SaskTel - Potential sale a possibility?

[Festivus]

The Frontier Centre is also a think tank that exists for the purpose of pushing conservative issues. By definition they are opposed to public companies. I'm sure they could also find a way to justify privatizing health insurance, roads, and the military if their corporate benefactors wanted them to.

[BrutallyDishonest2]

Originally Posted by Festivus

The Frontier Centre is also a think tank that exists for the purpose of pushing conservative issues. By definition they are opposed to public companies. I'm sure they could also find a way to justify privatizing health insurance, roads, and the military if their corporate benefactors wanted them to.

One doesn't have a to favour privatization to also recognize that many of the Crown's value has probably peaked.

It is very likely that SaskTel and SaskPower will be worth less in the future, not more and thus if you wanted to privatize now is probably the best time.

[aberrant]

Just my view, but a technology company as small as Sasktel with a giant geographic area to cover is going to have trouble staying relevant long term.

[Festivus]

Originally Posted by BrutallyDishonest2

One doesn't have a to favour privatization to also recognize that many of the Crown's value has probably peaked.

It is very likely that SaskTel and SaskPower will be worth less in the future, not more and thus if you wanted to privatize now is probably the best time.

That is only if the sale value is greater than the other benefits to the province.

For example (and using very approximate numbers to illustrate), if Sasktel saves Saskatchewan consumers $50,000,000 a year in premiums and brings in $130,000,000 in revenue for itself and the province (and that stays mostly in Saskatchewan), it's benefit over a decade or two far outweighs the temporary gain of a few billion if it's sold. Just because we could get more money now than in 10 years, it doesn't mean it's still worth it to sell, just that we'd be getting a less-worse deal than later.

[BrutallyDishonest2]

Originally Posted by Festivus

That is only if the sale value is greater than the other benefits to the province.

For example (and using very approximate numbers to illustrate), if Sasktel saves Saskatchewan consumers $50,000,000 a year in premiums and brings in $130,000,000 in revenue for itself and the province (and that stays mostly in Saskatchewan), it's benefit over a decade or two far outweighs the temporary gain of a few billion if it's sold. Just because we could get more money now than in 10 years, it doesn't mean it's still worth it to sell, just that we'd be getting a less-worse deal than later.

I don't deny that we could factor in a number of different things to get the true value.

It must also be remembered that SaskTel doesn't operate like a normal business in that it makes a profit but then the profit goes into the provinces general revenue fund and then infrastructure gets paid back out of general revenue. The goverment gets very creative with the crowns when it needs to.

[Nathan]

Originally Posted by BrutallyDishonest2

I don't deny that we could factor in a number of different things to get the true value.

It must also be remembered that SaskTel doesn't operate like a normal business in that it makes a profit but then the profit goes into the provinces general revenue fund and then infrastructure gets paid back out of general revenue. The goverment gets very creative with the crowns when it needs to.

True. And it also makes its profit charging some of the lowest rates in Canada. Were SaskTel to up their prices (the big 3 would definitely love to charge rates similar to what they do elsewhere), it would basically be pure extra profit, so even using current profitability as a valuation variable is a little flawed.

[Festivus]

Originally Posted by Nathan

True. And it also makes its profit charging some of the lowest rates in Canada. Were SaskTel to up their prices (the big 3 would definitely love to charge rates similar to what they do elsewhere), it would basically be pure extra profit, so even using current profitability as a valuation variable is a little flawed.

As my friend said to me (paraphrasing):

"So the government wants to sell Sasktel since it would get a large one-time windfall which they claim would eclipse Sasktel's current long-term outlook for profit. However, rates would probably double for Saskatchewan consumers, and match the rest of Canada. So, instead of selling, why not just force Sasktel to double their rates and keep the profit in the province? If Sasktel's rates were the same as Bell or Rogers in AB/ON, then there's no calculation that is possible that would make it a good idea to sell it."

But the reason for any possible sale isn't to make Saskatchewan money (or save money), as I think we know. It's to sell publicly-paid for assets to private interests which also coincidentally happen to donate to the political class. It's an endless cycle of companies donating to politicians, politicians doing things that benefit those companies, and then politicians getting board/lobbyist positions at those companies after.