Privatization of NZ's phones

[Bruce Cronin <b.cronin@xxxxxxxxxxxxxx>]

The neo-liberal zealots justify the privatization of NZ's phone system with the 
claim that this has allowed the directors to attract private capital for 
investment in new technology.

In fact, the investment in new technology was made BEFORE privatization, while 
Telecom was still state-owned. Since privatization Telecom's fixed capital has 
declined (reflecting the rapidly falling costs of this technology).
However consumer prices for residential network services have increased, and so 
have profits (dramatically); the return on equity is 32%, higher than all other 
large NZ corporations.

If profits have risen, but investment has fallen, where have the profits gone?
OUT OF the country. The dividend (repatriation) rate is 90%. So much so that 
every time you pick up the phone 5c goes to Bell Atlantic and Ameritech (the 
foreign 49.9% partners).

Bruce


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