Orban Eyes Telecoms as Next Target for Hungarian Ownership Drive

(Bloomberg) -- Hungary's government is setting its eyes on new industries as it tries to boost domestic ownership in the economy.

Hungary will seek to raise the share of domestically-owned companies above 50% in the information and telecommunication, construction materials and rail carriage sectors this decade, Prime Minister Viktor Orban said Thursday.

The new targets extend a drive under Orban's nationalist ruling party to put more of the energy and banking and media industries to Hungarian owners. The push has contributed to a rise of a new entrepreneurial elite loyal to Orban, who has expanded his influence to all corners of the society and economy.

“These are sectors that we want to change in the next decade,” Orban said at a conference of chamber of industry and commerce.

The ventures have started. State-owned network operator Antenna Hungaria Zrt. has already bought a minority stake in Telenor, the mobile service provider owned by the Czech PPF Group. Software developer 4iG Nyrt. also tried, but ultimately failed, to buy its much-larger competitor T-Systems, an information-technology unit of Deutsche Telekom AG's Hungarian subsidiary.

Shares of Magyar Telekom, the Deutsche Telekom unit, fell 0.3% to 391 forint as of 11:46 a.m. in Budapest, underperforming the benchmark BUX index.

“I assume the state intends to increase their stake in Telenor,” said Nora Nagy, an analyst at Erste Group Bank AG in Budapest. Hungary is one of the most expensive telecommunications markets in the region so other efforts will likely focus on information-technology projects, which may become less accessible to other companies, she said.

Orban is looking to further cut Hungary's reliance on foreign investors, even as it continues to lure companies from abroad to maintain its role as a manufacturing hub. The government has also reduced the share of debt it owes in foreign currencies.

Hungary has raised national ownership in the banking industry to 57% from 40% in 2010, according to Orban, after a chain of transactions that included the state as intermediary. The former units of GE Capital and Bayerische Landesbank are now part of one of the largest bank mergers since the fall of communism in eastern Europe that may create Hungary's second-largest bank after OTP Bank Nyrt.

The shift in media has helped Orban build a cohort of newspapers and television channels that promote his government's messages. Similar efforts to change the retail industry have so far failed, but will continue to be a strategic goal, Orban said.

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