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Germany Sells Telekom Shares to Plug Hole

December 20, 2004

Due to lower-than-expected tax revenues and a growing budget deficit, the German government has sold shares worth €1.6 billion ($2.14 billion) in German telecommunications giant Deutsche Telekom to the state-owned development bank KfW Group. The shares make up a 3.3 percent stake in Deutsche Telekom, taking the bank's holding in the company to around 15.3 percent. The transaction will help the government stay true to its borrowing forecast of €43.5 billion. The sale of Deutsche Telekom shares, along with sales of shares in other former state monopolies, such as Deutsche Post, aims to help the government bridge a widening budget gap partly due to falling tax revenues as unemployment has grown. Finance Minister Hans Eichel is planning to raise a total of €15.4 billion next year from asset sales.

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