Why Escrivá’s new technological SEPI will turn into ruins

The government will create a new public company to, among other things, enter the capital telephone, as announced a few months ago. In particular, the Minister of Digital Transition and Public Service Jose Luis Escrivatook advantage of its intervention last Monday on the opening day of Mobile World Capital (MWC) to speed up approval State Society for Technological Transformation (SETT) in the next Council of Ministers.

This new state enterprise in the image of SEPI (State Society for Industrial Participation) will be responsible for manage government participation in the telecommunications sectorthat’s why it was unofficially called Technological or digital SEPI.

Initially it will have 20 billion euros from PERTE Chip (about 12 billion for semiconductors and microelectronics), the NextTech fund (4 billion for investments in companies with a high-tech innovative component) and the Audiovisual Hub fund (1,700 million for companies in this sector).

And, in addition to including a 10% stake in Telefónica worth around €2 billion, he will coordinate and manage both investments and government subsidies for the technology sector, especially in medium- and long-term projects that are currently experiencing difficulties in obtaining financing. In particular, one of the main functions of the SETT will be to finance or invest in companies related to the technology and digital sphere, either by providing loans, acquiring shares or other participation, or providing subsidies.

What the government doesn’t say is that quite possibly it will be a ruinous affair for all taxpayers for three main reasons. Firstly, because the projects that can receive government support are those that have not previously received independent financing from the private sector, and the reason is nothing more than their lower viability and therefore higher risk.

The second reason is the sector in which they operate, since The technological world is highly competitive. the constant emergence of new technologies and disruptive innovations, causing many companies to eventually disappear. Various existing estimates show that only 5% of new companies in this sector manage to operate for more than 5 years. Thus, the investment risk is, if possible, higher than in other traditional sectors.

And finally, because the very nature of public administration does not always prioritize results and benefits in the medium and long term, given that they come into play. other political interests that have little or nothing to do with the economic sustainability of the business. For this reason, most public companies show losses.

The proof of this is that red numbers are usually the norm and not the exception in SEPI itself. This state-owned company directly and majority participates in 14 major companies (Efe, Correos Navantia, Tragsa, Mercasa, Ensa, Enusa, Cetarsa, Hunosa, Mayasa, Epides, Saeca, Cofivacasa and Hipódromo de la Zarzuela), is a shareholder of RTVE, It has direct minority stakes in 10 companies (Airbus, Ebro Foods, Enagás, IAG, Indra, Red Eléctrica, Alestis, Enresa, Hispasat and Epicom) and indirect stakes in more than 100. And in 2022, it produced joint losses 65 millionMoreover, Correos lost more than 200, and Navantia another 100. Everything indicates that the new technological SEPI de Escriva would suffer the same fate.