ABSTRACT
In attempting to grasp the nature of the transformation process, modelling based on theory is helpful. A fundamental premise of the theory is the existence of conflicting interests between the principal and the agent. Agency theory captures important aspects of the wish and need for controlling the agent in bringing about a desired outcome. The chapter argues that the principal–agent logic can enable us to highlight the significant aspects when investigating the transformation of the telecommunications companies: the key actors, their actions and interactions. The telecommunications firms have incentives to keep some slack that enables them, for instance, to start interesting high-tech projects or to build head quarters with fancy restaurants. The telecommunications companies have superior information on the actual effects of markets, technology and regulation. When government is the sole owner of a company some traditional governance problems are by-passed. There is no need for attention to a majority-minority division between groups of owners.
