The big business news of this morning is the announcement of a deal between Deutsche Telekom AG and France Telecom SA to create Great Britain's largest cellular phone company. One significant fact that is missing from the Bloomberg, Wall Street Journal, and New York Times coverage this morning is the fact that both the German and the French telecom companies have significant government ownership. The France Telecom Web site says, "At June 30, 2009, the French State owned 26.97% of France Telecom S.A.'s share capital either directly or indirectly through ERAP and 26.98% of the voting rights." The Deutsche Telekom Web site says that 14.8% of the company is owned by the federal republic of Germany and another 16.9% by the KfW Bankengruppe, a firm that is itself owned by the federal republic and the German states. So the total government ownership of Deutsche Telekom is 31.7%.
The companies don't highlight the government ownership in their public marketing in America, and it isn't really clear how much of a role the government plays in the companies' operations. But it is interesting, given how much alarm and outcry has attended the government takeover of banks and automakers here in America, that the European government stakes in the mobile phone companies go mostly unremarked upon. Maybe there is an expectation that Europe is socialist and that America is capitalist. It raises some interesting questions, too, ones that also apply to the government-owned banks and automakers in America. Do the government-owned firms have unfair advantages over their privately owned competitors, such as a friendlier regulatory environment or lower cost of capital? Do the government-owned firms have special disadvantages, such as political meddling that puts political goals such as job-creation or job-preservation ahead of profits or efficiency?