BELGIUM – The Belgian government may have to take over Belgacom’s employee pension fund if it is serious about privatising the national telecoms operator.

Rumours that the Belgian government is considering an initial public offering of Belgacom have resurfaced following hints by prime minister Guy Verhofstadt last week. But, say analysts, in order to attract investors, the government may have to take on the company’s 3.6 billion-euro pension fund.

Says Delta Lloyd Securities analyst Nico Daminet: “Whether the government takes on Belgacom’s pension fund obligations will be key for the IPO. The future obligations of the fund are seen as debt by investors, and taking on this debt will increase the value of the operator.”

Last year Belgacom injected 457 million euros into the scheme, of which 266 million euros was invested. The remaining amount went towards pension payments. “This is regarded as a cost item which reduces the net profit of the company,” said Daminet.

The Belgian government is also looking at selling off its national railway as it attempts to reduce debt, and is currently studying the effects of taking over its pension scheme.

Belgacom spokesman Piet van Speybroeck declined to comment on the rumoured IPO and the pension scheme, saying it was an issue for the shareholders.

Belgacom’s pension fund returned a negative 7.5% in 2002, underperforming the benchmark by 0.8%. Belgian pension funds returned an average –11.92% for 2002, according to the Belgian pension fund association.