Acquisitions By Partially Privatized Firms: The Case of Deutsche Telekom and Voicestream

31 Pages Posted: 17 Aug 2001 Last revised: 2 Nov 2009

Date Written: 2001

Abstract

A recent phenomenon in competition policy is the acquisition of a private firm by an enterprise that is either wholly owned by government or in the midst of privatization. Such an acquisition poses the question of how public ownership may alter the incentives of a firm to engage in anticompetitive conduct. It also prompts one to examine the process by which such altered incentives revert, as the level of government ownership declines, to the same incentives that face purely private firms. Using Deutsche Telekom's acquisition of VoiceStream Wireless as a case study, this Article presents the economic questions relevant to evaluating the competitive consequences of acquisitions by partially privatized firms. It predicts gains or losses to various constituencies of producer groups. It then analyzes bond ratings and weighted-average costs of capital to determine whether such data are consistent with the hypothesis, advanced by parties opposed to such foreign investment, that partially privatized acquirers benefit from government subsidization of their credit.

JEL Classification: F10, K0, K2, K21, K23, L4, L5, L9, L96

Suggested Citation

Sidak, J. Gregory, Acquisitions By Partially Privatized Firms: The Case of Deutsche Telekom and Voicestream (2001). Federal Communications Law Journal, Vol. 54, pp. 1-30, Winter 2001. Available at SSRN: https://ssrn.com/abstract=280148 or http://dx.doi.org/10.2139/ssrn.280148

J. Gregory Sidak (Contact Author)

Criterion Economics, L.L.C. ( email )

1717 K Street, N.W.
Washington, DC 20006
United States
(202) 518-5121 (Phone)

HOME PAGE: http://www.criterioneconomics.com

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