State eagerness to sell off holdings in various companies has died away
The government’s ownership steering policy was opposition’s favourite bone of contention during the past decade
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By Martta Nieminen
During the first decade of the new century the Finnish government raised capital to the tune of more than EUR 9 billion by selling its holdings in state-owned companies.
This is three billion euros more than in the 1990s.
Among the companies whose stock the state parted with were Sonera and its successor TeliaSonera, plus Partek, Fortum, Sampo, and Kemira.
The most enthusiastic sell-off phase took place during the early part of the decade.
Since then the eagerness to liquidate has taken a nosedive.
During the latest term (since 2007) the government has sold shares in its possession to a value of less than a billion euros.
There has been no reason to sell, either.
From the point of view of the taxpayers, 2006, 2007, and 2008 were the fat years, during which the state earned immense dividends from its corporate holdings.
In each of these years, dividend income from state holdings exceeded EUR 1.5 billion.
Over the entire decade, the government’s proceeds from dividends exceeded those from trading its stocks by about EUR one billion.
In the 21st century, the greatest success stories among the companies partially- or wholly-owned by the Finnish state were Sampo, Fortum, and Rautaruukki.
Both their trend in share prices and their success in relation to the rest of the branch have remained high.
A historic U-turn took place in the Finnish government’s ownership policy in October 2008, when the state used the pension insurance company Varma to acquire a chunk of telecoms operator Elisa’s stock from the hands of the feared Icelandic investor raiders.
During the legislative period that started in the spring of 2007, the government’s ownership policy has been of particular interest - mostly hostile interest - to the opposition.
To some extent this is because in the sitting government there is now an appointed minister for ownership steering.
At times the opposition politicians, the trade union movement, and the media alike have all received their fair share of the public unloading of bitterness by Minister of Defence Jyri Häkämies (Nat. Coalition Party), who is in charge of the ownership portfolio.
In addition to the handing over of the portfolio to a specific minister, another two significant changes took place with regard to ownership steering in the decade just ended.
First of all, the companies “steered on commercial criteria” that once belonged to the sphere of responsibilities of the former Ministry of Trade and Industry, the Ministry of Finance, the Ministry of Transport and Communications and three other ministries were all moved in 2007 under the Ownership Steering Department set up in connection with the Prime Minister’s Office.
The decision regarding the centralising of the ownership steering had already been made by the previous government.
The decision taken had been preceded by years of cabinet bickering over what would be the right place for the new department.
Finally the Prime Minister’s Office was seen as a neutral enough location in the midst of all the political turmoil.
Dr. Pekka Timonen, who had started as a negotiating official at the Ministry of Trade and Industry ownership policy unit back in 2001, was appointed as the head of the new department.
Another large change took place towards the end of 2008, when the state-owned equities in non-strategic listed companies were transferred to the entirely state-owned company Solidium Oy.
The purchased Elisa stock noted above also ended up with Solidium, which bought even more Elisa shares to increase its ownership in the telecoms operator to a level 10% holding.
Even though Solidium managing director Kari Järvinen and chairman of the board Keijo Suila insist that they are satisfied with Solidium’s operations, to many outsiders the whole company appears as a mysterious solitary fortress, the role of which remains obscure.
As yet, there are no signs of its active operation in the market.
Of the Ownership Steering Department of the Prime Minister’s Office, only Pekka Timonen appears regularly in public telling dryly of the government’s latest moves.
At times Timonen questions even surprisingly sharply some of the political decisions reached - such as the Sonera and Telia related arrangements.
Sonera, of course, was the most talked-about state-owned company and cash cow at the beginning of the decade.
Its fairytale, however, ended after the company's disastrous blunderings in the German investment market and other mishaps, in a merger with the Swedish telecoms operator Telia in 2002.
In Timonen’s view there is reason to ask if the Telia-Sonera merger made any sense.
“Afterwards it is good to ask, which is the right strategy: to find quickly someone to partner up with, or to wait and see how the rectifying measures work out. Should similar situations occur again, one would do well to examine carefully what is the sensible thing to do in the long term”, Timonen says.
Timonen points out that when operating alone Sonera was surely one of the world’s most innovative telecoms operators.
“It had a sizeable research and development department based on Finnish know-how and development work carried out in Finland. Its disappearance from our telecoms field shows up very clearly.”
Now the state’s - or in practice Solidium’s - portfolio contains two fierce competitors in the same market, namely Elisa and TeliaSonera.
Of the latter, Solidium owns 14 per cent.
Helsingin Sanomat / First published in print 7.1.2010
MARTTA NIEMINEN / Helsingin Sanomat
martta.nieminen@hs.fi
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| 12.1.2010 - THIS WEEK |
 State eagerness to sell off holdings in various companies has died away |
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