telekom shares without the consent of the banks.
“KfW and the federal government remain the largest shareholders in Deutsche Telekom AG,” the development bank’s statement also said. In the second quarter, KfW had already sold 22.4 million shares on the stock exchange. As of the end of 2023, the federal government and KfW still held a good 30 percent of Telekom. The Japanese Softbank Group still held a 4.5 percent stake in the Bonn-based company at the time.
Share sales bring money into the state coffers
In February, KfW sold a package of Post shares for almost 2.2 billion euros. The government needs money in light of the budget debate and the German rail network, which is in need of renovation. The federal government wants to modernize the rail network in the coming years with many billions of euros – plans that were thrown into disarray by the budget ruling of the Federal Constitutional Court in November last year. In mid-December, however, it was clear that there would be no cuts in rail spending.
Source: Stern
