Light, water, telephone
Sixth in a series on Portuguese companies and investors in Asia — what they built, what survived, and what is still being built today.
Energia Ásia was owned 50/50 by EDP and ACE Asia Co. Ltd and its sole asset is a 21.2% stake in Companhia de Electricidade de Macau – CEM, S.A. ("CEM"), which acts as the exclusive concessionaire for transmission, distribution and supply of electricity in Macau since 1985. — EDP, S.A., market notification to the Lisbon exchange, 17 June 2024
Switch on a light in Macau today and the electricity reaches you from the Companhia de Electricidade de Macau (CEM). Turn a tap and the water comes from the Sociedade de Abastecimento de Águas de Macau. Pick up a telephone and the line belongs to the Companhia de Telecomunicações de Macau.
Three companies, three Portuguese names, one small city. Not one of them is Portuguese-owned.
That is not a story of decline, or at least not only. It is the clearest illustration in this series of what Portugal was actually selling in Asia in the twentieth century. Not electricity, not water, not telephony — Portugal built almost none of the infrastructure and supplied very little of the capital. What Portugal supplied was the right to do it: a legal instrument, drafted in Portuguese, granting one company the exclusive privilege of serving a city for a fixed number of years.
The concession was the product.
The company that lit Macau and now runs a casino
Start with the strangest of them, because it explains the pattern.
On 27 October 1910, a company was incorporated in British Hong Kong called The Macao Electric Lighting Company, Limited (澳門電燈有限公司 in Chinese). It was among the first hundred companies registered in the colony, and it listed on the Hong Kong Stock Exchange in 1927. Its business was supplying electricity to a Portuguese city across the estuary.
Note the shape of that before going further. A British-registered, Hong Kong-headquartered company held the electricity concession for Portuguese Macau. The capital was British, the management was British, the customers were Chinese, and the licence was Portuguese.
It held that concession until 1972, when the Portuguese administration terminated it for non-fulfilment of the contract and replaced the company with a new one. So the firm lost the business it was named after.
What happened next is the part worth telling. In 1988 it renamed itself Melco International Development (新濠國際發展有限公司). In 1993 it became a subsidiary of Shun Tak Holdings (信德集團有限公司), and in 2001 Lawrence Ho (何猷龍) took over as managing director and moved the company into casinos. Today Melco International is the majority shareholder of Melco Resorts & Entertainment (新濠博亞娛樂有限公司), which in 2023 began a ten-year gaming concession granted by the Macau government.
A company created to hold a Portuguese concession in Macau in 1910 lost that concession in 1972 and now holds a different Macau concession, granted by a different sovereign, a hundred and thirteen years later. The business changed completely. The business model did not.
Water: three years, then sixty
The same company also brought you the water.
Macau had no formal water supply until 1932, when two men named Wong Lei (黃烈 — note: the transliteration from the Chinese name does not match Cantonese or Mandarin pronunciation) and Wong Kam Leng (王金玲) founded the Macao Water Supply Company (Sociedade de Abastecimento de Águas de Macau in Portuguese and 澳門自來水股份有限公司 in Chinese). It lasted three years as an independent concern. On 1 August 1935 the government signed a sixty-year concession with the Macao Electric Lighting Company, and the water utility became its subsidiary.
The underlying problem never went away: Macau has essentially no water of its own. The company relied on groundwater and a small reservoir, and had to import raw water from the mainland, where droughts meant rationing.
In June 1985, Sino-French Holdings (Hong Kong) Limited — then a joint venture between Lyonnaise des Eaux and Chow Tai Fook Enterprises (周大福) — acquired 85% of the water company and signed a twenty-five year supply concession with the Macau government. It was the French group's first concession contract anywhere in Asia. That contract was renewed in 2009 for a further twenty years. Today Sino-French Holdings is a joint venture of Suez and NWS Holdings.
So the water of Portuguese Macau was supplied under a Portuguese concession by, successively, two Chinese businessmen, a British Hong Kong electricity company, and a French water group in partnership with a Hong Kong jeweller. At no point was any of it Portuguese except the paper.
Electricity: the replacement
The company that took over in 1972 was the Companhia de Electricidade de Macau (澳門電力股份有限公司) known as CEM.
It was restructured with the Portuguese administration's backing in 1982, and in 1985 signed a twenty-five year exclusive concession. In November 2010 the Macau government extended the arrangement for a further fifteen years, effective 1 December 2010. CEM today is the sole concessionaire for the transmission, distribution and sale of electricity in Macau.
Two details are worth pausing on. In 2016 the Macau Power Station, which had been generating for over a hundred and ten years, was formally decommissioned. And the Macau grid is now tied into the China Southern Power Grid (中国南方电网) by four high-voltage cables. Macau stopped making most of its own electricity and now imports it, which means the concession is no longer really a licence to generate. It is a licence to distribute somebody else's power — the pure form of the thing.
CEM's shareholders today are Nam Kwong (南光集團) with 42%, a vehicle called Energia Ásia Consultoria with 21.2%, Polytech Industrial with 11%, Asiainvest with 10%, the Macao SAR Government with 8%, and China Power International with 6%.
Hold on to Energia Ásia. It comes back at the end.
Telephone: the last one Portugal wrote
Until 1981, telecommunications in Macau were run by the post office — the Correios e Telecomunicações de Macau (澳門郵電局), founded in 1884. The service was, by every account, dreadful. Residents waited months to have a telephone connected, and a call to Hong Kong had to be placed through an operator.
On 29 September 1981 the Portuguese Macau government signed an agreement with the British firm Cable & Wireless to create the Companhia de Telecomunicações de Macau (澳門電訊有限公司), incorporated three weeks later on 20 October. CTM received a monopoly franchise covering all telecommunications services except mobile telephony.
The shareholders tell the story in miniature. Cable & Wireless held the majority. Alongside it sat Marconi Comunicações Internacionais, the Portuguese arm of the British Marconi company, later absorbed by Portugal Telecom; CITIC Pacific (中信泰富), the Hong Kong arm of a mainland Chinese state conglomerate; and Macau Post. British operator, Portuguese minority, Chinese state minority, government stub — and a franchise written in Portuguese.
In 2013, Cable & Wireless sold its 51% to CITIC Telecom International (中信國際電訊) for $749.7 million in cash, valuing CTM at around $1.47 billion. Portugal Telecom's stake went in the same round of transactions. Cable & Wireless's chief executive noted at the time that his company "was a founding shareholder in CTM in 1981", which is the sort of thing you say on the way out.
CTM today is 99% owned by CITIC Telecom International, with 1% held by Macao Postal Savings (Caixa Económica Postal / 郵政儲金局).
Eight months before the handover
There is a coda that I find hard to read as anything other than habit.
On 22 April 1999 — with the transfer of sovereignty to China set for that December — the Portuguese Macau administration granted a fifteen-year exclusive franchise for subscription television to a newly created company, Macau Cable TV (澳門有線電視). The shareholders were a Sino-Portuguese group: Portugal Telecom, the public broadcaster Teledifusão de Macau, the Banco Nacional Ultramarino, and a satellite operator. Total investment: 450 million patacas, around €53 million at the time.
Eight months before it handed the territory over, the Portuguese administration was still issuing exclusive fifteen-year franchises. And there, once again, is the bank from the first instalment.
What Portugal put in place
Add these up and the pattern is unmistakable.
Electricity: British capital, then a restructured local company, now majority Chinese. Water: Chinese founders, British parent, French operator. Telephone: British operator, now Chinese state-linked. Cable television: a consortium assembled at the last minute. In none of these did Portugal supply the technology, and in most it supplied little of the money.
What Portugal supplied was the instrument. A concession is a peculiar kind of asset: it costs the issuer almost nothing to create, it can be sold for a great deal, it binds a successor government, and it has the useful property of being valuable precisely because it is exclusive. Macau's colonial administration was, for most of the twentieth century, in the business of manufacturing exclusivity and selling it to whoever had capital.
This is the same structure as the captaincy of the Japan voyage in the second post in this series, and the perpetual mining title in the fourth. The commodity is the right, not the thing.
And it explains why so much of this survived 1999. A concession does not depend on the identity of the sovereign who issued it. The People's Republic inherited a city whose light, water and telephones were already delivered under long-term exclusive contracts, and simply carried on renewing them. CEM's supply contract was extended in 2010. The water concession was renewed in 2009. Nobody had to rebuild anything.
The last one out
Which brings us back to Energia Ásia.
On 29 December 2023, EDP — the Portuguese electricity company, formerly Energias de Portugal — announced it was selling its remaining half of Energia Ásia, the vehicle holding 21.2% of CEM. The sale completed on 17 June 2024 for around €100 million. The buyer was China Three Gorges International (中国三峡国际).
EDP said the transaction let it reallocate capital to its core activities, which is true and also beside the point. What it actually marked was the departure of the last major Portuguese private group from the former colony's utilities.
And there is a detail in it that I think is the single neatest illustration of where things now stand. China Three Gorges has been EDP's largest shareholder since 2011, holding around 21% of the Portuguese company. So EDP sold its Macau concession stake to its own biggest shareholder — a Chinese state-owned enterprise that had attempted a full takeover of EDP in 2018 and been rebuffed.
Portugal's national electricity company exited Macau by selling to Beijing, and Beijing was already sitting on its own share register.
O que sobrou — what is still there
The three names. CEM, SAAM and CTM still trade under their Portuguese names in a Chinese city, and the bills, vans, manhole covers and meter boxes still carry them. Nobody has bothered to rename them, because the names are the brands and the brands are attached to the concessions.
Melco, one of the largest gaming companies in the world, whose name is a contraction of Macao Electric Lighting Company and which most of its customers presumably take to be a modern invention.
|  |
Next
Light, water and telephones are useful things to hold a monopoly over, but they are rate-regulated, capital-hungry, and politically awkward, and the margins are thin.
There was one Macau concession that had none of those problems. It required no infrastructure worth speaking of, generated cash in quantities that eventually dwarfed everything else in the territory combined, and turned a small colonial city into the largest gambling market on earth.
Portugal wrote that licence too. But it didn't make the money.
Next in the series: the 1962 gaming monopoly, and who actually profited from Portugal's most valuable Asian export.
Comments