Breakingviews

Merger “synergies” can’t just be code for job cuts

June 8, 2016

Most mega-deals leave companies with fewer staff, and higher sales and profit per head, a Breakingviews analysis shows. That’s capitalism. But the mood is changing, at least in pro-market Britain. Synergies do exist, but those reliant on cutting jobs may get harder to realise.

Brussels O2 veto cements BT’s home advantage

May 11, 2016

The EU’s anti-trust tsar has rejected CK Hutchison’s 10.3 billion pound takeover of O2, because it says it would raise mobile prices. That leaves several UK players figuring out next steps. In an industry moving towards packages of mobile, landline, broadband and TV, the winner is the beefed-up BT.

UK deal veto would be big setback for Li Ka-shing

May 4, 2016

A $15 bln takeover of Telefonica’s O2 unit was key to making the Hong Kong tycoon’s costly bet on European telecoms pay off. If CK Hutchison cannot overturn a likely EU veto, his UK telco will either have to carry on as a disruptive fourth player, or find a fallback deal.

Facebook’s free internet faces big test in India

January 5, 2016

Mark Zuckerberg is fighting hard to save his plan to offer a free mobile web service to the country’s poor. If India shuts it down, other developing nations may follow. It’s another case where the social network founder’s apparently noble goals have sparked a furious backlash.

O2 deal may get hung up on UK telco concessions

December 9, 2015

Brussels’ trustbusters are assessing the market impact of Hutchison’s 10 bln stg bid for Telefonica’s UK arm. It would be odd to push the bidder to surrender spectrum: rivals have more. A demand for it to create a new operator looks sounder but would hurt the deal logic.

A Panglossian guide to valuing Telecom Italia

November 20, 2015

Telecom Italia’s tough home market and high debt might struggle to elicit a buy from even Voltaire’s eternal optimist. Purchases from French billionaires Vincent Bollore and Xavier Niel have driven up the price. The shares could be worth more, but only with heroic assumptions.

Vodafone talks raise more questions than answers

June 5, 2015

The $100 bln telco is talking to cable group Liberty Global about an asset swap. Vodafone shares fell, suggesting disappointment among investors who’d thought a merger was on the cards. Smaller scale M&A is probably the right way forward, but any structure will be complex.

Portugal Telecom pays the price for weak controls

July 16, 2014

An Espirito Santo group company failed to repay a $1 bln loan to PT. That means the telco’s shareholders will own a smaller stake in the group it planned to form with Brazil’s Oi. It’s not a good start for a complex merger. The combined entity looks financially weaker.

FCC needs thick skin to weather its moment in sun

May 14, 2014

The U.S. telecom watchdog is tackling flashy issues on mergers, net neutrality and wireless spectrum. Resolving them won’t be easy, given the agency’s mandate to spark competition while also promoting efficiency and consumer choice. Current commissioners seem up to the task.

AT&T will struggle to justify $70 bln DirecTV bid

May 14, 2014

Expanding into satellite TV requires heroic assumptions to be financially viable. Just to cover its cost of capital, AT&T would need to find over $2 bln of synergies. That’s more than even Comcast pledges to squeeze from Time Warner Cable. The deal has a whiff of desperation.