Mi dispiace, ho sbagliato numero.*
Well, what did BT’s CEO, smouldering Gavin Patterson, expect? Italy is ranked 60th out of 176 countries in Transparency International’s corruption index, worse than Romania or Hungary. The “improper” management behaviour there had been going on for years, and would probably be going on still but for the call from a whistleblower.
The BT board must now decide how far up the hierarchy the buck should stop, and if the £530m hit (“only” £500m in cash) had been the worst of last week’s telegraph from the former nationalised phone company, it might not be so bad for a business of BT’s size. Unfortunately, there was worse.
Failing to co-ordinate Tuesday’s profit warning with Friday’s quarterly report looked tactically inept, serving to focus attention on a strategy which looks increasingly unconvincing. BT, as its millions of customers know only too well, is making telephone landlines – still more or less essential – more expensive every year. The latest inflation-beating increases came last Friday, only six months after the previous round.
The “free” footy, which spearheaded BT’s push into content, is now to cost many subscribers money, as it has not proved the must-have that we were led to believe when BT started bidding against Sky for the rights. Now another expensive round looms. With Sky likely soon to be 100 per cent owned by the Murdoch megasaurus, this could be the equivalent of double-or-quits for BT.
The company’s luck in being allowed to buy EE has been offset by the ominous weakening in demand from the public sector. The knife-catchers for BT shares at around £3 hope this is just Brexit-driven delays rather than cancellation, and point to re-affirmation of the policy to raise the dividend by 10 per cent a year for reassurance.
Saeed Baradar of brokers Louis Capital, who recommended selling the shares before this week’s shocker, is not reassured. If BT has to pay up for football, then the forecast dividend will consume all the company’s cash flow. Considering the Italian disaster, that is risky: and dividends that are not earned are not sustainable.
*So sorry, wrong number
They see sense on the North Sea
The tv pictures of the (almost) empty oil storage buoy dominated the evening news, as Greenpeace’s gallant protesters resisted big oil’s fire hoses. Shell never stood a chance. Threats to firebomb its forecourts forced the company to abandon its UK government-approved plan to dump the Brent Spar in the Atlantic.
Instead, it was expensively broken up, and with the environmentalists in full cry, 15 nations and the European Commission produced a convention requiring the sea bed to be returned to its “pristine” condition. The later revelation that Brent Spar contained almost no oil destroyed the credibility of Greenpeace, but by then it was too late, and the rest of us are about to get the bill.
It has taken over 20 years, and the prospect of massive tax credits for North Sea clean-up operations, for the politicians to notice. Meanwhile, the platforms have grown their own ecosystems, sheltered from predators and, more urgently, from industrial fishing. Far from being industrial monstrosities, they are valuable environments.
Some of us have made this point many times, but now it’s fashionable. Even Ed Davey and Jonathon Porritt are seeing the light. Sir Ed might more productively have noticed when he was energy secretary in the coalition, but we must rejoice at a sinner that repenteth, especially when it saves the taxpayer money.
Kindly take the money
One of the Bank of England governor’s more bizarre remarks last year was that Britain was reliant on the “kindness of strangers” to fund the country’s chronic trade deficit. Those strangers have seen the value of their pounds plummet since he said it, but the loss does not seem to be putting them off. Last week they kindly put up £23bn to lend to the UK government for 40 years, and the lucky few successful buyers will be rewarded with a return of 1.87 per cent. History says this is a high-risk investment at this price, but it is surely stretching things to suggest that the buyers are doing it out of kindness.
This is my FT column from Saturday