>> UK Government does not go as far as Germany and France
Investors need to be suspicious of government motives when they get involved in industry. The euro wireless industry fiasco is a great example.
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The cycle began in the early 1990's, when European governments allotted radio spectrum for the second generation of mobile phones. No one knew what the spectrum was worth, so companies were awarded licenses for a nominal fee on the merits of their business plan. A decade later, with two out of three Europeans owning a mobile phone, the industry had gained superstar status, and state treasurers were ready to cash in.
Taking a cue from the United States, where license bids have totaled $41 billion since 1994, some governments hired game theorists and designed auctions with the intensity of casino games. When the dust settled, European governments were some $130 billion richer. That is roughly equal to all the money raised in share offerings on European stock markets in 1999, Mr. Ganley estimates, making the process "one of the biggest nationalizations of private capital since the Russian Revolution."
Whether European governments will hang on to all that cash is another matter. Of the $41 billion bid in the United States, only $14.4 billion has ever been collected, as companies either failed to raise the funds or contested the fees in court. A similar pattern is already playing out in Europe, where weaker concerns are teetering on the edge of bankruptcy. A shakeout seems imminent.
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While some governments are backpedaling ? France and Spain have slashed license fees ? others are unwilling to retreat. Britain and Germany, which accepted bids worth a combined $79 billion, have ruled out refunds.
"It is not up for discussion," said Harald Doerr, a spokesman for the Regulatory Authority for Telecommunications and Posts in Germany. "We didn't force these companies to bid so much."
Earlier this year, Sir Peter Bonfield, the chief executive of the BT Group, formerly British Telecommunications news/quote), became one of the few executives to acknowledge that the company had overpaid for licenses by about £10 billion, or about $14.6 billion at current exchange rates.
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nytimes.com |
