Amidst the flurry of reaction and commentary to Labour’s BT pledge, we’ve had the final reading of eurozone inflation released this morning.
The 19-country bloc’s headline inflation slowed to 0.7% year-on-year in October, from 0.8% in September. That’s line with preliminary estimates by Eurostat.
The drop was caused by a fall in energy prices, which offset higher prices for services, food, alcohol and tobacco.
BT wins exclusive UEFA broadcasting rights to 2024
NEWSFLASH: In other BT news, the telecoms giant has won the exclusive rights to broadcast all 420 games of the UEFA Champions League, UEFA Europa League and the new UEFA Europa Conference League fora further three seasons.
BT will pay £400m each year for the privilege, but says its financial outlook for 2019/2020 remains unchanged.
Boris hits out at Labour’s “crackpot scheme”
Unsurprisingly, the prime minister has strongly criticised Labour’s pre-election pledge, and made it clear there will be no similar efforts by the Tories.
Boris told BBC radio:
What we won’t be doing is some crackpot scheme that would involve many, many tens of billions of taxpayers’ money nationalising a British business
Labour plans to fund the nationalisation by swapping investor shares for UK government bonds.
So who are the lucky shareholders in the running for those gilts?
Here’s a quick look at the top 10 shareholders in BT:
- Deutsche Telekom 12.1%
- BlackRock 5.73%
- Vanguard 2.73%
- Orange 2.69%
- Columbia Threadneedle Investments 2.38%
- Legal & General Investment Management 1.81%
- Norges Bank Investment Management 1.68%
- Invesco Asset Management 1.63%
- M&G Investment Management 1.33%
- Schroder Investment Management 1%
Labour has said web companies like Amazon, Facebook and Google, would foot the bill for the nationalised British broadband company’s annual maintenance costs.
The party estimates those operating costs are about £230m a year.
McDonnell told Sky News:
These companies now have to pay their fair share…no more sweetheart deals.
My colleague Rowena Mason has further details here:
Investors are considering which other UK firms could be candidates for nationalisation.
Some of the names being bandied around include Royal Mail (privatised fully by 2015) and Royal Bank of Scotland (which is still 62% owned by the government following its bailout in 2008).
Michael Hewson, chief market analyst at CMC Markets, says:
BT expressed surprise at last night’s announcement having been assured by Labour fairly recently that they weren’t being considered as a nationalisation candidate.
With other companies also being told the same thing by the Labour Party, investors will no doubt be looking very carefully at other possible candidates for nationalisation, and whether they need to be concerned.
Companies like Royal Bank of Scotland, National Grid, Centrica, Severn Trent, Royal Mail as well as the rail company franchisees, like Go Ahead Group and National Express to name but a few, are already trading at a nationalisation discount.
For now, given Labour’s current polling numbers the concern is fairly minimal, and investors will be hoping it stays that way, which helps explain the fairly muted share price reaction.
Rival TalkTalk stalls sale of fibre arm after Labour announces BT plans
BT rival TalkTalk is holding off on a decision to sell its own infrastructure arm to see how this whole Labour plan pans out.
TalkTalk chief executive Tristia Harrison told Reuters:
Our discussions are very advanced, and yes, the news overnight of course is making everybody in the sector pause and consider.
We were really close, really close, but I think something of this sort that is in the news, obviously everybody is pausing, considering, digesting and working out what it means.
Sky News, which first reported the strategic delay, said CityFibre Holdings nearly signed a deal to acquire TalkTalk’s FibreNation on Thursday before Labour’s pledge was announced.
More comments from Labour’s shadow chancellor, who is now speaking to Sky News.
He says the Labour pledge to establish a company called British Broadband from nationalising BT’s Openreach, follows similar models in countries like South Korea.
John McDonnell confirms that the nationalisation will be done by swapping investors’ BT shares for UK government bonds.
He adds that parliament will determine the value and ensure it is “done with a proper price” and that government bonds will offer shareholders a“stable, long-term investment.”
That’s exactly what pension funds and other shareholders are saying they need at the moment. It will be a good deal.
We can’t afford not to do it…we’ve fallen behind global competitors.
I’ve been touring around the country and you know even in some of our city areas they’re not connected up…this is good for the economy.
Labour’s shadow chancellor John McDonnell details BT plans
Speaking to the BBC’s Today programme, McDonnell has been clarifying Labour’s proposals, including that the part nationalisation would only apply to BT’s broadband network operator Openreach.
My colleague Lisa O’Carroll has some of the details:
The reaction trickling out from analysts hasn’t been glowing so far.
There are concerns that ongoing efforts by the government and sector regulator Ofcom to incentivise fibre installation by rival operators could all be for naught.
Matthew Howett, Founder & Principal Analyst at Assembly comments:
This is a spectacularly bad take by the Labour Party. The almost cut throat competition between broadband rivals has meant faster speeds, improved coverage and lower prices for consumers up and down the country.
The current government, and independent regulator Ofcom, have spent the last three years incentivising alternative operators to BT to deploy faster fibre technologies. Companies such as Virgin, CityFibre and others have committed billions to rival Openreach. Those plans risk being shelved overnight.
Only one other country in the world to come close to going down this route, and for a good reason – it’s hard, expensive and fraught with difficulty. Australia’s NBN is years late, massively over budget and offering speeds and technology a fraction of the original political intention.
BT shares are the worst performer on the FTSE 100
BT shares have slipped at the UK market open, dropping more than 2%
It makes the telecoms firm one of biggest fallers on the FTSE 100 alongside Berkeley group down 1.7%. Fresnillo down 1.6% and Standard Chartered down 0.6%.
Business reacts to Labour pledge
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Overnight, UK businesses have been digesting Labour’s latest election pledge that would result in the part-nationalisation of telecoms giant BT.
It is part of a plan to bring free full-fibre broadband to every home and business across the UK – but there’s clearly a question on costs.
The Labour party said the estimated capital cost of rolling out full-fibre broadband was £15bn, on top of the government’s existing £5bn earmarked for broadband expansion. This would be funded from its green transformation fund – paid for by borrowing.
But BT boss Philip Jansen has now weighed in and said the scheme would cost up to £100bn.
Speaking to the BBC, Jansen said:
These are very, very ambitious ideas and the Conservative Party have their own ambitious idea for full fibre for everyone by 2025 and how we do it is not straight forward.
It needs funding, it is very big numbers, so we are talking 30 to 40 billion pounds.. and if you are giving it away over an eight year time frame it is a another 30 or 40 billion pounds. You are not short of 100 billion pounds.
We’ll continue to bring you the latest business reaction as we get it.
Also coming up…
- 9.30am GMT: Eurozone inflation, final estimate for October
- 1.30pm GMT: US retail sales for October
- 2.15pm GMT: US industrial production