J.P. Morgan & Co., in its largest underwriting of equity, has won a spot as co-lead manager for Swiss Telecom's $3 billion to $4 billion privatization.

Morgan, which will work with SBC Warburg Inc., surprised the market by beating out a long list of top Wall Street firms. Traditionally, big privatizations in telecommunications have been led by Goldman, Sachs & Co., Morgan Stanley & Co., and Merrill Lynch & Co., experts said.

"It's a flagship type of deal," said an equity syndicate manager at a securities firm. "If you are going to be in the investment banking business, you want to do deals like that."

J.P. Morgan, the top commercial bank in investment banking, has been actively mining overseas markets, including Europe and Latin America. Last year, for example, it advised on two big pharmaceutical company mergers in Switzerland. It also has been taking some foreign telecommunications companies public in the United States.

Morgan, observers said, was well positioned to nab the Swiss Telecom deal because it had signed on as adviser to the Swiss government in the early planning for the project.

Swiss Telecom, which will be named Swisscom as of October, is the latest in the flood of European telecommunications companies to privatize. A number of banks and Wall Street firms had been hoping to snag the deal because of its high profile. The government-owned company is the main provider of phone service in Switzerland.

The privatization easily eclipses Morgan's previous record for lead underwriting of equity and stands as the biggest equity underwriting by any commercial bank. Morgan's previous record was a $1.1 billion secondary offering in May for Unibanco, a Brazilian bank.

The top securities firms appeared to have a clear edge for the Swiss Telecom deal. Goldman had been lead manager of Deutsche Telekom AG's $13.5 billion offering last year. And Merrill Lynch is lead manager for France Telecom's offering, which is expected in late June.

"I don't really know the politics behind the decision," said Douglas Wight, a telecommunications analyst at Salomon Brothers Inc. "But Goldman, Merrill Lynch, and Morgan Stanley have good records in terms of distributing telecom equity in Europe already, and J.P. Morgan has less of a track record, so there must be some other" factor.

One equity syndicate manager said, "For banks to start cracking that very elite group of firms on these big, high-profile deals is very prestigious, in addition to being very profitable. J.P. Morgan is really coming on strong."

The bank has indeed been working hard to grab the brass rings of investment banking.

In April, for instance, it won the lead manager spot for Ford Motor Co.'s spinoff of Hertz Corp. Observers had expected the $480 million initial public offering to go to Goldman-Ford's main investment banker.

On the international front, Morgan last year was the adviser on the Swiss pharmaceutical firm Ciba-Geigy's $21 billion merger with Sandoz, which created Novartis. It also advised Switzerland-based Roche Holding Ltd. on its $5.3 billion acquisition of Syntex Corp.

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