quinta-feira, setembro 20, 2012

Worse than a public monopoly ...

It is an old economic saying, that the only business more profitable than a public monopoly is a private monopoly , especially one which is able to control costs and capture the regulator.

Thus, it may be no coincidence that the "richest man in the world", Carlos Slim,  is said to enjoy a persistent telecommunications monopoly after having acquired Telmex in a privatization in .....  According to an OECD study, Mexicans are being overchanged about USD 13.4 billion a year,   billion a /year for telecommunications services, equivalent to an enormous 2% of GDP.

Telmex has an 80% market share, double the market share of incumbents in most other countries where telecommunications has lost much of its "natural monopoly" power with the advent o mobile telephony.
In short, there is no substitute for efficient and balanced economic regulation of public services. A country pays twice for bad regulation, once in excessive user tariffs, second in lost growth and risky income disparities.

Something to keep in mind, as Portugal undertakes the next round of privatization of nearly everything it can, one of the conditions of the EUR 78 billion external bailout program negotiated with the IMF/ECB/EC troika.
Portugal's privatization program is being implemented mostly through direct sales to pre-qualified investors.
BPN bank, sold
EDP electricity, sold
REN power grid transmission concessionaire, sold

Remaining in 2012
TAP Air Portugal, three bidders for TAP Air Portugal
ANA Airports, airport management concession to be formalized

In 2013 
ADP Águas de Portugal
RTP public television concessionaire

See also lunch conference with Antonio Borges, head of the privatization team at Parpublica, sponsored today by the American Club of Lisbon

OECD study, ver version en espanõl
Portugal privatization program, audio
Privatizations and low growth in Portugal