FT : New-look Nokia set to ring in the changes

New-look Nokia set to ring in the changes

Nokia is dead, long live Nokia! The Finnish group’s shareholders are likely to approve the sale of its once dominant mobile phones business to Microsoft for €5.4bn at an extraordinary general meeting in Helsinki on Tuesday. Some protests over the €19m pay-off to former chief executive Stephen Elop are also probable.

But even though it is selling a business representing half of its sales, Nokia’s share price has doubled since the deal’s announcement in early September. Investors may well be more optimistic but they also have big questions over the future direction of the new Nokia. Here are four of them. What will happen to the new core of Nokia? Nokia is still thrashing out details of its future business model. But its telecoms equipment business Nokia Solutions and Networks (NSN) is likely to be at the heart of the new group. Soon to be flush with Microsoft’s cash, Nokia is facing plenty of investor scrutiny over whether NSN could soon buy a competitor to compete better with its bigger Nordic rival, Ericsson. Rajeev Suri, NSN’s chief executive, tells the Financial Times he will not be pushed into any “silly acquisitions” nor make any transformational transactions in the short term. But he adds that deals will be something to consider in the long term given the strength of the new Nokia’s balance sheet, with about €7.5bn net cash. Most attention has been placed on a tie-up with Alcatel-Lucent, the French networks business, but Mr Suri declines to comment. Nokia has had no contact with the French group, according to one person with knowledge of the group. The idea of a big acquisition makes some investors and analysts nervous. “That is usually the position you don’t want them to take: the danger is they pay too much and there are big integration risks,” says Sami Sarkamies, analyst at Nordea, who sees Juniper Networks as a possible target as well. There is also concern over the fierce nature of competition in a telecoms equipment sector that has been hard hit by lower cost alternatives made in China. NSN’s sales fell by 26 per cent year on year in the third quarter as it focuses on profitability, as well as specific areas of the industry less open to commoditisation, in particular high-speed mobile data communications. “The top line trends are quite alarming,” says Mr Sarkamies. But profitability is relatively strong with an underlying operating margin of about 12 per cent forecast for the current quarter, which compares with a negative 1.6 per cent for mobile phones in the third quarter. Who will become chief executive? Mr Suri should be a strong contender to replace Mr Elop as chief executive (the job is being filled temporarily by Risto Siilasmaa, Nokia’s chairman). His success in turning around the long-time problem child of NSN has made him a favourite of many telecoms analysts for the job. Internally his main rival is likely to be Timo Ihamuotila, currently finance director and interim president.

The choice is about more than who leads Nokia. Several people inside and outside the company also believe it will be crucial in deciding the Finnish group’s future structure. Should Mr Suri get the nod, NSN would be clearly the core of the new group. If it is Mr Ihamuotila, analysts expect more of a holding company structure with NSN keeping its independent governance structure. An outsider as chief executive is also a possibility, but seen as less likely after Mr Elop, who came from Microsoft. The mood in Finland seems to be slowly shifting towards having a Finnish chief executive. “It’s totally out of the question that Rajeev would be CEO of Nokia. Timo is a possibility. What he has is the strategic acumen, what he lacks is charisma,” says a Finnish former Nokia executive. What about the other two divisions? It is not just about NSN. Investors are perhaps most excited about the potential for Nokia’s vast patent portfolio, which will live in a division called advanced technologies that will also house some research and development functions that could allow Nokia to make consumer products again in the future. Mr Sarkamies assigns it a value of €6bn – the same as for NSN. “Patents is the bit that really fascinates me,” says one big Nordic investor. It is different for the other division, it’s mapping business. People involved in the Microsoft deal say the only reason it was not sold to the US company was because of a disagreement over price. Mr Sarkamies says Nokia values it at a little more than €3bn in its books but has hinted that it might have to revise down that figure. How much cash back can shareholders expect? Another area that gets investors excited is estimating how much of its cash pile Nokia could return to them. Mr Sarkamies thinks a maximum of €4bn could be handed back via special dividends in the next few years. Third Point, the activist hedge fund run by Daniel Loeb, has said it has taken a stake in Nokia and wants the Finnish company to return cash through a dividend or buyback. At Nokia’s third-quarter results two weeks ago, Mr Ihamuotila said the company would provide clarity on its “strategy, operating structure and capital structure” around the closing of the Microsoft deal, which is expected in the first quarter. But impatience in some quarters is growing. Customers of NSN are starting to ask questions about the future of the group, with some complaining of a “typically Finnish” process that takes too long to take decisions.

(BFW) Atos to Reedem 2011 Convertibles Early at Par Value

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ONE 11/18 07:26 ATOS: Early redemption of the 2011 Convertible Bonds (OCEANE) BN 11/18 07:28 *ATOS SAYS EARLY REDEMPTION OF 2011 CONVERTIBLES TO BE AT PAR BN 11/18 07:28 *ATOS TO REDEEM OCEANES 2011 1.5% DUE JULY 2016 ON DEC. 18 BN 11/18 07:28 *ATOS SAYS EARLY REDEMPTION TO OCCUR ON DEC 18 BN 11/18 07:26 *ATOS: EARLY REDEMPTION OF 2011 CONV BONDS (OCEANE)

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Atos to Reedem 2011 Convertibles Early at Par Value 2013-11-18 07:32:07.471 GMT

By David Whitehouse Nov. 18 (Bloomberg) -- Convertibles due July 1, 2016 will be redeemed on Dec. 18 at par value plus accrued interest, Atos says in a statement on its web site.

Link to Statement:{NSN MWG7BL3PWT1C <GO>} Link to Company News:{ATO FP <Equity> CN <GO>}

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

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

>>> Citi Pre-Market Indication

CS Aberdeen +3-4% No's solid & Lloyds to sell S.Widows to ADN LN for £660m Aveva unch H1 no's all inline and reiterate guidance Capita -1-2% CEO Paul Pindar to step down EADS +1% Spec Airbus, Boeing secured record orders at Dubai air show Easyjet +1-2% Spec co preparing to announce record profits tmrw (S.Tel) ENI -0.5% More clashes in Libya over the weekend Lanxess unch CEO in +ve interview. Sees EU auto sales crisis over soon Lloyds unch Lloyds to sell Scottish Widows to Aberdeen for £660m Miners +1% Copper unch, China +3%, OZ miners +0.25%, Mitie +2% No's solid & on track to maximise growth in all 4 divisons Petrofac -2% IMS mixed. Backlog +ve but 2014 guidance not great Prosieben +1% Spec co is sticking to dividend policy & on track for FY Rolls Royce +2% Spec co won a $5b Etihad Airways order for Trent XWB engine Sanofi unch Spec co to buy Indias Elder Pharma ($22bn Rupees, not new) Sonova +3-4% H1 Org growth +9.6% (c6.3%) & raise sls growth guidance Subsea 7 +2% Q3 no's good. Co remains +ve on medium, long term prospects Thomas Cook +1% Spec co to sell Foreign Currency division to Moneycorp Tobacco +1% Spec Heathrow to open the first electronic cigarette zone

>>> HSBC Sees ‘New Wave’ of M&A in 2014

New wave driven by structural consolidation as cos. see logic of merging with or acquiring cos. in same industry to bolster competitive positions, analysts led by Garry Evans write in global equities report.

- In many industries cos. sitting on large cash piles so there should be no problem financing deals * Telecoms: European regulatory change means consolidation will continue as theme in fragmented, underinvested sector; sees Vodafone, Liberty Global leading this * Latin America: M&A trend of 2013 likely to continue; Brazil mobile market would be healthier if it shrank to three from four players * Mexico: Amid domestic slowdown cos. can buck trend and generate earnings growth through M&A; sectors that have been active on M&A/consolidation incl. food & beverage, industrials, financials * Luxury goods: Most cos. will be faced with cash piles sooner or later, though available targets sizeable enough to “move the needle” for larger groups are scarce, synergies limited

>>> What to look at today :

China stocks surge on more details from 3rd plenum agenda, while y/y property price gains accelerate...Dubai airshoe, Boeing, EADS, GE, Rolls Royce land multibillion Contracts... Shnaghai +2.9% - German Finance Minister Schaeuble Rules Out Greek Hircut: Bild

Eur$ 1.3492 S&P future -0.07% European Futures : 0.15%

Keep an eye on:

- ABBN VX : ABB to Name Claudio Facchin as Head of Power Systems Division - AV/ LN : Aveva 1H In Line; `Well Positioned` to Meet FY Expectations - AZN LN : Cholesterol Guidelines Positive for Astrazeneca, Moody’s Says - BALSN VX : Basilea’s Isavuconazole Gets FDA Orphan Drug Designation - BARC LN : Barclays Says More U.K. Branches May Be Closed: FT - BELG BB : Belgium government fires Belgacom chief over ‘criticism’ - BP/ LN : Spanish Gov studying a new tax on energy, Gas station - CEP SM : Spanish Gov studying a new tax on energy, Gas station - DL NA : Delta Lloyd Says 3% Annual Div Growth Target No Longer Applies - EAD FP : Boeing Leads Airbus in Orders on First Day of Dubai Air Show - GALP PL : Spanish Gov studying a new tax on energy, Gas station - KENZ LN : Kentz to Study Return of Capital to Holders If No M&A Targets - KORI FP : Korian, Medica Plan to Merge; Korian CEO Will Lead New Group - LXS GY : Lanxess CEO Sees EU Auto Sales Crisis Over Soon: Handelsblatt - NHY NO : Norsk Hydro Signs $1.7b Revolving Credit Line With 13 Banks - NOK1V FH : Nokia May Seek Acquisitions in Long Term: FT (1) - PFC LN : Petrofac Sees `Flat to Modest' Y/y Profit Growth 2013 to 2014 - REP SM : Spanish Gov studying a new tax on energy, Gas station - RR/ LN : Rolls-Royce wins $5bn Etihad Airways order to power 50 Airbus A350 XWB aircraft - SAN FP : Sanofi Cancels Regulatory Filing Plans for Fedratinib - SOON VX : Sonova 1H Rev. Beats Est.; Raises Ebita, Sales Forecast - SUBC NO : Subsea 7 Says Some N. Sea New Projects Awards May Be Postponed - TDC DC : TDC Chairman Won’t Rule Out Nordic M&A, Borsen Reports - TFI FP : TF1 Plans to Make LCI Channel Free, CEO Paolini Says: Figaro

>>> Brokers Up & Down

Up

*DAILY MAIL RAISED TO BUY VS HOLD AT LIBERUM *DRAX RAISED TO BUY VS HOLD AT LIBERUM *LANCASHIRE RAISED TO ADD VS HOLD AT NUMIS *NOVOLIPETSK RAISED TO BUY VS HOLD AT SOCGEN *PEUGEOT RAISED TO NEUTRAL VS UNDERWEIGHT AT JPMORGAN *SANOFI RAISED TO BUY VS HOLD AT KEPLER *SEVERSTAL RAISED TO BUY VS HOLD AT SOCGEN

Down

*ACKERMANS CUT TO HOLD FROM BUY AT ING *DEBENHAMS CUT TO SELL VS NEUTRAL AT GOLDMAN *NESTE OIL CUT TO SELL VS NEUTRAL AT CITI *PEKAO CUT TO UNDERWEIGHT AT JPMORGAN

PT Changes

*ACKERMANS PT RAISED TO EU86 FROM EU84 AT ING *BEFIMMO PT RAISED TO EU48.90 FROM EU47.20 AT ING *KBC PT RAISED TO EU48.50 FROM EU38.50 AT ING

Initiation

*ARROW GLOBAL RATED NEW NEUTRAL AT GOLDMAN, PT 325P*MORPHOSYS RATED NEW OVERWEIGHT AT JPMORGAN, PT EU68

Country Sector Stock Call

FT :Belgium government fires Belgacom chief over ‘criticism’

Belgium government fires Belgacom chief over ‘criticism’

BRUSSELS, Nov 15 – Belgium’s prime minister announced the dismissal of Belgacom chief executive Didier Bellens on Friday, saying the government, the telecom group’s majority shareholder, had acted partly because of his repeated criticism of the authorities. Mr Bellens has had a turbulent year during which media reports on his outspoken views on the political and regulatory situation in the country drew complaints from Belgian politicians.

The government, which has a 53.5 per cent stake in Belgacom, said the search for a successor to Bellens was under way. “Repeated criticism and incidents have irrevocably undermined the confidence of the Belgian government in Mr Didier Bellens,” Prime Minister Elio di Rupo said. “For this reason the federal government recalls Mr Didier Bellens from the post of the chief executive of Belgacom,” he told a news conference. Belgacom declined when asked to comment earlier on Friday about newspaper reports that Mr Bellens was about to be dismissed. Mr Bellens had forcefully voiced frustration that mobile operators were barred from installing a new, high-speed “4G” mobile network in Brussels, because of the city’s strict radiation regulations, although it is already used in Germany and the United States. He was also reported to have told a Brussels business club meeting that, in receiving an annual dividend from Belgacom, Mr Di Rupo was like a child coming for his present from Santa Claus. Mr Bellens, previously at Belgian holding group GBL and media group RTL, became CEO of Belgacom in March 2003. His mandate would have run until 2015 after being extended for a six-year term in 2009. Investors in the company view Mr Bellens as having done a reasonable job at a tough time for European telecoms operators, many of which have paid top dollar for mobile licences at a time when regulators moved to cap prices in the sector. “We believe Mr Bellens has done a fine job at Belgacom, balancing investments with a consistent (dividend) payout policy,” KBC analyst Thomas Deschepper wrote in a note to clients on Wednesday.

FT Telecoms dividends set for further fall

Telecoms dividends set for further fall

European telecoms dividend payouts will fall by a sixth this year, excluding the resumption of payments from Telefónica, as the sector continues to struggle with sluggish demand and fierce competition. Dividends in the telecoms sector plunged 44 per cent last year from a peak of more than €22bn paid for 2011, according to Markit, the financial information services group, as companies slashed payouts to conserve cash on overstretched balance sheets.

The telecoms sector has traditionally attracted more defensive investors given its long-term record of shareholder returns given income from mobile and fixed-line services. The dividend yield on the sector has been among the highest with an average forward looking yield of 5.1 per cent even after the cuts. Competition in the sector combined with the economic downturn and the effects of regulation has dragged down revenues in the past few years, which hit the cash position of group’s guilty of over expansion into new markets over the past decade. Even so, companies in the sector only began to take remedial action to bolster balance sheets through dividend cuts last year. According to Markit, 12 of the 19 major companies in the sector have reduced or suspended payments either this year or last. Tom Matheson, analyst at Markit, said: “Band wave auctions, LTE network rollout, regulations and changing customer behaviour all add up to a squeezed free cash flow. BT’s audacious £1bn assault on premium content for interactive services is just the latest example of how hot competition is getting.” These risks, he added, combined with sluggish growth and the need for restorative M&A, have led the market to attach a high risk premium on any dividends paid. Markit said dividends will be 16 per cent lower this year again overall, although the group stripped out the effects of the resumption of Telefonica’s dividend after a one-year hiatus. Including the payment by the Spanish group, aggregate dividends across the sector are forecast to grow 12% year-on-year. Last year, the Spanish group axed its shareholder payments in order to reduce its net debt to earnings ratio. Telefónica will resume its dividend policy with payment worth about €3.4bn, according to Markit. Markit predicted that the “worst might be over” in spite of the forecast of further cuts to come this year, most notably by Telecom Italia. There was an “improving picture by 2014”, by which time all companies that it tracks are forecast to resume dividends. Next year, Markit expects that five groups will even increase dividends again. Before then, Markit forecasts seven companies to cut dividends again this year, including KPN and Deutsche Telekom. Of companies where management has yet to make intentions clear, Markit said its primary concerns were Telecom Italia and Belgacom. Telecom Italia has a huge debt that needs to be reduced, he said, while Belgacom has low free cash flow. “We’re forecasting Telecom Italia to scrap its payment entirely and we’re forecasting Belgacom to reduce its annual payment by over 30 per cent,” according to Mr Matheson. “Both these companies have high short interest.” Belgacom fired Didier Bellens last week after the chief executive remarked that the government was only interested in the company’s dividends. Markit predicted last week that Mr Bellens might be ousted over the comments, which it said could mean “twists to come” for the majority stated-owned group. Meanwhile, the outperformer in the industry has been Telenor, the Norwegian operator, according to Markit. “Exceptionally, it has increased its dividend every year since 2010 and shows no signs of bucking this trend,” it said.