Tag: Approved

JOHN LEGERE, the lion-maned boss of T-Mobile, made his wireless firm the fastest-growing carrier in America by cutting prices and giving customers better deals than AT&T and Verizon, which he relentlessly mocked on Twitter as retrograde behemoths. His personal brand as an industry maverick may have helped too. On April 29th he put that image to the test, agreeing to a combination with Sprint, the next largest carrier after T-Mobile, and creating a behemoth under his leadership.

The deal, all in shares, values the combined entity at $146bn including debt. If approved by regulators, it would squeeze the number of providers in the wireless market in America from four to three. That is a big “if”—twice earlier this decade, antitrust authorities have either stepped in to prevent such an outcome or indicated that they would do so, for fear of higher prices for consumers.

Mr Legere presumably knows the challenge, so he appealed to the political priorities of President Donald Trump….Continue reading

WHICH has provided a better return in recent decades: America’s stockmarket or education? The latter, according to a research review by George Psacharopoulos and Harry Patrinos for the World Bank. The two economists looked at 1,120 studies, across 139 countries, and came up with an annual average “rate of return”—actually a pay premium, the increase in hourly earnings from an extra year of schooling—of 8.8%. The analogy is inexact, but for comparison America’s stockmarket returned an annual 5.6% over the past 50 years.

Their figure excludes social gains, such as lower mortality rates associated with greater education. The premium is higher for girls and for primary education. It is also higher in poor countries, presumably because the smaller the share of educated people, the higher the pay they can command. The same reasoning suggests that the return should have dwindled as educational attainment rose. Instead, it has stayed strong, especially for higher education (see…Continue reading

IN THE skyscraper that is Bank of America’s New York headquarters, the chief executive, Brian Moynihan, looks relaxed. The bank has just announced record first-quarter earnings. Its return on equity is comfortably in double digits. Its share price has been on a roll. The revival of America’s second-largest bank, he avers, was inevitable. Any dark moments? None, except perhaps when America’s sovereign debt was downgraded in 2011 and all the country’s banks suffered. Early hints at the current prosperity? On his first day in the job, in 2010, he says. Vast losses from bad debt and litigation merely obscured billions of dollars in operating profits. “We just had to get rid of what was dragging us down.”

In fact, this renaissance was anything but predictable. Over little more than half a century Mr Moynihan’s two predecessors, Hugh McColl and Ken Lewis, had transformed the tiny North Carolina National Bank into an institution that could claim a business relationship with half of all American…Continue reading

QUAYSIDE, a 12-acre (4.8-hectare) stretch of flood-prone land on Toronto’s eastern waterfront, is home to a vast, pothole-filled parking lot, low-slung buildings and huge soyabean silos—a crumbling vestige of the area’s bygone days as an industrial port. Many consider it an eyesore but for Sidewalk Labs, an “urban innovation” subsidiary of Google’s parent company, Alphabet, it is an ideal location for the world’s “first neighbourhood built from the internet up”.

Sidewalk Labs is working in partnership with Waterfront Toronto, an agency representing the federal, provincial and municipal governments that is responsible for developing the area, on a $50m project to overhaul Quayside. It aims to make it a “platform” for testing how emerging technologies might ameliorate urban problems such as pollution, traffic jams and a lack of affordable housing. If things go well, its innovations could eventually be rolled out across an 800-acre expanse of the waterfront—an area…Continue reading

INTEREST rates are heading higher and that is likely to put financial markets under strain. Investors and regulators would both dearly love to know where the next crisis will come from. What is the most likely culprit?

Financial crises tend to involve one or more of these three ingredients: excessive borrowing, concentrated bets, and a mismatch between assets and liabilities. The crisis of 2008 was so serious because it involved all three—big bets on structured products linked to the housing market, and bank-balance sheets that were both overstretched and dependent on short-term funding. The Asian crisis of the late 1990s was the result of companies borrowing too much in dollars when their revenues were in local currency. The dotcom bubble had less serious consequences than either of these because the concentrated bets were in equities; debt did not play a significant part.

It may seem surprising to assert that the genesis of the next crisis is probably lurking in corporate debt….Continue reading

THE herd of water buffalo ambling over rolling hills may look like a scene from southern Italy. In fact the beasts roam in southern Ireland. Johnny Lynch, who owns a 150-acre farm in County Cork, makes plump balls of mozzarella from their milk, and bids customers a cheerful, Irish-accented “Buongiorno!” in online advertisements for his produce.

Of the 200,000 tonnes of cheese made each year in Ireland, 90% is cheddar. That could soon become a problem. Apart from America, which has plenty of cheesemakers of its own, the only country with a big appetite for cheddar is Britain. It buys more than half of Ireland’s cheddar exports, for upwards of €250m ($300m) a year. But its impending exit from the European Union could cause the dairy trade to turn sour.

If Britain leaves the EU’s single market and customs union, as it intends to, Irish exporters can expect to face regulatory hurdles and perhaps tariffs. Conor Mulvihill of Dairy Industry Ireland, a lobby…Continue reading

“THIS port is for the Togolese,” says Sherif Tchedre, a mechanic standing among containers that line the shorefront in Lomé, Togo’s capital. “But it is Bolloré who runs everything.” He thinks little of the port’s French operator, Bolloré Group, or the conglomerate’s eponymous owner-boss, Vincent Bolloré. They do “nothing for Togo”, he says, adding that the Frenchman is too cosy with African presidents.

The French police seem to think so, too. On April 24th they arrested Mr Bolloré and some of his firm’s senior staff in Paris on suspicion of paying bribes a decade ago to win bids to run the Lomé port and one in Conakry, in Guinea. The next day he and two others were placed under formal investigation, one step short of being charged. The authorities suspect that Havas, a communications firm that Bolloré then owned, gave African politicians heavily discounted help in their election campaigns. Mr Bolloré and Bolloré Group deny the allegations.

Bolloré is bigger…Continue reading

BENEATH a lustrous 33-metre bronze statue of Guanyin, the Buddhist bodhisattva of mercy, a young monk on Mount Putuo tallies the cash donated by visiting faithful: “Daily, anywhere between tens of thousands and hundreds of thousands of yuan,” he says (100,000 yuan is a little under $16,000). Over 8m trips are made yearly to the tiny islet in Zhoushan city, about a four-hour drive from Shanghai (11m visited Shanghai Disneyland in its first year, after it opened in 2016). When it comes to temple fundraising, the monk is resolute. “The traditional way is the best way,” he says.

The Putuoshan Tourism Development Company has other ideas. A state-owned enterprise whose biggest shareholder is controlled by the government of Zhoushan and some state asset-management firms, it manages tourist facilities in the location, such as ferries, cable cars and joss-stick shops. Since 2012 it has mulled an initial public offering (IPO) of these services on Shanghai’s stock exchange; last year it…Continue reading

GLOBAL deals may be growing at a rapid clip, but they seldom offer instant gratification. Qualcomm, an American chipmaker, first bid for NXP Semiconductors, a Dutch company, in October 2016. The union has since been blessed by eight regulators worldwide, but one hurdle remains: China. With no decision yet from its regulator, the companies, which were expecting to have closed the $44bn deal this week, now hope to conclude it by July. The purchase of the chip unit of Toshiba, a troubled Japanese company, by a consortium led by Bain Capital, an American private-equity firm, is similarly awaiting sign-off from China.

Some suspect the delays stem from the threat of a trade war with America. Holding back regulatory approval, particularly on sensitive high-tech deals, could be part of the arsenal in any trade conflict. Organisational change may also be to blame. Fay Zhou, who works in Beijing for Linklaters, a law firm, points out that a recent reshuffle, which took merger reviews away from the commerce ministry…Continue reading

ECONOMISTS have spent the past decade wringing their hands over the health of the euro area’s economy. Last year, in a welcome respite, it expanded by a robust 2.3%, outstripping forecasts and matching America’s growth rate. But it has appeared less rosy-cheeked since.

Symptoms include moderation in a number of monthly indicators. Industrial production fell in January and February, as did business confidence; retail-sales growth was disappointing. The purchasing managers’ index (PMI), an output survey regarded as a good early indicator of GDP growth, has fallen from exuberant—and perhaps unsustainable—levels at the turn of the year, though it still points to decent growth (see chart).

Germany, the bloc’s largest economy, has not been immune. A summary indicator compiled by the Macroeconomic Policy Institute, a German think-tank, which includes production, sentiment and interest-rate data, suggests that the probability of a recession has risen, from 7% in March to 32% in April. A…Continue reading