The international telecommunications sector : a financial investigation of post privatisation performance
The focus of this thesis is an investigation of the post-privatisation performance of the international telecoms sector. Firstly, the general hypothesis (1) of this thesis has been pursued, which states that the privatised telecoms companies perform differently from their non-privatised (private) counterparts. Several tests were applied; namely, ANOVA, and multiple regression analysis. The principal finding was that there was no significant difference in performance. Secondly, the next hypothesis (2) states that the financial performance of each company is positively related to that of the other two selected companies. For this purpose, multiple regression tests were performed to investigate any inter-relationships between BT, AT&T and NTT. It was found that the performance of each was affected by the other companies. Thirdly, the next hypothesis (3) states that, in a global market, company performance is related more closely to the sector than to each respective stock market. It was found that performance was affected more significantly by their respective stock markets than by competitor global players. Fourthly, the next hypothesis (4) states that, in terms of competitive advantage, NTT exhibits through time a superior position compared with BT and AT&T on account of its monopoly position. It was found that monopoly was not an issue. Fifthly, the next hypothesis (5) states that, of the three global players, AT&T is more adversely affected in its competitive advantage on account of its having a weaker monopoly position. It was found that AT&T had a competitive advantage from 1990 to 1993. BT took the lead until 2000, then NTT forged ahead after the Japanese market started to become more liberalised in terms of competition. Original tests were performed regarding the changing degree of competitive advantage of these three companies. This required an evaluation of the relationship between competitive advantage and priceearnings inverses, capital asset pricing model derived rates of return and dividend-based rates of return. A random walk with drift model was also applied, in order to evaluate forecasted trends. Finally, BT's short-term debt-financing problems were examined. To overcome these difficulties, BT raised funds via a rights issue, selling off Yell and other profitable assets and de-merged their mobile company. It was found that the strategic risk probability of a failed rights issue was quite small.