Reuters - Funds expect Saudi Aramco to be valued around $1-1.5 trillion - survey

Funds expect Saudi Aramco to be valued around $1-1.5 trillion - survey

Fund managers and institutional investors expect oil giant Saudi Aramco to have a market capitalisation of $1 trillion (816 billion pounds) to $1.5 trillion (1.22 trillion pounds) when it sells shares to the public next year, a survey by regional investment bank EFG Hermes showed on Monday.

The valuation of Aramco IPO-ARMO.SE, the world's biggest oil firm, has been the focus of intense speculation since the Saudi government last year announced plans to sell up to 5 percent of it and list the shares in Riyadh and at least one foreign stock exchange.

Deputy Crown Prince Mohammed bin Salman, who oversees the kingdom's economic policy, has said the sale is expected to value Aramco at $2 trillion or more, making it by the far the world's largest initial public offer.

The EFG Hermes survey, conducted at an investment conference organised by the bank in Dubai, found 39 percent of respondents predicted the market would value Aramco at between $1 trillion and $1.5 trillion.

Thirty-six percent expect a valuation below $1 trillion, and 24 percent a figure above $1.5 trillion, the bank said.

EFG Hermes said it polled 510 international fund managers and investors from 260 institutions at the conference, as well as 147 other companies. It did not say how many of them had replied to the question on Aramco.

The company's ultimate valuation will depend on decisions that are expected to be made by Saudi authorities in coming months, including the tax rate that Aramco will pay as a public company, and the portion of Aramco's huge and diverse array of assets that is included in the listed entity.

Saudi officials have given no concrete indication of how they will decide these questions, so any estimate of Aramco's value remains tentative.

The EFG Hermes survey suggests a higher valuation than some estimates by private analysts. Last year Foreign Reports, a Washington-based oil industry consultancy, calculated Aramco could have a market value of $250-460 billion, excluding the value of refining assets and guaranteed access to oil and gas.

Aramco's valuation is important for Saudi Arabia because it will determine how much money the government makes from the IPO and the size of foreign fund flows that are expected to enter the country to buy the shares.

The huge IPO looks likely to strengthen the case for Saudi Arabia to join the emerging markets indexes of international index compilers such as MSCI, a step which could attract tens of billions of dollars of fresh foreign money to the kingdom.

The EFG Hermes survey found 16 percent of respondents expected Saudi Arabia to join MSCI's emerging markets index next year, 34 percent in 2019, 22 percent in 2020 and 27 percent at a later date.

FT : BT pays £1.2bn to retain European football broadcasting rights

BT pays £1.2bn to retain European football broadcasting rights
Group sees off rival Sky for Champions League games after ‘knockout bid’

BT has paid a hefty premium to stay in the Champions League after spending £1.2bn to retain the exclusive rights to show European football in the UK. 

BT paid £394m per season for the three-year deal that runs between 2018 and 2021 — a third higher than it paid in 2013 when it surprised the market by knocking Sky and ITV out of the running for live Champions League football.

The deal is the latest sign of hyperinflation in the value of football rights as media and telecoms companies battle for the most lucrative games. But it also shows that BT is not finished in its audacious attempt to turn itself into a heavyweight competitor in pay-TV.

BT was in a “no win situation”, according to one person with knowledge of the auction, given the need to maintain investment in a still fledgling TV operation in a market long dominated by arch rival Sky.

Yet BT will also need to justify the additional £100m annual outlay to shareholders already reeling from cuts to its free cash flow guidance following the accounting scandal in its Italian unit. The additional expenditure takes its annual sports spend to near £1bn, according to analysts at Raymond James.

John Petter, head of BT’s consumer operations, denied the company had overpaid for the rights, however. “You have to make a good business case,” he says, adding: “You have to be mindful of losing them but there are no blank cheques.”

Tenders for the rights were only lodged at the start of March and a vicious battle between Sky, BT and potentially other bidders was expected to ensue. Yet there was a distinct lack of fireworks in what was described as a “clean” auction. People involved said that only two rounds of bidding took place, with Sky stepping back from the fight after BT lodged a “knockout bid” that matched the expectations of Uefa, the European football body.

Jerry Dellis, an analyst with Jefferies, noted that BT faced limited opposition from Sky but still shouldered a hefty rise in the cost of the rights. “BT shareholders might, therefore, question how necessary it was for their company to meet Uefa’s price expectations in full. Moreover, we wonder what this implies for BT’s negotiating leverage in future Uefa rights auctions,” he said in a note.

Other analysts questioned whether the payout for Champions League might hinder its ability in any future auction of Premier League football rights, in which its British customers base may have greater interest.

However, BT executives make it clear that they see the price as justified. BT Sports has become a growth driver for the company, with its TV customer base rising to 1.7m from 1m in the 10 quarters since it started showing Champions League games, initially as a free service for its broadband customers.

Sport also acts as a counterweight for broadband customers defecting to Sky for cheaper broadband deals — protecting BT’s core market. The 2013 auction win triggered a turnround in its consumer arm, which returned to revenue growth in 2014 for the first time in almost five years partly as a result of its push into premium sports.

BT argues that it has got more bang for its buck with the new deal. The new European football rights package contains 35 per cent more broadcasting slots, including a 6pm and 8pm “double header” that analysts said would be good for pubs and clubs revenue when games are shown back to back.

There were concerns that Uefa has been unhappy with ratings on BT’s pay-TV sports channels given the limited reach of the BT Sports product compared to free-to-air television.

BT has dismissed that notion in the past, and Uefa’s decision to sell the entire rights package — including highlights and clips packages previously owned by ITV and News UK, the publisher of The Sun and The Times newspapers — undermines that argument. There is no requirement for BT to show any games on free-to-air channels for the new rights although it could choose to wholesale games to ITV.

BT is also able to show the games to a wider base having acquired EE, the UK’s largest mobile network, in 2015.

The exclusive rights for football clips could work well on Twitter and was highlighted by BT’s Mr Petter, who says that social media “is where the audience is”. He points to deals signed by the National Football League to live stream games over Twitter and Snapchat as a sign of the way broadcasting sport has evolved.

“You can reach a younger, broader audience through social media,” he says. Chasing viewers on those platforms could help to offset the decline in traditional TV ratings for football matches.

Mr Petter would not rule out raising prices to offset the higher cost of the Champions League rights but says that consumers are “very conscious of value for money” in the broadband market. He says BT has an opportunity to increase its take on pubs and clubs revenue and wholesale deals with more games. “There are a lot of sources of value,” he says.

REuters - Investor group seeks to bar Snap from indexes over voting rights

Investor group seeks to bar Snap from indexes over voting rights


A group representing large institutional investors has approached stock index providers S&P Dow Jones Indices and MSCI Inc, looking to bar Snap Inc and any other company that sells investors non-voting shares from their stock benchmarks.

Both index providers have said they are reviewing Snap's inclusion. Were Snap to be added to indexes such as the S&P 500 Index or the MSCI USA Index, then managers of stock index portfolios will have to buy its shares and other investors, whose performance is tracked against such indexes, would likely follow suit.

Some big money managers worry about buying Snap’s Class A shares because they have no voting rights, meaning shareholders will have no voice on matters like the company’s future strategy or the pay of its executives.

"They're tapping public markets but giving shareholders no say," said Amy Borrus, deputy director of the Council of Institutional Investors, which represents big pension funds and other large asset owners, in an interview.

In reaching out to both index providers, she said, "What we would like to see at the least is for the indexes to exclude new no-vote companies." Meetings with both index providers are scheduled this week, she said.

David Blitzer, managing director of S&P Dow Jones Indices and chair of a committee overseeing its indexes, said they would not add a new stock like Snap for 6 to 12 months after its IPO in any case, and will use the time to study Snap's structure.

While the index provider does not have a hard requirement about a company's voting structure, the committee needs to think through how much influence investors should have, Blitzer said in an interview on Monday.

" 'Who Votes?' is the issue right now," he said.

MSCI said on March 2 that Snap would qualify for indexes including the MSCI USA Index but then said on March 3 that after additional analysis Snap did not meet all requirements. Snap's inclusion into the MSCI USA Index will be re-assessed in May, MSCI said in a statement on its website.

MSCI is seeking feedback from investors about whether companies without voting rights should be included in indexes, according to the March 3 statement. A spokesman did not immediately provide further details.

A spokesman for Snap declined to comment.

Snap's $3.4 billion initial public offering of stock last week marked the hottest technology IPO in three years as investors snapped up shares of the Venice, California company, even though its two co-founders retained near total control. The situation alarms some big investors who fear other companies might copy Snap's structure.

Other big S&P 500 companies like Facebook and Google parent Alphabet also have non-voting shares but still grant voting rights with other widely-traded shares.

After the council raised concerns about Snap's lack of voting rights last month, Snap's chairman Michael Lynton wrote back on Feb. 21 to point out a section of its prospectus stating the voting structure "prolongs our ability to remain a founder-led company" and that Snap will have a majority-independent board, including himself.

Index inclusion requirements vary. For the S&P 500 a stock typically needs a market capitalization of around $5.5 billion and to have been profitable over the past four quarters, for instance, Blitzer said.

>>> XOM - Plans $20B of investments to expand manufacturing in U.S. Gulf Region

Exxon Mobil - Plans $20B of investments to expand manufacturing in U.S. Gulf Region 

Expanding its manufacturing capacity along the U.S. Gulf Coast through planned investments of $20 billion over a 10-year period to take advantage of the American energy revolution, Darren Woods, chairman and chief executive officer, said Monday.

The projects, at 11 proposed and existing sites, are expected to generate thousands of new high-paying jobs and $20 billion in increased economic activity in Texas and Louisiana, Woods said, highlighting the company’s Growing the Gulf initiative in a keynote speech today at the CERAWeek 2017 conference.

ExxonMobil is strategically investing in new refining and chemical-manufacturing projects in the U.S. Gulf Coast region to expand its manufacturing and export capacity. The company’s Growing the Gulf expansion program, consists of 11 major chemical, refining, lubricant and liquefied natural gas projects at proposed new and existing facilities along the Texas and Louisiana coasts. Investments began in 2013 and are expected to continue through at least 2022.

WSJ : Uber Chief Travis Kalanick Rides Out Recent Storms

Uber Chief Travis Kalanick Rides Out Recent Storms
Some investors say negative headlines reveal leadership woes at ride-sharing company

Tearing up at times, Uber Technologies Inc. Chief Executive Travis Kalanick reflected on the previous five years after a stretch of negative headlines.
“I realize that I can come off as a passionate advocate for Uber,” Mr. Kalanick said, reading from a teleprompter. “I also realize that some have used a different ‘a’ word to describe me. I’ll be the first to admit I’m not perfect, and neither is this company.”
The humbling moment in a June 2015 anniversary speech at Uber headquarters in San Francisco suggested Mr. Kalanick was maturing as a CEO. Nearly two years later, the 40-year-old is again pledging to reform following a spate of setbacks that some investors say has exposed leadership shortcomings at the ride-sharing company, the world’s most valuable startup.

In recent days, people familiar with the matter said, Uber executives have discussed hiring a new senior deputy for Mr. Kalanick, possibly in the mode of Sheryl Sandberg, who as Facebook Inc.’s chief operating officer has served as a public face of the company. The challenge for Uber’s board, composed mainly of its executives and investors, is to make any changes while preserving the formula that built its $68 billion valuation.

Uber declined to comment and said Mr. Kalanick wasn’t available for an interview.
A self-described “hustler,” Mr. Kalanick has a pugnacious leadership style that helped Uber bulldoze into new markets while battling local regulators and competitors around the world. Investors have pumped some $13 billion into the business, which matches some 1.5 million drivers with millions of riders globally, who can hail a car via a smartphone app, often at a lower cost than taxi fares.
Uber’s work culture reflects Mr. Kalanick’s confrontational approach, say employees and investors. The company lists “toe-stepping” and “hustlin’” as corporate values. It has acknowledged aggressive tactics including Operation Slog to divert rival Lyft Inc.’s drivers from picking up legitimate fares, and a program called Greyball to identify and block authorities from using Uber’s app so they can’t interfere with its operations.

The approach has left a swath of detractors, including regulators, rivals, employees and drivers.
Still, Mr. Kalanick, another Uber co-founder and its head of global operations together retain a majority voting stake in the company, and therefore effectively control his fate as CEO, the people familiar with the matter said. Even with a steady drumbeat of negative stories over time, Mr. Kalanick hasn’t faced much internal pressure, being rewarded instead with a skyrocketing valuation particularly as regulatory victories have mounted.
A customer backlash erupted in January when it appeared Uber tried to undermine a brief work stoppage from New York City taxi drivers who were protesting President Donald Trump’s travel ban. Uber said a tweet stating it wasn’t raising fares during the protest was misunderstood. Days later, Mr. Kalanick stepped down from a presidential advisory board.
Last month, a former engineer accused the company of permitting sexism and sexual harassment, prompting others to come forward with similar accusations. Mr. Kalanick condemned the behavior described by the woman and ordered an investigation led by former U.S. Attorney General Eric Holder. In a teary presentation at a town-hall meeting, Mr. Kalanick faced pointed questions from employees upset about what they described as a challenging workplace and tarnished brand.
In late February, Google parent Alphabet Inc. sued Uber, alleging it conspired to steal design plans for self-driving vehicle technology, claims Uber said it was reviewing. Then a dashboard camera video of Mr. Kalanick yelling expletives at an Uber driver emerged, prompting the executive to apologize and pledge to “grow up” and get “leadership help.”
“The question for many entrepreneurs is whether they can shift to a more conventional leadership style, while still maintaining their willingness to defy conventions,” said David Bach, associate dean at Yale University’s School of Management. “The last four weeks or so have unraveled a lot of the work Uber has done.”
At Uber, Mr. Kalanick’s relentless drive is often on display. Tables in some conference rooms are pushed closer to one wall to give him room to pace during meetings. He often spontaneously approaches employees at their desks to ask what they are working on. A little over a year ago, after Mr. Kalanick was seen in the same clothing for several days straight, a few employees surmised he was sleeping at the office and persuaded him to go home and clean up, according to a person familiar with the matter.
Mr. Kalanick has caused, and weathered, previous controversies. He once joked in an interview that the company should be called “Boob-er” because of his ability to attract female companions, and he mocked customers online for complaining about pricing.
Several months before the five-year anniversary speech, a senior company executive was quoted describing plans to investigate journalists who wrote critically about it. The comments, and news that Uber used an internal tool called “God View” that let employees track movements of specific riders, triggered an inquiry from Sen. Al Franken (D., Minn.). Uber scaled back the use of “God View.”
Mr. Kalanick has sought to clamp down on leaks. The release of documents related to internal programs such as Operation Slog prompted Uber to begin to erase all emails after six months. “The answer was not about changing the behavior, it was about changing the disclosure,” a former employee said.
Throughout, investors have largely remained loyal, saying his directness and boldness are rare virtues. And Uber’s rise has created what could be a once-in-a-lifetime payout if the company goes public.
“He definitely has my confidence, he has the board’s confidence,” Arianna Huffington, one of Uber’s only independent directors, told CNBC on Friday. She is assisting the internal investigation into the sexual-harassment claims.
Early investors Freada Kapor Klein and Mitch Kapor have called out in an open letter what they saw as a “toxic” culture at Uber and insufficient responses to prior scandals. But they didn’t suggest change in the c-suite.
“Until there’s a real impact to the fundamentals of the business, say ride requests falling or fewer drivers signing up, investors are likely to view this as just another blip,” said Yale’s Mr. Bach. “Otherwise, Kalanick is going to be their guy.”

FT : CDS markets signal rising fear of euro breakup

CDS markets signal rising fear of euro breakup
The following guest post on credit default swap basis is from Marcello Minenna, the head of Quantitative Analysis and Financial Innovation at Consob, the Italian securities regulator.
Financial markets are well aware that the next few months could be decisive for the future of the Eurozone.
In April, the French will vote in the first round of presidential elections. Marine Le Pen, who is currently expected to make it to the second round in May, has said that if she wins she will dedicate the first six months of her term to lead the country out of the single currency.

Italy is another potential risk, even though there is no imminent election. The country is saddled with high levels of public and private debt, meagre growth prospects, and persistent political instability. The single currency is deeply unpopular in Italy, with only 41 per cent of Italians considering the euro “a good thing” for their country, compared to 47 per cent who think it’s “a bad thing”, according to the latest Eurobarometer survey.
Euro area institutions haven’t been helping.
Germany continues its crusade for fiscal virtue. If countries aren’t willing to cut spending and raise taxes, the German solution is to restructure public debt — starting with Italy — according to the scheme already applied to Greece. Angela Merkel recently declared herself in favor of a “multi-speed Europe”.
At the same time, the European Central Bank’s commitment to defend the irreversibility of the euro is based as much on threats as on positive pledges. Mario Draghi recently said that if a country wants to quit, it must first fully settle its Target2 balance with the rest of the eurosystem. Italy, for example, would have to pay more than €360 billion — the equivalent of a (big) war debt, like the one imposed on Germany a century ago. But those were different times, and a different Europe!
Financial markets understand the risks of “Italexit” and “Frexit” even if the likelihood of either event is still judged to be low.
This can be seen in the data on credit default swaps (CDS), which offer protection in the case of an “insured event” or, in the jargon, a credit event. The widening gap in prices between different types of CDS contracts reflects the rising risk that some euro area sovereign debts may be redenominated into new, depreciating, currencies, which would probably lead to real losses for investors.
To correctly interpret the data on CDS prices, we need a quick flashback to 2012, another year of great tension for the single currency. While the center of the crisis was in Greek sovereign debt and the Spanish banking sector, institutional investors had already begun to think of how to protect themselves from the danger of the euro’s total dissolution, which might be prompted by the exit of a big country such as Italy or France.
Back then, there were no good options available. Buying CDS wouldn’t have helped because the standard contract explicitly excluded debt redenomination from the list of credit events if the issuer were a member of the G7 or an OECD investment-grade sovereign.
Two years later, new ISDA standards entered into force: contracts made since 2014 protect against euro area countries redenominating their debt into new national currencies.
Strictly speaking, it’s still possible to redenominate debt into a different currency without triggering a credit event, but this only works if the debt is switched into a reserve currency: the US dollar, the Canadian dollar, the British pound, the Japanese yen, or the Swiss franc. In all other cases, the only way to avoid the triggering of a credit event is if the switch to the new currency does not result in a loss for the investor: “no reduction in the rate or amount of interest, principal or premium payable”.
Since 2014 two types of sovereign CDS therefore coexist: the old (ISDA 2003) and the new (ISDA 2014). The latter has always traded at spreads wider than the CDS-2003, but the difference (the ISDA basis) has generally been small: 15-20 bps for Italy, 8-12 bps for Spain, 2-4 bps for France, and 1-2 bps for Germany.
The width of the spread between the two types of CDS — the Isda basis — reflects both the perceived risk of redenomination risk and, in addition, the potential scope for depreciation in the event of a return to a national currency.
This year, something has changed. Since late January, the ISDA basis has rocketed upwards in the major Eurozone economies, indicating that investors perceive greater redenomination risk than before. The rest is pure physiology of the financial markets: a greater risk raises the demand for protection which, in turn, leads to an appreciation of the 2014-vintage CDS, which are the most appropriate instrument to smooth out any losses arising from the change of the payment currency of the contract.
The following chart shows the phenomenon in the case of Italy. In February, the difference between CDS-2014 and CDS-2003 has doubled from 20 to 40 basis points:
For France, the phenomenon is even more overwhelming. In February the Isda basis soared from 3 to 24 bps. While the level of this basis is still relatively small in absolute terms, traders think the risk has increased by roughly eight times as they assess the upcoming elections:
Further confirmation comes from the increase in the net notional outstanding amount of CDS contracts linked to the French Republic. Since mid-January, the amount of protection purchased on a credit event by the French government has grown by about €320 billion, or roughly 5 per cent:
“Frexit” would have far more devastating effects than “Brexit” on the resilience of Europe, and especially for the integrity of the euro area. The contagion effect is one of the main components of the widening ISDA basis in Italy.
But no one is completely immune from the possible consequences of a French secession. Even in Germany, the basis shows similar trends to those displayed in France and Italy, especially when viewed as a percentage increase. (In absolute terms it is still laughable, at around 5 basis points.) The differential between CDS-2014 and CDS-2003 has also widened in Spain, although by less than in other countries.
So far we’ve been looking at the gap between CDS-2014 and CDS-2003, both of which are US dollar-denominated contracts. There are similar dynamics at work in the “quanto spread”: the difference between the prices of dollar-denominated and euro-denominated ISDA-2014 CDS contracts insuring against credit events by the same reference entities.
If redenomination affects a liability issued by a sovereign of the euro area, it’s reasonable to expect that euro-denominated CDS would offer only limited protection to investors. It would certainly offer less protection than the corresponding USD-denominated contract could give, presumably because the of the nontrivial possibility the euro would cease to exist.
The next two charts compare the trends of the quanto spread and the ISDA basis for Italy:
And for France:
Markets do not lie. Institutional investors may hope to get special deals from Le Pen. Germans, unnerved by reflation, may not want to increase the size of their Target2 liabilities and demand the interruption of QE. Italy must avoid remaining with short end of the stick. I wonder if our leadership will rise to the challenge.

FT : Pressure on Standard Life merger partners to avoid an own goal

Pressure on Standard Life merger partners to avoid an own goal
Co-chiefs Keith Skeoch and Martin Gilbert share similarities — which is a concern

Would Keith Skeoch, low-key chief executive of Standard Life, have headed from the bar at Davos to Donald Trump’s inauguration? Does he base his management style on that of football supremo and Glaswegian verbal hairdryer Sir Alex Ferguson? Could he have been likened to a “snake oil salesman” by MPs in a probe into split capital investment trusts, and emerged unscathed?

Standard Life’s shareholders might ask themselves such questions given Mr Skeoch’s choice of merger partner. Martin Gilbert, flamboyant co-founder of Aberdeen Asset Management and co-CEO designate of their combined £11bn business, is known for all the above. He appears a very different character to Mr Skeoch. Mr Gilbert has proved the consummate deal consummator. This is his 43rd merger or acquisition in a three-decade career as Aberdeen’s dominant leader, to whom no obvious successor has emerged.

Mr Skeoch, by contrast, is an economist by training, who first opted for a Whitehall job before spending 20 years at conservative London stock broker James Capel.

The two men insist these differences will make being co-CEOs work. On Monday they stressed that being “very different people” who have known — and fly-fished alongside — each other “for a long time” was “why we get on”. Opposites attract, it seems (to which comedian John Cleese once countered: “Ah, the cry of the truly desperate.”)

However, it is not the duo’s differences but their similarities that worry some. The pragmatic Mr Gilbert does what it takes to get deals done, swapping the banks of the Tay for a flat above a Thameside pizza joint when working his contacts in the City.

Mr Skeoch is no less steely — in his role running Standard Life’s investment arm, he began being paid more than, and ended up usurping, group chief executive David Nish.

Could such forceful personalities share the CEO role?

Mr Gilbert should know it doesn’t work in football. At Manchester United, his friend Sir Alex watched rivals Liverpool fall apart when they played under joint managers Roy Evans and Gerard Houllier.

It seldom works in financial services, either. At Citigroup, co-CEOs Sandy Weill and John Reed clashed so often between 1998 to 2000 that Wharton business school uses them as a case study of why “strong people with strong views” should not jointly run companies. CEOs of Fortune 500 businesses in the US rarely share power.

Closer to home — and closer to the bone — one analyst recalls “the ‘Richard & Roger’ show”, when co-CEOs Richard Gamble and Roger Taylor tried ineffectually to integrate Royal Insurance and Sun Alliance.

Single mindedness is all when merging insurance and investment houses. For Standard Life’s shareholders — and regulators — the key question may be whose single mind.

BT’s costly defence play

Footie fans pay almost any price to watch their teams play. At least BT, whose boss Gavin Patterson is a diehard Liverpool supporter, must hope so. The telecoms-to-TV group is paying a whopping £1.2bn for the rights for three years to broadcast European Champions League football to UK audiences, writes Kate Burgess. That is a third up on the price it coughed up to win the rights from rivals Sky and ITV in 2013. What price will Mr P pay next time round?

In BT’s defence, sport underpins the group’s broadband and pay-TV business, luring in and holding subscribers. Before BT Sport, the group was losing 200,000 customer lines per quarter. BT would come a poor second to Sky if all it could offer subscribers was thin coverage of Premier League matches. It is not so much what BT has won but what it would have lost if Sky had won the Uefa rights.

BT can in part justify the price, saying the new Uefa package has improved. And it will be able to offset some of the cash cost by charging for sport. It also has access to EE’s mobile customers.

But Bernstein analysts reckon BT Sport is barely profitable on a standalone basis. And the Uefa package hasn’t improved so much it can guarantee the millions of viewers who will watch a match between, say, Man Utd and Liverpool. BT might have been wiser to hold on to the cash and use it next year to secure the rights to Premier League matches. Other parts of the business will need cash, too. Last month the group warned on profits from its global services division, having found the jiggery pokery in its Italian operations was worse than expected. A massive hole in its pension fund looms over BT, as does its continuing tussle with Ofcom over Openreach.

Securing the rights to show Uefa games is central to Mr Patterson’s plan to turn BT into a “quadplay” provider of TV, telephony and broadband. The worry is that those who believe BT is overpaying are but a penalty kick away from losing faith in Mr Patterson and his strategy.