Abstract This paper studies the impacts of industrial policy on efficiency and productivity of Asia-Pacific telecom firms under circumstances of competition and privatization. A two-stage method is applied to examine the efficiency scores of twenty-four telecom firms in APEC member economies during the period 1999-2004. The data envelopment analysis (DEA) is used in the first stage to measure the technical efficiency of these companies. In the second stage inefficiency scores obtained from the first stage are regressed upon the environmental variables with the Tobit regression. Finally, the Malmquist productivity index is employed to evaluate the longitudinal total factor productivity (TFP) changes. Scale and scope economies have significantly positive impacts on the efficiency improvement of Asia-Pacific telecom firms, but the influence of market competition and privatization to their telecommunications performance are insignificant. The TFP growth of these telecom firms is mainly due to technical innovation instead of from technical efficiency change.