A takeover battle for BT would bring much-needed excitement to the City — as well as a major political row. The privatised telecoms giant that rarely pleases its customers and regulators has seen its shares fall by four-fifths since late 2015. While many other tech-related stocks have rebounded, BT’s price is still down where it was when the market plunged in February — lockdown having interfered with BT Openreach’s broadband installation programme, slashed new orders from business customers and even knocked out the fixtures that might have been shown on BT Sport’s television channels. On top of all that, there’s a gaping hole in the pension fund. No wonder BT’s board has asked Goldman Sachs and other advisers to dust off the company’s defence strategy in case a hostile bid is incoming.
But from whom? One contender is Deutsche Telekom, which already has a 12 per cent stake (acquired when it sold the EE mobile network to BT in 2015) and a seat on the board. The UK government no longer holds a ‘golden share’ that could prevent foreign takeover, but imagine the reaction in Westminster if this vital piece of national infrastructure falls, on the eve of final Brexit closure, into the hands of its more potent German counterpart.
The alternative, City sources suggest, is an approach from private equity interests who would aim to extract value by splitting off Openreach, which analysts believe could be worth up to £20 billion on its own, compared with the current £11 billion market value of BT as a whole. Some think BT chief executive Philip Jansen, who made his own fortune in private-equity turnaround jobs, might actually favour that approach.
But it would have the effect of turning BT into a vehicle for fancy financial engineering at a time when it needs no distraction from the real engineering task of rolling out superfast broadband to 20 million homes and businesses under the handicap of no longer using state-of-the-art Huawei equipment. And it would invite criticism from all quarters that the City is hunting a fast buck while Britain falls ever further behind in internet technology.
Meanwhile, keeping Jansen in check will be BT’s steely South African chairman Jan du Plessis, who was picked for the job on the strength of his defence of shareholders’ interests in previous roles at Rio Tinto and the brewer SAB Miller. One way or another, a gripping boardroom drama could be in prospect for the autumn — but I wouldn’t bet on it delivering better broadband.
Zoom, the video-conferencing service that became part of lockdown life for more than 300 million daily meeting participants around the world, suffered a major outage on both sides of the Atlantic on Monday — affecting many US schools and colleges as term began — and is reportedly seeing sharply reduced numbers of new users. The novelty seems to have worn off as criticisms of the app’s security features echo around the blogosphere while rival products from Microsoft and Google jostle for market share. Could Zoom fall as swiftly as it rose, emulating previous victims of digital Darwinism such as the now-forgotten social networks MySpace and Bebo? Noting in late March that the share price of California-based Zoom Video Communications, listed on the US Nasdaq market, had doubled since the start of the year, I offered the view that it was ‘a bit late to buy’ — only to see it double again before Monday’s disruption. If you ignored that advice and bought anyway, now might be a good time to take profits.
One forecast I got right in the spring — my farmer neighbour on his big crop sprayer being a more reliable source than my Nasdaq mole — was that ‘recent extended wet and dry spells mean 2020’s harvest could be the worst for years’. Wheat sowing was greatly reduced by bad weather last autumn and yields on this low hectarage are expected to be poor in most parts of the country, with some farmers producing only a third of their usual volume. The same weather patterns have afflicted northern Europe and forward prices have risen accordingly — so UK millers may find themselves having to import already-expensive wheat with added WTO tariffs if Lord Frost fails to reach a deal in Brussels. And so to my next forecast: painful inflation in the price of post-Brexit bread.
I’m amused to see that Schroders, the blue-chip investment firm, was the first of several major City institutions to tell staff they won’t be required to return to the office full-time after the pandemic is over. According to chief executive Peter Harrison: ‘The office will become a convening place where you get teams together, but the work will be done in people’s homes.’
Opinion divides vigorously on the prospect of semi-permanent ‘WFH’. Advocates say it’s more productive because it cuts out commuting time and opportunities for idle gossip, while creating a new world of work in which performance will be judged purely on measurable results. Opponents say it’s a dismal prospect for the young, who will be forced to work from their Zone 3 bedsits while being denied the buzz, the building of collegiate trust and the lessons in how to handle yourself in interpersonal dealings that are the daily bread of office life.
As a traditionalist, I would naturally fall into the second camp — except that I recall how my own first three years in the City as a trainee in Schroders’ long-gone banking department were largely wasted on the Times crossword, party planning, flirtation (it wasn’t illegal back then) and lunch — Sweetings seafood counter being a last survivor from those distant days. I might have turned out a better banker if I had been required simply to report in once a week with all my tasks completed.