169
Figure 3.10. TELMEX: Number of Communities with Telephone Services, 1987-91
According to our estimates, and given an infinite perspective, the net present value of the fiscal impact was negative if the benefit derived from the reduction of interest rates is not accounted for, which was a contributing factor in the sale of "L" shares abroad. This result incorporates the company's future profits, assuming that it maintains the same rate of growth in the number of lines in service as it did before privatization and applying the real increments in the rates set forth in the Amendment to the Certificate of Concession. This assumption was very important in measuring government revenue for two reasons: It was feasible to do so under the public administration because the level of telephone prices was kept constant in real terms and the impact on user purchasing power was nil, and it isolated the effect of privatization on the amendments to the regulations. Therefore, the sacrifice in efficiency caused by the decision not to sell the enterprise as a series of smaller companies was not justified by the price obtained. Given that the company has not received any direct subsidies and that substantial investments have been made in the short time since privatization, the Increased Investment Hypothesis is not rejected. A Contingency Fund was established with the proceeds from the privatization of TELMEX because of the climate of uncertainty in the international oil market caused by the Persian Gulf crisis. The proceeds from the sale of other companies and banks after the privatization will also go to this fund. Nevertheless, at the close of the third quarter of 1991 the proceeds from the sale of the telephone
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THE PRIVATIZATION PROCESS IN MEXICO