How state became global corporations

In Brandenburg, the post offices close, but today Deutsche Post DHL is the only logistics group that supplies every village in Syria, Libya and Yemen. In the Eifel region, Funkloch follows Funkloch, for which Deutsche Telekom commissioned the first 5G network with national coverage in the USA back in December. In the Hunsrück, the stations are closed, but Deutsche Bahn is building a Metro in Qatar. Three cases, one phenomenon-the privatized state-owned enterprises have become global corporations with billions of euros in investments and are increasingly no longer fulfilling the basic supply in their own country. And in between, there is even a connection.

The yellow giant is now the world’s number one

The good old yellow federal postal service is now called Deutsche Post DHL Group and – thanks mainly to its international subsidiary DHL-is one of the three largest logistics groups in the world, head-to-head with the US companies FedEx and UPS. DHL alone delivers around 1.3 billion parcels per year and is active in “over 220 countries and territories " according to its own data. The great empire of Deutsche Post includes, for example, the Indian freight airline Blue Dart Aviation, the 54-employee subsidiary DHL Myanmar, the freight platform Saloodo!, which provides freight services to customers from the Middle East and Africa from Abu Dhabi, and the Australian Tasman Cargo Airlines, which uses a Boeing to provide air freight to some South Sea islands. It is not more global.

DHL in Shenzen/China

Although the yellow giant is a German company on paper, the logistics group’s largest national market is China. With its DHL eCommerce Asia division, Deutsche Post covers the entire supply chain for online retailers – from warehouse logistics to parcel delivery in 220 countries and returns management. The Post subsidiary DHL generates around six billion euros per year in the Asia/Pacific Region. In 2012, it opened a new global hub in Shanghai for 175 million euros, through which DHL handles global cargo air traffic in addition to the cruises in Hong Kong, Cincinnati and Leipzig. Here, too, Deutsche Post and its Belgian subsidiary DHL Aviation are the global number one with around 250 aircraft and around half a billion air freight shipments per year.

This success is remarkable, but it does not benefit the German citizen if “his Post” manages to deliver parcels from Guangdong to New Caledonia 24 hours later, but at the same time takes out the last post offices and letter boxes in the country. While Deutsche Post is now setting up its own parcel business in India and South Africa, it is already thinking out loud in Germany about not delivering letter mail on Mondays in general. And since the global Expansion costs a lot of money, it seems that one is forced to outsource the parcel carriers in the German market to regional low-cost companies in order to eliminate the postal tariff and to pay the employees worse.

Neither the German citizens nor the German employees of the Post office have any advantage from the fact that Deutsche Post operates worldwide with apparently great success. On The Contrary. If the Postal Service has to cut back on its core activities in order to raise the funds for the gigantic international investments, this is a disadvantage. Privatization has not changed anything for the better in this field. In the past, a well-paid Post Office official delivered the letters and parcels; today, four “self-employed” people, often from South-Eastern Europe, carry out this task on behalf of companies such as Hermes, GLS, DPD or the post office subsidiary DHL. Economically, this is counterproductive and the quality of letter and parcel delivery has not improved by one iota as a result of privatisation.

Deutsche Telekom invests billions in the USA and there is no network in the Eifel

Less entrepreneurial Fortune as the former yellow Post had the former grey Post. Shortly after the privatisation, Deutsche Telekom AG had already used the money raised from the IPOs not for the much-needed digitalisation of the country, but for an extremely costly Expansion into the US market. Ron Sommer’s great legacy was therefore not a contemporary national telecommunications network, but a huge mountain of debt, made up primarily of the costs of the nearly 40 billion euro acquisition of the US mobile telecommunications companies Voicestream and Powertel.

In the following years, the interest burden for this entrepreneurially questionable adventure alone massively cuts the Budget for necessary infrastructure investments in Germany. Now the alarm bells were ringing at Deutsche Telekom, too, and they desperately tried to sell off the US business, which was in deficit, but could not find a buyer who could or wanted to meet the requirements of the US antitrust authorities. So Deutsche Telekom poured even more money into its US subsidiaries to make them competitive themselves.

And this time the project even succeeded. But the price was enormous. Billions of dollars from Germany have now been invested in new licenses, infrastructure development and advertising. Thanks to the billion-dollar transfers from Germany, T-Mobile USA had turned the corner. Last year, the US Department of justice even approved Deutsche Telekom’s desired merger of its US subsidiary with Sprint, and now the Bonn-based company holds a majority share in the second largest US mobile phone company.

T-Mobile advertising in Time Square in New York

That would all be a beautiful economic fairy tale, were it not for an annoying “blemish”. Due to the investments in the USA and the merger with Sprint, Deutsche Telekom’s net debt has now risen to a staggering 78.8 billion euros and there is a lack of money at all corners and ends. Especially for the mobile network expansion and the expansion of fiber optic technology on the German home market, the funds are lacking. While Deutsche Telekom already operates a functioning 5G network in the USA, in Germany one radio hole follows the next, and technologies such as 5G, which are already in operation in numerous countries, are in Germany pure future music, especially in the area.

Privatisation has led to the fact that Germany has now lost its connection with digitalisation. In terms of internet connections via fibre optic cables, Germany is currently ranked 72 in the international comparison, and 58 in terms of mobile broadband connections. in the Borneo Bush, the network is faster and more stable than in the Lüneburg Heath.

Countries like Finland have an almost complete coverage despite sparse population … but the Finns are also not customers of a mobile phone company, which is the number two in the USA and also in many other European countries from Albania to Hungary to Slovakia. It’s just stupid that the German customers have no advantages from the international commitment of the former state-owned company, but they also have massive disadvantages. Because every euro Deutsche Telekom invests in the USA is missing in Germany. There is a clear connection between the functioning, nationwide 5G network of T-Mobile USA and the incomplete 4G network of Deutsche Telekom in Germany. The privatization and the senseless international orientation of Deutsche Telekom has therefore also led to clear structural disadvantages in this country.

Deutsche Bahn-a Global Player on the road and at sea

While Post and Telekom went public and are now only partly state-owned, Deutsche Bahn AG is still a purely state-owned company, despite its corporate name being a public limited company, whose shares are 100 percent owned by the federal government. But those who believe that the railway would not have squandered its limited resources abroad by the organizing hand of politics are unfortunately mistaken.

Today, Deutsche Bahn owns a network of 675 companies all over the world that can only be called insane. Among them are railway companies in Great Britain, but also a VW dealership in Slovenia, a Danish language school for Taxi and bus drivers, a British ambulance operator, a Swedish tyre dealer and a car refiner in Spain. What all this is supposed to have to do with the company’s purpose of operating public rail transport in Germany is certainly not known even by Messrs. Mehdorn, Grube and Lutz, who have borne the “railway boss” like a first name for years.

The madness began already during the tenure of railway boss Mehdorn. He bought the logistics giant Schenker for the railway, whose core business, however, is not rail freight, but road freight. With billions of investments, Bahn integrated Schenker in the following years. However, the trucking giant did not become a national rail freight giant, with which parts of road freight traffic were diverted to the rail for the benefit of the environment and the nerves of motorists. No, quite the opposite. Rail has now become an internationally active Logistics Group, which in the freight segment now generated more and more revenue by road and sea and less revenue by rail. Today, Schenker is one of the market leaders in China for container transport to the USA and, according to its own information, ships 5,500 containers per day by sea freight. Again, it is not clear what this has to do with the business purpose of Deutsche Bahn.

Deutsche Bahn AG in Manchester

The activities of the European local transport group Arriva, which Deutsche Bahn AG took over in 2010 under Bahnchef Grube, are similar. Since then, Deutsche Bahn has operated part of the red double-decker buses in London and bus services on the Mediterranean island of Malta. Why? Even with a lot of imagination, neither a connection with the business order nor an advantage for the German rail customer is discernible here.

The planning and construction activities of Deutsche Bahn are even crazier. Instead of renovating the dilapidated provincial stations and upgrading the rail and signalling technology of the German rail network, Deutsche Bahn Deutsche Bahn prefers to focus on major projects in China, India, Malaysia, Singapore and Australia. In India, the railway is building a freight road, in Qatar, a Metro and in South Africa, a network of between 50 coal mines and a port on the Indian ocean.

If one asks the railway and the federal policy, which controls the railway in a fiduciary way, about the meaning and purpose of such activities, it usually comes as an answer that the railway is supposed to initiate lucrative business abroad and the profits and dividends of these businesses then flow into investments in Germany to improve the core business. But this explanation is not only false, but even the exact opposite of the actual situation.

In total, the railway’s foreign operations are a chronic billion-dollar grave. Profits from German business flow de facto into foreign business and not vice versa. This has even already called the Federal Audit Office on the Plan. He recommended the railway to separate from its foreign subsidiary Arriva and from the logistics subsidiary Schenker. The Problem: politics has placed a debt limit on the railways and this limit has already been fully exhausted. “Since the 2017 financial year, the inflow of liquid funds from operating activities is no longer sufficient to finance investments that are necessary for operations,” says the German Federal Audit Office (Bundesrechnungshof). Of course, the federal government can and should also transfer subsidies to the railways for upcoming investments; however, if the railways use these funds to make pointless foreign investments out of another pocket, this does not help German rail transport either.

Especially at Deutsche Bahn, the failure of politics in its control function becomes clear. Self-indulgent managers such as Mehdorn and Grube have squandered billions on corporate acquisitions and investments and international operations that are missing from all corners of today’s rail transport. However, Mehdorn and Grube were “only” employees of the railway. Responsible for the entire misery are above all the politicians, who – whether as transport minister or representatives of the federal government on the supervisory boards of the Railway – have represented the state as the sole owner of the Deutsche Bahn. Apart from that, however, the patterns in the misguided privatisation of the railway are quite comparable to the cases of the Post office and Deutsche Telekom.

Lost sight of the corporate purpose

Privatized state enterprises with a clearly defined supply contract in their own country have not used the public funds to fulfil this contract. Instead, they have turned the big wheel with a crazy financial effort in order to become a global Player of the first league with more, usually with less success. This may all be desirable for” normal " yield-oriented companies. In concrete cases, however, we are talking about companies that perform a public function due to their monopoly position and their supply mandate. And if a company can no longer perform this public function properly because it prefers to reap returns at the other end of the world, there is a fundamental Problem.

For example, these examples show above all the wrong path our politics has taken for decades and which in some cases grotesquely tramples on public interests and thereby delivers the public service mission without need to market mechanisms. The loser is in any case The Citizen. A rethink is more necessary than ever.