TheChek News Flow

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BN 02/26 11:18 *ILIAD'S FREE MAKES TRIPLE PLAY OFFER AT EU19.98/MONTH: FIGARO BN 02/26 11:17 *ILIAD'S FREE RESPONDS TO BOUYGUES TRIPLE-PLAY OFFER: FIGARO

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Iliad’s Free Responds to Bouygues Triple-Play Offer: Figaro 2014-02-26 11:19:57.570 GMT

By David Whitehouse Feb. 26 (Bloomberg) -- Co. responds to Bouygues Telecom’s triple play offer of EU19.99 a month announced today with an offer of EU19.98 a month, Le Figaro reports, citing the company.

Link to Company News:{EN FP <Equity> CN <GO>} Link to Company News:{ORA FP <Equity> CN <GO>} Link to Company News:{VIV FP <Equity> CN <GO>}

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To contact the editor responsible for this story: David Whitehouse at +33-1-5365-5059 or dwhitehouse1@bloomberg.net

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Switzerland Shifting From Bankers to Bunkers in Data Push: Tech 2014-02-25 23:01:00.3 GMT

By Cornelius Rahn, Carolyn Bandel and Hans Nichols Feb. 26 (Bloomberg) -- The bunker deep in the Swiss Alps an hour’s drive south of Zurich was designed to withstand nuclear blasts and protect soldiers from a foreign invasion that never came. Today, it’s used to guard digital data. As Switzerland yields to pressure from the U.S. and the European Union to relax its bank secrecy rules, it’s repositioning itself as the global vault for online identities. With consumers and companies uploading ever more confidential information to make online transactions, there’s increasing demand for services that keep data out of reach of criminals and government spies. “This is the future of this country: It’s not to store any more money, it’s actually to store data, which is the next currency,” said Carlos Moreira, founder and chief executive officer of WISeKey SA, which encrypts and stores information in the bunker. “The Swiss respect the privacy of people.” In the wake of reports about the extent of government spying, demand for WISeKey’s services is growing 300 percent every month, he said in a cavernous bunker room with a vaulted concrete ceiling. Moreira said he plans to fill the room, the far side of which is barely visible in the gloomy distance, with racks upon racks of computers that could hold the data of as many as 6 million people. The bunker, near the town of Attinghausen, was built to be self-sustaining, drawing on mountain water and powered by nearby hydroelectric plants. WISeKey has servers in four bunkers across Switzerland, providing the service to 2,000 companies and 2 million consumers.

Rocketing Demand

“It’s a very sensible move” for Switzerland, said Rik Turner, an analyst at researcher Ovum Ltd. in London, “to rebrand themselves as a safe haven for data.” Other companies are joining the effort. SIAG Secure Infostore AG, based in Zug, runs two underground data centers, branded “Swiss Fort Knox,” in a joint venture with the government. Safe Host SA owns a 10,000 square meter data center near Geneva and expects to start building a second one nearby in March. A key advantage is that “the Swiss have strict data privacy laws” due to the country’s tradition as a private banking center, said Safe Host CEO Gerard Sikias. Since former U.S. National Security Agency contractor Edward Snowden began documenting the extent of government surveillance, WISeKey has seen increasing demand in the U.S., Moreira said.

Digital Keys

With a large share of the closely-held company’s growth expected to come from the U.S. this year, the CEO plans to list the company on Nasdaq in 2015. A $35 million financing round in 2011 valued the company at $360 million. For the past three years, WISeKey has hosted parties at the World Economic Forum’s annual Davos meeting to promote the notion that Swiss trustworthiness in banking can be replicated on the Internet. WISeKey, with about 180 employees, offers applications that let customers secure their Web accounts with access codes called digital keys that can be hundreds of characters long. In online banking, customers share a public key with banks that are used for authorization. But without the client’s private key, stored on his mobile device or computer, the data cannot be decrypted.

Bunker Maze

“It’s like a safe in the bank,” Moreira said in the maze- like bunker, hundreds of meters below the mountaintop above. “You need your key and the bank’s to open the safe. We do the same, only digitally.” Moreira acknowledges that even blast-proof doors can do little against an attack via the Web. A skilled digital intruder could manage to siphon data from the servers to his own computer. And in today’s arms race between hackers and security firms, ever more powerful computers will require increasingly strong encryption, Moreira said. The keys at Attinghausen are in turn locked by a so-called root key that sits on a computer, unconnected to the Internet, in another bunker near Bern. Whenever it needs to be changed to keep decrypters guessing, Moreira and other executives must all be present, bringing different pieces of an authentication puzzle with them. “From a pure data center perspective it is a bit gimmicky” to place the servers in a bunker, said Steve Wallage, managing director of BroadGroup Consulting, which advises clients on data storage. But, he said, “some people might be impressed by that. It is like going to a Swiss bank.”

Black Belt

While some bunkers are used to keep art and other valuables, underground data storage is the fastest growing business of Deltalis SA, the company that owns the Attinghausen site, said CEO Stephan Grouitch. Deltalis bought the decommissioned 1950s bunker, one of Switzerland’s largest former command posts, from the Swiss government in 2007 and opened it as a storage facility in 2010. “We cater to any company that is looking for a stable place in Europe, out of U.S. reach,” said Grouitch, a karate black belt and former French Air Force officer. “It matters to our customers.” The Attinghausen bunker still shows signs from days gone by, with the former planning center, a cage that blocks radio signals once used to make top secret phone calls, and faded maps of Europe and Switzerland replete with movable NATO-style brigade tokens. “With the growth of the company,” Moreira said, “we need 20 or 30 more spaces like this in the Swiss Alps.”

For Related News and Information: Zuckerberg’s Data Stance Facing Privacy Backlash in Europe: Tech NXTW NSN N1B8V86JTSET <GO> Companies Not Loving Obama Plan to Fight Hackers Without Perks NXTW NSN N0UFD06K50ZM <GO> U.S. Said to Swap Intelligence With Thousands of Companies NXTW NSN MOE9BA07SXKX <GO> Top Stories: TOP <GO> Top Technology Stories: TTOP <GO>

--Editors: David Rocks, Kenneth Wong

To contact the reporters on this story: Cornelius Rahn in Berlin at +49-30-70010-6212 or crahn2@bloomberg.net; Carolyn Bandel in Zurich at +41-44-224-4104 or cbandel@bloomberg.net; Hans Nichols in Berlin at +49-30-70010-6216 or hnichols2@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at +49-30-70010-6215 or kwong11@bloomberg.net

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BlackBerry’s WhatsApp Valuation Seen Derailed by BBM: Real M&A 2014-02-26 01:05:44.168 GMT

(For a Real M&A column news alert: SALT REALMNA <GO>.)

By Tara Lachapelle, Brooke Sutherland and Gerrit De Vynck Feb. 26 (Bloomberg) -- For BlackBerry Ltd. investors cheering the prospect of a sale of its BBM messaging service after last week’s $19 billion deal for WhatsApp Inc., the waiting may be the hardest part. BlackBerry shares have rallied 18 percent since Facebook Inc. agreed to pay $42 per user for WhatsApp’s mobile-messaging application, implying a valuation of as much as $3.6 billion for BBM. The messaging service isn’t likely to find a buyer willing to pay close to that much because it lacks the scale of WhatsApp with a user base one-fifth the size, BGC Partners Inc. said. Chief Executive Officer John Chen said yesterday that he’d eventually consider spinning off or selling BBM once he’s built it into a stronger competitor. Even if the app doubled its growth rate of 2.8 million users per month, it wouldn’t reach WhatsApp’s current size until 2019, according to data compiled by Bloomberg. BlackBerry, which failed to find a buyer last year, may be better off making a last attempt to sell the entire company to Microsoft Corp., Hudson Square Research Inc. said. “The outlook is not bright,” Daniel Ernst, a New York- based analyst at Hudson Square, said in a phone interview. BBM’s user base currently isn’t “in the ballpark of what would be interesting to a global Internet company.” Lisette Kwong, a spokeswoman for Waterloo, Ontario-based BlackBerry, declined to comment beyond Chen’s remarks on the prospects for selling the messaging service.

BBM Potential

“The potential is going to be huge” for BBM, Chen said in a Feb. 25 interview with Bloomberg Television at the Mobile World Congress in Barcelona. “Until we get to the point that we can showcase that potential, it is a bit too early to think about getting our $19 billion.” BlackBerry has added about 25 million BBM users since May to reach 85 million this month, according to company statements. Should the app maintain that growth rate, it would rival WhatsApp’s current 450 million users by January 2025, data compiled by Bloomberg show. Doubling the pace to 5.6 million each month makes BBM the size of WhatsApp by August 2019 and the size of Tencent Holdings Ltd.’s WeChat, with 272 million users, by December 2016. “There are benefits of scale in this area, so you’d probably pay a lot less for Blackberry’s BBM subscribers than you would, say, a WhatsApp,” James Cordwell, a London-based analyst at Atlantic Equities LLP, said in a phone interview. For potential BBM suitors, the “biggest question would be, can they hold onto those users or are those users going to migrate over to a larger service?”

WhatsApp Growth

More than 1 million people are signing up for WhatsApp each day, and the service is on track to reach 1 billion users in the next few years, Facebook CEO Mark Zuckerberg said last week after the deal was announced. “WhatsApp has five times the scale, roughly, of BBM and it’s growing at a fast clip,” Colin Gillis, a New York-based analyst at BGC Partners, said in a phone interview. “The No. 1 company in a space tends to command a higher premium.” Rakuten Inc., a Tokyo-based online retailer, earlier this month paid $900 million for Viber, a similar mobile-messaging service with more users than BBM. That deal implies a lower value for BBM than the $3.6 billion that’s based on the WhatsApp acquisition, data compiled by Bloomberg show. BlackBerry had a market value yesterday of $5.6 billion.

User Strength

While selling BBM now could give BlackBerry shareholders an immediate reward, the company can’t risk parting with one of its best assets, said Brian Blair, a New York-based analyst at Wedge Partners Corp. BlackBerry reported losses in six of the last eight quarters and revenue in the most recent period was the lowest since 2007, according to data compiled by Bloomberg. “It’s not in the best interest of BlackBerry as a company,” he said in a phone interview. “What they should learn from WhatsApp and other communications platforms is that the strength is in getting as many users as possible.” With BBM so far behind peers, BlackBerry must find a niche market to lure more users, according to Todd Coupland, a Toronto-based analyst at Canadian Imperial Bank of Commerce. Chen, who became CEO in November after Fairfax Financial Holdings Ltd. terminated a $4.7 billion takeover proposal, hasn’t said he’s looking to enter an arms race for users with WhatsApp and Facebook. He’s instead targeting the bankers, lawyers and other professionals who have stayed loyal to BlackBerry because of the security of its e-mail networks and its Qwerty keyboard-equipped phones. Yesterday, Chen unveiled BBM Protected, a version of the instant-messaging service with enhanced encryption.

Business Customers

“Nobody has a secure messaging infrastructure, and we’re the only ones who have it,” Chen said in an interview. “It’s important that we showcase and use that as a differentiator into the thousands and thousands of enterprise customers.” BlackBerry has said it’s looking to develop BBM channels -- essentially chat rooms devoted to specific themes -- that could carry advertising as a way of creating new revenue streams for the messaging service. The company has the potential to charge business customers for using the service, Tim Long, a New York- based analyst at Bank of Montreal, wrote in a Feb. 20 report. WhatsApp charges $1 a year after one year free. BBM could command a higher price per user because enterprise users are more valuable, said Neeraj Monga, an analyst at Veritas Investment Research Corp. in Toronto. Even with BBM, BlackBerry is projected to continue losing money through at least 2016, according to analysts’ estimates compiled by Bloomberg. Revenue is forecast to tumble 39 percent in the fiscal year ending February 2015, the data show.

Whole Takeover

While Chen has made some progress since taking the helm, “nothing is really turned around in terms of the business,” said Coupland of CIBC. BlackBerry’s focus on security and enterprise customers would still be a good fit for Microsoft, and a purchase of the entire company would be a relatively small acquisition for the $312 billion software maker, said Ernst of Hudson Square. With shares of acquirers rallying after deal announcements lately, Redmond, Washington-based Microsoft should consider a takeover now, he said. Tony Imperati, a spokesman for Microsoft, declined to comment on whether the company is interested in buying BlackBerry. A takeover of the entire company may be more likely than a sale of the BBM unit, said David Cockfield, a fund manager with Northland Wealth Management in Toronto who helps manage about C$270 million and owns shares of BlackBerry. “BlackBerry’s messenger has been around and nobody’s rushed up and made them an offer,” Cockfield said in a phone interview. As for the entire company, “if it looks like it’s going to survive -- and it’s beginning to look that way -- then I suspect somebody may come in and make a bid.”

For Related News and Information: BlackBerry’s Chen Would Consider BBM Sale, Spinoff in Future NSN N1K9DL6TTDT9 <GO> Facebook Values WhatsApp Like Miracle Drug in Takeover: Real M&A NSN N1BCRT6JTSEK <GO> BlackBerry Best Hope for Future Is Without BlackBerrys: Real M&A NSN MVWXC76VDKHT <GO> BlackBerry deal news: BBRY US <equity> TCNI MNA <GO> Real M&A columns: NI REALMNA <GO> Top deal stories: DTOP <GO>

--With assistance from Stefanie Batcho-Lino and Hugo Miller in Toronto. Editors: Whitney Kisling, Beth Williams

To contact the reporters on this story: Tara Lachapelle in New York at +1-212-617-8911 or tlachapelle@bloomberg.net; Brooke Sutherland in New York at +1-212-617-0448 or bsutherland7@bloomberg.net; Gerrit De Vynck in Toronto at +1-416-203-5720 or gdevynck@bloomberg.net

To contact the editors responsible for this story: Beth Williams at +1-212-617-2307 or bewilliams@bloomberg.net; Sarah Rabil at +1-212-617-5992 or srabil@bloomberg.net

Ex-Deutsche Bank team shuts emerging markets hedge fund

Avantium Investment Management, an emerging markets hedge fund, is shutting down after almost two-and-a-half years in business, becoming the latest victim of a torrid year for developing markets.

The firm, which was set up by Kay Haigh, the former global head of emerging markets trading at Deutsche Bank, is closing following redemptions after investors lost appetite for emerging markets, Financial News has learned.

Lucy Blair, marketing and investor relations, told Financial News: “As appetite for dedicated emerging markets funds decreased, there was an erosion of our assets that compromised our ability to provide an institutional offering.”

Avantium launched in October 2011 with about $200 million in assets. It grew to manage $800 million at its peak in May 2013 but suffered as investors decided to pull their money. Money will now be returned to investors. It is unclear what the current size of the fund is.

Haigh led a 17-person team split across London and New York. The core eight people in the team came from Deutsche Bank, where they had worked together incubating the strategy since 2009. Avantium chief executive is Arnd Sieling, a former managing director at Deutsche Bank.

The firm's fortunes illustrate the fragility of new and small hedge fund businesses, which can be more vulnerable to changes in investor sentiment than their larger counterparts.

Last year was a difficult year for emerging markets. Years of loose monetary policy in the US had seen money flood into the region in a search for yield. However, last summer emerging markets equity and credit markets sold off after Federal Reserve chairman Ben Bernanke warned of a possible tapering of quantitative easing.

Avantium’s emerging markets global macro hedge fund gained 7.5% in 2012 but was down 4.5% last year, according to the firm. Last year the JP Morgan Emerging Markets Currency Index fell 8% and the JP Morgan Government Bond Index-Emerging Markets (Global Diversified) was down 9.55%.

Since last summer, specialist emerging markets managers have faced a tough time convincing investors to put money with them.

Earlier this month, The Wall Street Journal reported that Brevan Howard Capital Management was closing its emerging markets hedge fund, which lost 15% last year. Portfolio manager Geraldine Sundstrom is leaving the firm.

Last summer boutique manager Adelante Asset Management closed its global emerging markets debt fund after 14 years because it believed its long-biased investment style was not right for the current environment, Financial News reported at the time.

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Orange Seeks to Sell 10% of Dailymotion to MSFT: WSJ on Twitter 2014-02-25 16:15:05.344 GMT

By Rita Devlin Marier Feb. 25 (Bloomberg) -- {NSN N1K7EEBE07I9 <go>}

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To contact the editor responsible for this story: Rita Devlin Marier at +1-416-203-5718 or rdevlin5@bloomberg.net

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*UKRAINE FACES HIGH PROBABILITY OF DEFAULT: RUSSIA'S STORCHAK 2014-02-25 15:01:26.721 GMT

--TORREY CLARK

-0- Feb/25/2014 15:01 GMT