TheChek News Flow

Ofgem says French argument that British consumers should bear more of the costs is ‘unacceptable’

Britain is in a stand-off with France over how much each country’s residents should pay towards planned giant new power cables under the Channel to trade electricity between the two countries.

Ofgem, Britain’s energy regulator, said the argument by its French equivalent Commission de régulation de l’énergie that British consumers should bear more of the costs was “unacceptable”, as the two sides announced this week that approval for a new project had stalled.

Britain and France already trade power across three cables under the Channel but more projects are being developed as part of a push towards closer links between the two markets.

France and Britain want another 1 gigawatt of interconnection to be developed, but in a statement to the financial markets this week, the regulators said the conditions were not yet met for approval and they would continue talks. 

In a further statement, Ofgem said that after talks lasting a year, “we have not resolved how to allocate costs and revenues across British and French consumers”.

It added: “CRE’s long‑standing position is that British households and businesses should pay a far higher share of building and operating costs while taking a much lower share of export revenues. We’ve been clear this is unacceptable: it undercuts energy security and penalises our consumers disproportionately.”

The stand-off comes as Britain and the EU are also exploring ways to more closely align their electricity and carbon trading markets following Brexit, to try to smooth out electricity trading and reduce the gap in carbon pricing. 

Trading power between Britain and the continent is becoming more important due to both sides’ growing use of intermittent renewable electricity, as countries with too much power during high winds can export to neighbours, and import when wind speeds are low. 

France gets most of its electricity from its vast fleet of nuclear power stations, which helps power neighbours including Britain, but it sometimes imports electricity from Britain during peak times in France. 

Potential new interconnector projects between Britain and France include the 1.4GW GridLink project owned by iCON Infrastructure Partners and the 1GW Eleclink 2 proposal through the Channel Tunnel. 

Phil Hewitt, director at energy market specialists Montel Analytics, said there was some “anti-interconnector sentiment” in French politics but it was positive that both sides had committed to further talks.

CRE said: “Studies conducted by CRE (the French regulator) do not allow to conclude that a new interconnection with Great Britain would be profitable for France in the event of equal cost sharing between French and British consumers.

“The regulators of both countries have therefore committed to launch a joint study in order to reach common conclusions for future discussions.”

Ardian’s Plan to Take Control of Italian Telecom Operator Inwit

Dominique Senequier’s investment firm aims to bring Canadian fund Brookfield Asset Management into its bid to acquire 100% of Inwit’s capital. The takeover would result in the Italian operator’s delisting from the Milan Stock Exchange.

Ardian has firmly decided to take over Italian group Inwit (Infrastrutture Wireless Italiane). The French investment firm chaired by Dominique Senequier, which already holds approximately 31% through Italian-registered holding company Daphne 3, plans to launch an offer to acquire 100% of the capital of Italy’s leading telecommunications tower company. Already active in this sector with Míla in Iceland and MXT Holdings in Mexico, Ardian intends to bring Canadian fund Brookfield Asset Management (BAM) into the deal, which would ultimately lead to the delisting of the former Telecom Italia subsidiary from the Milan Stock Exchange.

To gain full control of the Italian operator led by Diego Galli since 2022, the French fund benefits from a favorable window of opportunity. Another shareholder, British operator Vodafone, is looking to sell its approximately 38% stake. Ardian would then only need to convince the minority shareholders, who hold the remaining 30% of the capital, to tender their shares in the transaction.

Offer Rumor Two Years Ago

Created in 2015 as a spin-off from Telecom Italia, Inwit is valued at approximately €8 billion on the stock market. On the Milan Stock Exchange, its shares currently trade around €8, following a 14% decline in 2024 and nearly 20% in 2025. In 2023, Ardian had already considered launching a bid for Inwit’s entire share capital but ultimately abandoned the plan due to insufficient funding. The takeover rumor had driven Inwit’s share price to its all-time high of nearly €13 in May 2023.

The choice of Brookfield Asset Management as a partner in this transaction is strategic for Ardian. The Canadian fund is a major player in infrastructure, spanning telecoms, energy, and transportation, with a portfolio of $247 billion under management. In France, this discreet asset manager recently entered exclusive negotiations with Galeries Lafayette to acquire the Bazar de l’Hôtel de Ville (BHV) building for approximately €300 million (LL, 29/01/26 and 30/01/26). Contacted by La Lettre, Ardian declined to comment.

Le plan d’Ardian pour prendre le contrôle de l’opérateur télécoms italien Inwit

La société d’investissement de Dominique Senequier veut embarquer le fonds canadien Brookfield Asset Management dans son opération visant à acquérir 100 % du capital d’Inwit. Une prise de contrôle qui se traduira par la sortie de l’opérateur italien de la Bourse de Milan.

Ardian est bien décidé à mettre la main sur le groupe italien Inwit (Infrastrutture Wireless Italiane). La société d’investissement française présidée par Dominique Senequier, qui en détient près de 31 % via la holding de droit italien Daphne 3, prévoit de lancer une offre pour acquérir 100 % du capital du numéro un transalpin des tours de télécommunication. Déjà présent dans ce secteur avec les groupes Míla en Islande et MXT Holdings au Mexique, Ardian veut embarquer le fonds canadien Brookfield Asset Management (BAM) dans l’opération, qui se traduira in fine par un retrait de l’ex-filiale de Telecom Italia de la Bourse de Milan.

Pour prendre le contrôle intégral de l’opérateur italien dirigé par Diego Galli depuis 2022, le fonds français bénéficie d’une fenêtre de tir favorable. Un autre actionnaire, l’opérateur britannique Vodafone, veut vendre sa participation de quelque 38 %. Ardian n’aurait dès lors plus qu’à convaincre les minoritaires, qui représentent les derniers 30 % du capital, d’apporter leurs titres à la transaction.

La rumeur d’une offre il y a deux ans

Né en 2015 en tant que spin-off de Telecom Italia, Inwit est valorisé en Bourse à près de 8 milliards d’euros. À la Bourse de Milan, ses actions s’échangent aujourd’hui autour de 8 €, après une chute de 14 % en 2024 et de près de 20 % en 2025. En 2023, Ardian avait déjà envisagé de lancer une proposition pour acquérir l’intégralité du capital d’Inwit, mais y avait finalement renoncé faute d’avoir trouvé les fonds nécessaires. La rumeur d’une offre avait d’ailleurs fait flamber l’action Inwit, la propulsant à son pic historique de près de 13 € en mai 2023.

Le choix de Brookfield Asset Management comme partenaire dans cette opération est stratégique pour Ardian. Le fonds canadien est un acteur majeur dans le secteur des infrastructures, tant dans les télécoms que dans l’énergie et les transports, avec un portefeuille de 247 milliards de dollars sous gestion. En France, ce discret gestionnaire d’actifs est tout récemment entré en négociation exclusive avec le groupe Galeries Lafayette pour acquérir les murs du Bazar de l’Hôtel de Ville (BHV) pour près de 300 millions d’euros (LL du 29/01/26 et du 30/01/26). Contacté, Ardian n’a pas répondu aux sollicitations de La Lettre.

On the roadmap

If the EU is not moving fast enough on improving its competitiveness, a group of member states have to move forward alone, European Commission president Ursula von der Leyen said yesterday after lengthy discussions on the topic, write Barbara Moens and Alice Hancock.

Context: The bloc’s 27 leaders held a summit yesterday to discuss how to boost Europe’s economic engine. They will meet again in March, in the hopes of agreeing to definitive action then.

The new slogan for the nimble and competitive EU is an upgrade of the single market to “One Europe, One Market”, von der Leyen said, even though more than 30 years after the single market was established it is far from complete.

Von der Leyen said that in response to urgent concerns about the EU’s stagnating economic growth, she would present a “very detailed” roadmap “with a clear timeline and targets on when to deliver”.

European Council chief António Costa said the retreat led to “new energy and a shared sense of urgency”, including on deepening the single market, simplifying rules and lowering energy costs.

Enrico Letta, the former Italian premier who penned a report on the single market and attended the meeting, told the FT that the EU should now be “opening the third phase of the market in Europe”, after the European common market and the European single market. 

But given the slow pace of reforms over recent decades, von der Leyen said that moving ahead with a smaller group of member states on tricky issues might be necessary to stop moving “at the speed of the slowest”.

French President Emmanuel Macron also said that if leaders could not move ahead with integrating the bloc’s capital markets before June “we will have to do enhanced co-operation”. The plan has been blocked by countries who do not want to hand over supervision of financial markets to an EU-wide body.

Letta, however, said that “enhanced co-operation can only be a last resort”.

Talk about moving ahead in a smaller circle showcases that despite a lot of talk on unification and convergence — and a show of unity between Macron and German Chancellor Friedrich Merz at the start of the day’s retreat — deep divisions remain in von der Leyen’s “One Europe”.

The most contentious issues are joint borrowing, the extent to which the bloc should protect its market and whether to water down its flagship climate policy, the emissions trading system, which charges companies to emit carbon.

The software sell-off (part one)

The biggest story in stock markets in the past 15 or 20 years has been “software eating the world” — using “software” in a broad sense to include not just literal software vendors such as Microsoft but also internet services companies including Google, Meta, Amazon Web Services, as well as software-intensive hardware companies such as Apple and Nvidia. It strikes me as possible that the biggest market story in the next 15 or 20 years will be “software eating itself” — increasingly autonomous AI machines displacing not only legacy software companies but the cognitive component of all sorts of industries.

This isn’t a prediction; I don’t know enough about AI to roll out the crystal ball. But what I have read and observed leads me to think the recent sell-off in the software sector might be the leading edge of something big. Here’s a chart of the software and services sub-index of the S&P 500. It is down 27 per cent since late October:

Of course this sub-index does not capture everything that’s going on — AI panic came for trucking companies yesterday for goodness’ sake. But it’s a good microcosm to start with. And a good, if ultimately insufficient, question to start with is: is the sell-off overdone? Is there a buying opportunity in software?

Below is the valuation premium of the software and services subsector to the whole S&P 500, based on the price/earnings ratio of the two. Software is selling at a discount for only the second time in 30 years:

That’s relative valuation. The absolute valuation is not as attractive. The sector now trades at a bit above 22 times expected earnings. It was lower than that continuously from 2008 to 2016:

Of course neither relative nor absolute valuation can by itself tell you anything about whether the sell-off is overdone. For that you have to know something about what is driving the selling.

It is therefore important to recognise that we are not looking at one sell-off but two possibly overlapping ones. The first sell-off began on October 28 last year, which is when (as Unhedged has discussed at some length) there was a massive sea change in market leadership, at the expense of tech and growth stocks generally. The second started on January 28, when Microsoft’s earnings report landed and (for reasons that are not perfectly clear to me) disappointed investors badly.

Microsoft’s earnings may have been a mere catalyst for a change that was coming one way or another. But it’s still particularly important, inasmuch as it accounts for half of the software sub-index, and its 26 per cent fall since October accounts for half of the sub-index’s decline.

We can tell the two sell-offs are separate because different software stocks have performed very differently in the two periods. Here is the price return of the constituents of the sub-index in each:

Some stocks performed quite well from late October to late January, only to be crushed this month. These include Epam, which provides software engineering services and product design, and Cognizant, an information technology consultant and outsourcer. Others were crushed in the first period only to get off relatively lightly in the second. These include Oracle, a business software conglomerate and would-be cloud hyperscaler. Meanwhile, Intuit (finance and tax software), Tyler (public sector software), Gartner (tech research and consulting) and AppLovin (advertising and analytics for mobile apps) have got hit coming and going.

It is worth noting of this last group of two-time losers that they all had very wild run-ups between mid-2022 and early 2025, and were already falling when the ill wind hit software. Part of the sell-off is probably down to many members of the group getting way ahead of themselves. This chart does not include AppLovin because that company’s rise was so extreme it would make the other stocks’ gains illegible:

Scott Chronert’s strategy team at Citigroup makes a useful observation about this. Software margins had grown very wide recently and the endurance of those margins all the way to the financial horizon got priced into the stocks. That was never going to last. Chronert’s chart:

All of these comments amount to context rather than attacking the big difficult question directly. That question is whether AI machines can make legacy software companies obsolete or at the very least offer them an intense new form of competition. More on that next week.