The Privatization of the Fixed-Line Telecommunications Operator in OECD, Latin America, Asia, and Africa: One Size Does Not Fit All

Abstract

The aim of this paper is to highlight empirically some important worldwide differences in the impact of privatization of the fixed-line telecommunications operator on network expansion, tariffs, and efficiency during the 1985-2007 period for a large panel of countries. Our work suggests that the divergent results in the empirical literature on the performance of the privatization reform can be explained to a large extent by cross-regional heterogeneity. We find that the impact of privatization on outcomes is significantly positive in OECD and African resource scarce coastal countries, weakly positive in Latin American and the Caribbean countries, and strongly negative in African resource rich and African resource scarce landlocked countries. The results presented in this paper thus challenge the idea that there is a unique model of reform for infrastructure sectors that is equally applicable across regions and countries. JEL-codes: L51,

Paving the Way for Better Telecom Performance: Evidence from the Telecommunication Sector in MENA Countries

“…Additionally, the existence of an independent regulator in the market may be an important determinant for new investors, to serve as a guarantee that they would have profits in the long run and that they would not be harmed by anticompetitive behaviors. Furthermore, if the private investors are very interested in the performance indicators before going through the privatization process, the government may increase the efficiency of the incumbent operators in order to attract investors when introducing privatization (Gasmi et al 2013).…”

“…14 Productivity is measured by the number of telephone subscribers in fixed and mobile telephone per employee (employed by total full-time telecommunication employee) 15 . To measure affordability, we use prices indicators 16 as the monthly subscription for residential telephone service in US$ as in Estache et al (2006) and Gasmi et al (2013), and the price of a 3-minute fixed telephone local call (off-peak rate) in US$ as was used by Wallsten (2001), Li and Xu (2004) and Estache et al (2006). We also use mobile price of 3-minute local call (off-peak) in US$ to reflect mobile affordability as in Gasmi et al (2013), but at the peak rate.…”

“…We use this method to measure productivity, because we do not have the number of telecom employees per segment. We find that dividing the number of mainlines by the number of staff employed by telecom operators is not reliable, as used in(Ros 1999;Ros 2003;Fink et al 2001;Fink et al 2003;Wallsten 2001;Li and Xu 2004;Gual and Trillas 2006;Gasmi et al 2013;Trillas and Montoya 2011).16 Given by the ITU Database (2011).17 In this survey, ITU defines separate as "independent" in terms of finance, structure, and decision making from the operator(s) and the sector's Ministry.18 We prefer to construct an index to reflect regulatory powers and functions, but limited published information for the whole period prevent us from doing so because we have only one year per country data. As stated byWallsten (2001), "Acquiring such information-especially for developing countries-is a Herculean task".…”

“…During this last decade, telecommunication reforms in developing countries have been heavily explored (Boylaud and Nicoletti 2000;Fink et al 2001;Wallsten 2001;Fink et al 2003;Estache et al 2006;Gasmi et al 2013). Although the MENA region is politically relevant, especially for Europe, the literature that focuses on the MENA countries is indeed scarce.…”

“…This measure is used by different authors(Ros 1999;Ros 2003;Fink et al 2001;Fink et al 2003;Wallsten 2001;Li and Xu 2004;Gual and Trillas 2006;Gasmi et al 2013;Trillas and Montoya 2011).15 This measure is used in different studies(Ros 1999;Ros 2003;Gutiérrez 2003;Li and Xu 2004;Gual and Trillas 2006;Gasmi et al 2013). We use this method to measure productivity, because we do not have the number of telecom employees per segment.…”