Ready for Prime Time?

Europe's biggest railways firm, state-owned Deutsche Bahn AG, is due to make its debut on the stock exchange by 2009, the country's last big privatization.

But Jürgen Kurz, a spokesman for the German investor protection group (DSW) said Deutsche Bahn's efforts at restructuring were coming a little too late and that the process was "not really in hand."

Kurz told the dpa news agency in an interview published Monday that it was rare that a company's stock market listing should be delayed as this one has.

Company managers have unpleasant memories of the autumn of 2004, when the government and supervisory board broke off preparations for an IPO.

Bad plan?

After 12 years of reorganization at Deutsche Bahn, the country's last big state-owned company, it is clear to the partners in Germany's governing coalition that the time had come for a partial sell-off. The sticking point, though, is whether the privatised company should own the rail network, including tracks and stations.

Kurz also said that Deutsche Bahn's planned stock-market debut had been hurt by the privatization model selected by Chancellor Angela Merkel's ruling coalition government. Under legislation which is to be presented to parliament in March, the federal government is to take over the rail tracks and the railway stations.

The government's plan, which was set out in November, calls on Deutsche Bahn to manage the tracks for a minimum of 10 years and to issue financial reports each year.

But, said Kurz: "It however, clearly diminishes the value of the Bahn." As a result, he said, the proceeds from the Bahn's stock exchange listing will be correspondingly smaller.

From the point of view of future investors, Kurz said, it would make more sense to list the company as a total unit on the stock exchange, as was the case with the German post office, Deutsche Post AG, and the nation's giant telephone company, Deutsche Telekom AG, both of which have been listed on the stock market.

Moreover, Kurz said the tough price competition with airlines would check growth in Deutsche Bahn's domestic German market. On the other hand, he said growth outside Germany would require a major investment.

In addition, Deutsche Bahn chief Hartmut Mehdorn has so far not set out where the company's growth was likely to come from, Kurz said.