WSJ : U.S. Skeptical on Sprint's Possible T-Mobile Deal

U.S. Skeptical on Sprint's Possible T-Mobile Deal

Justice Officials Met With Directors Son and Hesse, Signaled Dim View Toward a Merger

Sprint Corp. S -0.11% board members Masayoshi Son and Dan Hesse met recently with Justice Department officials who said they would view a Sprint acquisition of wireless rival T-Mobile US Inc. TMUS +1.54% with skepticism, people briefed on the conversation said.

The conversation, which occurred in January, shows the seriousness of Mr. Son's interest in a deal, and his highest hurdle. U.S. antitrust authorities regard the current lineup of four national mobile-phone carriers as important to maintaining a competitive market, and department officials indicated at the meeting that a deal combining Sprint and T-Mobile could face regulatory difficulties, the people said.

It doesn't appear the meeting has deterred Mr. Son, who has been the driving force behind the effort to merge Sprint, the third-largest U.S. carrier by subscribers, with No. 4 T-Mobile.

Some of the people briefed on the meeting came away with differing impressions of the level of the Justice Department's concern about such a deal.

Mr. Son's SoftBank Corp. 9984.TO -1.30% , the Japanese technology company that bought a majority stake in Sprint last summer, and Deutsche Telekom AG DTE.XE -0.64% , the German company that owns about 67% of T-Mobile, have been in talks about merging the two U.S. carriers, people familiar with the matter said.

Sprint got assurances from banks earlier this month that a deal to buy T-Mobile for around $31 billion could win financing, people familiar with the matter said. Junk bonds like those that would be sold to finance such a deal have been hit by recent market turmoil, but conditions remain relatively favorable.

The parties are working through remaining issues including the size of any breakup fee that would be paid if the deal fell apart, who would lead the combined company and whether it should be called T-Mobile or Sprint, the people said. Those issues could take time to resolve, they said.

Justice Department antitrust officials, who review deals for possible harm to competition, are known to welcome meetings with executives ahead of mergers and acquisitions, but they usually are careful not to signal their views on a deal too strongly before giving it a full review.

Representatives of US Airways Group and AMR Corp. sounded out Justice Department officials before announcing their merger as well, but later ran into trouble when the department sued to block the merger. Ultimately, the airlines worked out a settlement that involved giving up some takeoff and landing slots, among other concessions.

The Federal Communications Commission, the nation's top telecommunications regulator, also reviews telecom transactions to determine if they are in the public interest.

The Justice Department meeting was one of a series of discussions Messrs. Son and Hesse plan to hold with regulators and lawmakers.

The discussions involve more issues than just the possible T-Mobile deal, including the introduction of new technologies and wireless competition in an industry considered heavily regulated, said a person familiar with the talks.

The message from regulators shouldn't have come as a surprise. In April, the Justice Department wrote in a comment letter to the FCC that the four wireless carriers competed in ways that are important to consumers. The FCC has sent similar signals.

Sprint, SoftBank, T-Mobile and Deutsche Telekom are all involved in the takeover talks and are debating how best to structure a deal, the people said. They are also contemplating approaches to get a deal past the Justice Department.

A key argument for Sprint and T-Mobile is likely to be that market leaders Verizon Wireless and AT&T Inc., T +0.57% which account for more than two-thirds of the U.S. industry's subscribers and nearly all its profits, won't face any significant competition absent a merger, and that their advantage over smaller carriers will only grow larger over time, people familiar with the matter said. The industry may be going through a competitive spurt now, but it isn't likely to last, they said.

Three years ago the Justice Department shot down a $39 billion deal for AT&T to buy T-Mobile, lauding the smaller company's role as a price-cutting maverick. T-Mobile has stepped up its aggressive tactics in the past year, getting rid of industry standbys like service contracts and international data roaming fees,and has started reversing a long slide in its customer base.

T-Mobile's resurgence might leave regulators less inclined to approve a deal. Justice Department officials regard T-Mobile's strides since the demise of the AT&T deal as good for consumers and competition, said people familiar with the matter.

The turnaround has been led by T-Mobile Chief Executive John Legere, who nevertheless has said consolidation is needed, and has argued that T-Mobile would impart its competitive drive to a combined company. "I think what we're doing in any scenario we will prevail," he said at a press event this month in Las Vegas

(BFW) Alcatel Rises; AT&T Capex Plan Above Ests, Kepler Cheuvreux Says

+------------------------------------------------------------------------------+

Alcatel Rises; AT&T Capex Plan Above Ests, Kepler Cheuvreux Says 2014-01-29 08:36:42.386 GMT

By Sam Chambers Jan. 29 (Bloomberg) -- Alcatel rises for a thrid straight session, gains as much as 3.8% today, 3-day rise ~7.3%; Stoxx 600 tech index +1.4%. * Stoxx 600 up as much as 1.1% today; over last 2 years, Alcatel shrs have weekly beta of 1.5 vs Stoxx 600: Bloomberg data * Yday, AT&T said it sees 2014 capex in ~$21b range * Kepler Cheuvreux: U.S. mkt spending looks healthy in 2014, is positive for Alcatel, Ericsson * AT&T will probably begin adding capacity to its 4G network in 2H * Ericsson likely to be pressured in S/T due to omission from Sprint’s ‘Spark’ project, peaking of deployments at T-Mobile USA * NOTES: * The U.S. comprised 37% of Alcatel’s 2012 sales and 26% of Ericsson’s 2012 sales; both cos. supply AT&T: Bloomberg data * Ericsson reports 2013 results on Jan 30, Alcatel reports 2013 results on Feb 6

For Related News and Information: First Word scrolling panel: FIRST<GO> First Word newswire: NH BFW<GO>

To contact the reporter on this story: Sam Chambers in London at +44-20-7673-2021 or schambers7@bloomberg.net

To contact the editor responsible for this story: James Ludden at +44-20-7673-2645 or jludden@bloomberg.net

>>> Renault : Missed the point to buy it back - stock is strong

I have been very positive on RNO since last month, we bought it soon and sold it also maybe too soon, stock is still below the level we sold them...

I was waiting for level around the 61 levels to come back on it...Story is still the same, interesting and from my point of view one of the top name in the auto sector for the next few weeks....

On the chart attached we can see that there is still some decent potential but I will rather wait for another pull back to come back on the name.

Laurent

>>> Sunrise and Orange Switzerland consider options to compete w

Sunrise and Orange Switzerland consider options to compete with Swisscom including merger 
The Swiss telecommunications companies Sunrise Communications and Orange Switzerland are considering various measures to enable them to complete with market leader Swisscom, TMT Finance reported.

Without citing a source, the specialist telecoms news portal said the two firms' owners -- the UK private equity firms CVC and Apax Partners -- are holding talks. Rumoured considerations include the pooling of assets, a network sharing deal, and/or a merger, the item said.

Sunrise owner CVC values the company at EUR 2.6bn and is reportedly looking to sell the business this year, with an intra-Swiss deal a probable scenario, the report said, citing unidentified sources. Getting a deal past the Swiss regulator is not expected to be straightforward, however, it added.

Source TMT Finance

(BofA-ml) European Auto. : Q4 2013 preview

* Reiterating cautious sector view, more on 2014 than Q4 2013
Heading into Q4 2013 earnings we reiterate our cautious sector stance as spelt out
in our 2014 year ahead and preview the results season. With EU car sales +6% in
Q4 we do not expect too many companies to report a weak quarter but, in general,
we think outlook statements may provide little reason for consensus to upgrade
already high 20% sector EPS growth forecasts for both 2014 and 2015. Risks do
exist in the form of weakening LATAM vols and pricing, still tough EU Car pricing,
Truck pricing and FX headwinds. Trading back at a pre-crisis P/E of 10x and a P/E
rel of 73% vs. the long-term average of 70% we now see limited sector wide
valuation multiple support.

* German OEM guidance likely to remain cautious
Given the aforementioned fundamental challenges to earnings we would expect
outlook comments to remain somewhat cautious. Of the German OEMs for 2014 we sit
furthest below consensus EBIT at Daimler (U/P) (-5%), broadly in line with VW (Buy),
and slightly ahead at BMW (N). With consensus modelling a €2bn jump in 2014 EBIT
for DAI the bar looks high to us. Cars launch costs together with Truck pricing could
limit upgrades and at 12x P/E valuation is full, in our view. VW should guide for growth
in EBIT (but this may be non-specific) while BMW will likely point to flat PBT (expected).

* Below Q4 consensus EBIT in trucks; above for RNO, Valeo
Specifically for Q4/H2 we are furthest below EBIT for Volvo (-14%), Scania (-10%)
and Peugeot (-5%). We see potential upside to current quarter earnings for Renault
(+3%) and Valeo. We provide detailed company previews within the document.

* A new mid-term plan vs. a capital increase. RNO vs. Peugeot
We see Renault as offering perhaps the most interesting short term catalyst over
results with the announcement of its multi-year plan alongside what we expect to be
a good set of H2 earnings. Peugeot aims to announce details of its cap raise with
results meaning cash is likely to be managed well into year end. Looking further into
2015 we are less convinced on Peugeot’s ability to stem the cash drain.

* Trucks: still cautious, avoid Volvo on EU weakness
Of all the sub-sectors we cover we remain the furthest below 2014 and Q4 2013
consensus for Trucks. We still see pricing headwinds in EU and LATAM and downside
to volume expectations as well. We are 10% below 2014 EBIT consensus for
Volvo but 3% above for Scania. Volvo in particular trading on 21x 2014 P/E looks
expensive to us.

* Tyres: Michelin over Pirelli. Suppliers still looking solid
The outlook for tyre markets in 2014 is more positive than 2013 but we think current
valuations broadly capture this. Stock specifically we prefer Michelin at 9.4x 1yr fwd P/E
over Pirelli at 13.2x. For 2014 EBIT we sit 5% below Nokian consensus. In Auto
suppliers we think Q4 is well underpinned for both Valeo and Norma given Q4 EU Auto
production +3% YoY. Conti has already set a solid tone with its encouraging results.

FT : Barclays to swing axe with branch closures and job cuts

Barclays chief executive Antony Jenkins plans to take an axe to the cost structure of the bank, closing a quarter of its 1,600 branches in the UK and cutting hundreds of investment banking jobs. He will also outline new five-year targets for the lender next month.
The move underlines the UK bank’s need to improve profitability in the face of a tougher regulatory climate. But analysts said the branch closures also highlighted how banks across the world view new technology as a unique chance to improve customer service while cutting costs.

“This is a fundamental 100-year transformation of the banking industry, that’s what I think we are seeing,” said a person familiar with the plans of Barclays, which will replace some of the 400 branches it is closing with smaller sites in Asda supermarkets.
Other UK banks, including Lloyds Banking Group and Royal Bank of Scotland, are expected to follow Barclays’ lead by closing branches and encouraging more customers to use new smartphone applications, analysts said. The cuts could prove controversial with politicians and consumer groups, which are concerned about the exodus of banks from the high street.
Mr Jenkins, who took over in 2012 when Bob Diamond was ousted over the Libor rate manipulation scandal, has focused on cleaning up Barclays’ culture and improving profitability with a plan to cut £1.7bn of costs by next year.
But when he presents annual results on February 11, Mr Jenkins will also set eight new targets as part of a five-year “balanced scorecard”, comprising two financial objectives and six wider “good citizen” aims concerning staff, customers and broader society.
The new objectives will include an update to the bank’s earlier promise to achieve a return on equity above its cost of capital by 2016, and a core tier one capital ratio – a crucial measure of financial strength – of 10.5 per cent by 2015.
Other objectives include increasing the number of women in senior roles and improving trust in the bank as measured by a YouGov poll.
On Tuesday, it emerged that Barclays plans to cut another several hundred jobs at its investment bank, which has come under pressure to cut costs amid falling revenues and stricter regulatory capital rules.
The investment banking operation, which bought the US arm of Lehman Brothers in 2008 and now employs about 25,500 of Barclays’ 140,000 staff, will make up to 400 managing directors and directors redundant – mostly in London and New York, people close to the situation said. The cutbacks come on top of 1,700 staff reductions in its trading and advisory unit announced a year ago.
Barclays is also clamping down on travel expenses, with a message to the staff in recent weeks that international travel should be restricted to “essential” external meetings.
Its investment bank was hit hard last year by a slump in the sales and trading of bonds and other fixed income products – a factor that contributed to a €1bn quarterly loss at its main European rival Deutsche Bank.
The cost-to-income ratio for Barclays’ retail bank is about 66 per cent. That is skewed by the fact that its lower cost credit cards business is reported separately. But Ashok Vaswani, head of the retail business, has said he wants to cut that dramatically.
Meanwhile, Co-operative Bank is planning to shrink its branch network by 15 per cent as it slims down the business after being forced to raise £1.5bn of fresh capital. Lloyds has committed to maintaining its 2,200-strong network until the end of the year – but may consider closures after that.