Hungary buys Vodafone

Liberal authors question the rationality of public ownership in the mobile phone industry, while a pro-government commentator sees the deal as a strategic step which bolsters Hungarian sovereignty.

Vodafone Group PLC signed an agreement to sell Vodafone Hungary to 4iG Public Ltd and Corvinus Zrt. on Monday for 1.7 billion Euros, 100 million less than the price quoted last Summer (See BudaPost, August 24). The government-owned Corvinus Investment company will buy 49 percent of the shares. 4iG’s part of the deal will be financed by two government-owned banks. A fresh government decree declared the deal to be of national strategic importance, which exempts it from competition scrutiny.

On HVG online, Iván Sztojcsev questions a statement by Márton Nagy, the Economy Minister, who said the government share in Vodafone will strengthen Hungarian sovereignty. The liberal author asks whether the US, the UK, Italy or the Netherlands must fear for their sovereignty as their governments own no shares in telecommunications companies.

On the Radio Free Europe website, Dániel Szalai suspects that the share the government and 4iG possess in the telecom industry may jeopardize fair competition. The two companies they fully or partially control produce over half the total turnover in the sector. Szalai quotes unnamed law professors who invited the European Union to check if the new deal fits European Union competition standards.

On Mandiner, Mátyás Kohán dismisses opposition opinions that the government should raise teachers’ wages instead of buying telecom shares. He argues that the government is issuing bonds to finance the deal and that the additional debt will be serviced from the dividend Vodafone will pay to its new owners, which would not be the case with teachers’ salaries. On the other hand, he recalls that similar objections were raised when the government bought back a decisive packet of shares in the Hungarian energy giant MOL, but its influence over the Hungarian oil and gas company made it possible to impose a cap on fuel prices as well as subsidize household gas consumption. The telecom sector with its role in high-tech progress may become strategically vital in the future and Hungary may profit from national ownership in case international crises erupt, for instance between the US and China, he writes.

Tags: MOL, telecommunications