TheChek News Flow

Weekly Update

Dow -2.50% S&P -0.07% Nasdaq +1.22% Russell +0.58% Brazil +0.54% Nikkei -0.35% Hang Seng -0.33% CSI -0.66% Shanghai -1.11% EuroStoxx +0.62% FTSE -0.09% CAC +1.34% Dax +1.87% Ibex -0.15% MIB +0.41% SMI -0.82%

Macro :

- Renzi Says Italy Fund Solves Bank Bad-Loan Issues: Repubblica

- Clinton Leads Trump After Dem. Convention: Reuters/Ipsos Poll

- Paschi Fix ‘Awkward’ to Roll Out to All Italian Banks: Barclays

- Dombret Says German Banks Must Change Business Models: Bild

- Deficit Fine Would Have Humiliated Spain, Moscovici Tells Pais

- Qatari Diar Delays Part of Chelsea Barracks Project: S. Times

- EU Banks Won’t Need to Set Up U.K. Subsidiaries Post-Brexit: FT

Keep an eye on :

- A2A IM : A2A, Montenegro Sign New Shareholder Agreement for Utility EPCG

- AC FP : AccorHotels aims high in Brazil expansion

- AIR FP : Airbus to Keep Working With India After Tanker Tender Is Dropped

- AF FP : Air France to Fly More Than 80% of Monday Services Amid Strike

- AAL LN : Anglo American Set to ‘Unbundle’ Kumba, CEO Tells Telegraph

- BKIR LN : Bank of Ireland Says Capital Level Is ‘Strong’ After Stress Test

- BCP PL : Banco Comercial Says Had ‘Strong’ Results in ECB Stress Tests

- BCP PL : Fosun Says BCP Investment to Extend Business in Europe, Africa

- POP IM : Banco Popolare Solid Under Stress Test: CEO to Messaggero:

- BBVA SM : BBVA to Work With ECB on Capital Planning

- BMPS IM : Paschi Approves Sale of EU27.7b Gross NPLs at 33% Value: Stampa

- BMPS IM : Paschi Plan Execution Risk Not Very Low But Manageable: CEO

- BMPS IM : EU: Monte Paschi Capital-Raising Plan Fully in Line With Rules

- CABK SM : CaixaBank FL CET1 8.5% in Stress Test, Bank Says

- DBK GY : Deutsche Bank Can Build Up Capital Organically, Lewis Tells FAS

- EDF FP : Hinkley Point presents cost and security issues

- FGR FP : France’s Hollande Seeks Further Investment in Autoroutes: Figaro

- ENI IM : Talks on Mozambique at Very Advanced Stage: Eni CEO to MF

- FRA GY : Fraport Sells Thalita Stake to Qatar Investment Authority

- GKP LN : Gulf Keystone Won’t Engage With DNO After Takeout Offer

- GS US : U.S. Issued Subpoenas to Goldman Sachs for 1MDB Documents: WSJ

- ISAT LN : Inmarsat in Takeover Approach for Avanti: Sky

- ISP IM : Intesa Strongest Among Europe Big Banks in Stress Test: CEO

- ISP IM : Intesa Not Interested in Paschi Even After Clean-Up: Messaggero

- LSE LN : Deutsche Boerse's proposed merger receives 63.65% acceptances from Deutsche Boerse shareholders

- NATZ IM : Natuzzi Says It Cut 355 Jobs

- PARG SW : Pargesa 1H Net Loss CHF361.2m Vs Net Income CHF398.6m Y/y

- PARRO FP : Parrot 2Q Loss Widens, Sees ‘Significant Upturn’ for 3Q Sales

- PUB FP : Publicis Says Saatchi & Saatchi Chairman Roberts Put on Leave

- RNO FP : Nissan takes on European premium rivals with Infiniti brand

- SK FP : SEB CEO Says Double-Digit Growth Continues in China: Investir

- SREN VX : Natural disasters weigh on Swiss Re

- STAN LN : Hedge funds sue StanChart over Indian bonds

- TEL NO : Vimpelcom shareholder Telenor plans to sell 33% stake on LSE eyeing no less than USD 2.3bn; hires advisors

- TUI LN : TUI CEO Says Won’t Cut U.K. Prices After Brexit: Euro Am Sonntag

- UBI IM : Italy Banks to Benefit From Paschi Plan Success: UBI CEO to Sole

- UCG IM : UniCredit to Work With SSM to See If More Cap Measures Needed

- UCG IM : Caltagirone Doesn’t Exclude Increasing UniCredit Stake: Stampa

- VIE FP : Caisse des Depots to Buy 20% of Transdev from Veolia for EU220m

- DG FP : France’s Hollande Seeks Further Investment in Autoroutes: Figaro

- VIV FP : Vivendi Never Considered Mediaset Takeover: CEO to Corriere

- VIV FP : Vivendi warns Mediaset of “other plans”

- VOD LN : EU Said Set to Approve Liberty/Vodafone Dutch Ops Deal: Reuters

- VOW3 GY : Volkswagen to Respond to $176M Washington Fine in Due Time: FAZ

Vivendi’s chief executive has said his group’s ambitions to become a media and content power house in southern Europe do not depend on its planned alliance with Italy’s Mediaset.

Arnaud de Puyfontaine’s stark assessment comes as Vivendi tries to renegotiate an April agreement to buy Mediaset Premium, the Italian company’s pay-TV unit, as part of a wider deal in which the two media groups would take a 3.5 per cent stake in each other.

This tie up was hailed as an important complement to Vivendi’s 24.9 per cent stake in Telecom Italia, enabling the Paris-based company to expand its base in the region and take on the likes of Sky.

But the plans ran into trouble after Vivendi took issue with Mediaset’s growth projections for the pay-TV unit, claiming they were “unachievable”. An ensuing dispute now pits French billionaire and Vivendi chairman Vincent Bolloré in a struggle for supremacy with Silvio Berlusconi, Italy’s former prime minister and Mediaset’s founder.

In an interview with the FT, Mr de Puyfontaine said that while he still hoped a deal with the Italian broadcaster was possible, Vivendi had other ways to seek growth in the region.

“We started this journey with other plans,” he said. “If it does not happen, we will make the journey with other plans. We have different options.”

Last week, as the relationship between the two sides deteriorated, Vivendi threatened to sue Mediaset for defamation after the Italian group claimed to be surprised by an alternative offer from the French company.

Mediaset said in a statement on Tuesday that an alternative offer from Vivendi to acquire just 20 per cent of Mediaset Premium plus a 15 per cent stake in Mediaset was a surprise and had come “absolutely out of the blue”.

But Mr de Puyfontaine told the FT that Vivendi had first raised its concerns in a letter sent to Mediaset on May 12. He said that his company had since communicated, through meetings and phone calls, numerous times with Mediaset. “When we see Mediaset saying that it came out of the blue, that is factually wrong,” said Mr de Puyfontaine. “There are a whole range of assertions that are just wrong and we can’t accept that.”

Stressing that he still wanted to do a deal with the Italian broadcaster, Mr de Puyfontaine added: “As the saying goes, we hope for the best and plan for the worst.”

Mediaset rejected Vivendi’s alternative offer last week, fearing the 15 per cent stake proposal might be the start of a creeping control that many associate with Mr Bollore’s business style.

However, Mr de Puyfontaine dismissed any notion that Vivendi wanted ultimately to take control of Mediaset. “We firmly state that the intention is not to take control,” he said of Vivendi’s alternative proposal. “If we had wanted to do that, it would have been much easier to go in the market and build a stake.”

He stressed that he still believed in the merits of an alliance with the Italian broadcaster but said Mediaset’s projections for its lossmaking pay-TV unit were over optimistic. “If you tell me that you are selling me a Ferrari but it turns out to be a Fiat Punto, there is a problem,” he said. “Mediaset Premium is a problem in terms of its business plan.”

Accor currently has 244 hotels in 100 cities, which already makes it Brazil’s largest hotel operator.

Although the country’s longest and deepest recession on record has reduced consumer spending, the weakness of the real against the dollar has encouraged Brazilians to holiday at home, as well as attracting more foreigners.

“We have very good business from Colombia and Argentina, and Brazilians themselves are travelling in Brazil instead of going to Europe and America,” Mr Hick explained.

In the past two years, the real has fallen about 30 per cent against the dollar, to R$3.25, a move that has benefited Brazil’s upmarket shopping centres, as the wealthy cut back on trips to Miami.

Mr Hick said that the Olympic Games, which is due to kick off in Rio de Janeiro this Friday, should also help increase Brazil’s visibility as a tourist destination in spite of the litany of problems affecting the event.

AccorHotels’ ambitious expansion plan comes as many companies are struggling to stay afloat in Brazil.

Latin America’s biggest economy is expected to shrink more than 3 per cent this year after contracting 3.8 per cent last year, while inflation and unemployment are running at about 9 and 11 per cent, respectively.

Brazil’s political crisis has led many foreign companies to put their investment plans on hold as they wait for the outcome of the final vote later this month on President Dilma Rousseff’s impeachment.

While AccorHotels has not been immune to Brazil’s problems — the country was one of worst-performing for the group in the first half, alongside France — Mr Hick says that he sees the crisis as an “opportunity more than a threat”.

Recession has made it easier to take over some of Brazil’s struggling independent hotels, he notes. “Brazil has all the ingredients to recover — it’s just part of the economic cycle,” he argues.

Structurally, the country also represents one of the biggest opportunities for the group worldwide, Mr Hick says.

While about 80 per cent of the group’s business in Asia comes from tourism and only 20 per cent from corporate clients, the inverse is true in Brazil. In São Paulo, as many as 85 per cent of hotel guests are on business.

However, by adding family-friendly facilities to existing hotels and offering package deals, the group plans to increase its leisure business to 40 per cent of its offering in Brazil by 2020.

SHANGHAI—A Chinese consortium led by Shanghai Giant Network Technology Co. and joined by a fleet of financial moguls including a private-equity arm set up by Alibaba founder Jack Ma has agreed to purchase an Israeli games business for $4.4 billion in cash.

The consortium of 11 investors—including Giant Investment Ltd., Yunfeng Capital, a private-equity firm co-founded by Alibaba Group Holding’s Mr. Ma, China Oceanwide Holdings Group Co., China Minsheng Trust Co., CDH China HF Holdings Company and Hony Capital Fund—will purchase a 100% stake in Caesars Interactive Entertainment’s subsidiaries, including mobile-games unit Playtika. A statement announcing the deal was released Sunday by Shenzhen-listed Chongqing New Century Cruise Co., a shell company bought by Giant Interactive Group last year.

The deal, underscoring the Chinese game developer’s ambition to expand overseas, is another big Israel-focused move by a Chinese firm. China National Chemical Corp. paid $1.44 billion for a 40% stake in crop-protection producer Adama Agricultural Solutions in July and last year Shanghai Bright Food took over Tnuva, Israel’s largest food producer, for more than $2 billion.

Possessing advanced research and development, big data and artificial-intelligence analysis capabilities, Playtika has maintained rapid growth over the past five years, the statement said. Its main business is focused on games such as poker, and it has no presence in China yet. The virtual currency used on the Playtika platforms will remain unexchangeable into real currency, the filing said.

The consortium boosted capital in Alpha Frontier Ltd. in its purchase of CIE’s Playtika, said the statement. Playtika will continue to run independently with its headquarters remaining in Herzliya, while its existing management will oversee daily operations, said the companies.

Playtika’s revenue hit $725 million in 2015 and $456 million in the first half of 2016, according to the filing.

In October 2015, the formerly U.S.-listed Giant Interactive, owned by billionaire Shi Yuzhu, returned to the Shenzhen Stock Exchange via a $2.1 billion reverse merger with Chongqing New Century Cruise Co., which is currently valued at $12.6 billion. Trading in the company’s shares was suspended July 13 because of a major asset restructuring.

Martin Skancke, who used to run Norway’s oil fund, the world’s largest sovereign wealth fund, added: “SWFs will not be supporting asset prices to the same degree [in the future, compared with previous years], but I would still expect them to retain their countercyclical nature through rebalancing.”

A state fund specialist at a large asset manager, who did not want to be named, rejected the idea that sovereign funds act as a safety net, pointing out that they are a far smaller investor group in terms of assets than pension funds.

The report, which was produced by the Bocconi University’s Sovereign Investment Lab, a department focused on state-backed vehicles, found that as well as investing less, sovereign funds are investing more in western markets and in so-called safe assets.

More than 57 per cent of state funds’ direct investments went into safe assets such as utilities, hotels and property last year, compared with 15.5 per cent in 2008.

The Bocconi figures include money placed directly into companies, infrastructure projects, property and other investments, rather than money invested via asset managers.

Investments via asset managers have also been falling, according to figures from eVestment, the data provider. It found that sovereign wealth funds pulled at least $46.5bn from investment houses last year.

Prof Bortolotti said state funds are becoming more discerning investors. “Funds will be much more selective [from now on]. It will be more difficult [for companies and projects] to tap sovereign funds for investments. Everything is pointing to better diversification.”

The four largest US wireless carriers are signing up new mobile phone customers at their slowest rate in more than 15 years as consumers put off switching networks and upgrading their smartphones.

Verizon, AT&T, T-Mobile US and Sprint recruited 7.1m of the most lucrative “postpaid” mobile phone customers in the second quarter, according to figures prepared for the Financial Times by BTIG, the stockbroker.

Walt Piecyk, an analyst at BTIG, said postpaid phone additions on a gross measure — which strips out the impact of customer defections — had not been as weak since the broker started tracking them in 2000.

Postpaid phone customers pay for their mobile phone service on a recurring monthly basis, and generate the most profit for the networks.

“Activity in the market looks to be at a record low in terms of upgrades,” added Jonathan Chaplin, analyst at New Street Research. “It’s probably the lowest quarter ever — or at least since we had data.”

Analysts are divided on the reason for the phenomenon, with some blaming pent-up demand for the Apple iPhone 7 and a paucity of new smartphone features.

Others argue that efforts by the networks to stop customers leaving have started to bear fruit, resulting in a smaller pool of switchers for their rivals to pick off.

“There’s a tremendous amount of pent-up activity ahead of the iPhone 7 launch,” said Mr Chaplin. Activity has been so subdued, he said, because the iPhone 6S was not sufficiently different from previous models to convince customers to upgrade.

Customers tend to think about leaving their existing networks and switching to a rival only when they want a better phone, he said.

“A lot of people delayed a decision on upgrading their device,” Mr Chaplin added. “Even though people think the iPhone 7 will be a marginal improvement, they’re nursing beaten-up devices with cracked screens and just can’t wait to upgrade.”

Mike Sievert, chief operating officer at T-Mobile US, also ascribed the quiet quarter to “the absence of a major iconic phone launch”, pointing out that the Samsung Galaxy S7 hit the market in March.

However, Mr Piecyk said the networks were getting better at keeping their existing customers, meaning they do not have to fight so hard to win new ones.

He said the majority of customers were now on family or data-share plans, where the entire family is billed together for several lines.

“If your daughter isn’t coming up for an upgrade for six months, but you’re ready to switch now — well, it’s much harder to switch three or four lines,” he said.

Ironically, the trend could be positive for some carriers, because the process of losing customers and replacing them with new ones, known as “churn” in the industry, is time consuming, costly and damaging to profitability.

Mr Piecyk said it could make it harder for the smaller “challenger” networks — T-Mobile US and Sprint — to win new customers from their larger rivals, however.

Despite talk of pent-up demand for Apple’s iPhone 7, few Wall Street analysts are predicting a blockbuster launch for the handset.

Analysts at RBC Capital Markets said in a recent Apple note that customers are now holding on to their iPhones for several months longer than they used to.

“Replacement cycles have been getting extended rather consistently across the board, which in a flattish smartphone market could create revenue headwinds,” said Amit Daryanani, an RBC analyst.

Like many on Wall Street, Mr Daryanani predicts that the next iPhone will be “more evolutionary rather than revolutionary” compared with its predecessor, giving customers less incentive to upgrade.

Leaks from Apple’s supply chain suggest the handset will have a similar external design to the original iPhone 6, although the camera is expected to be significantly improved.

Uber to pour $500m into global mapping project

Uber is preparing to pour $500m into an ambitious global mapping project as it seeks to wean itself off dependence on Google Maps and pave the way for driverless cars.

The San Francisco-based transportation company has mapping vehicles crisscrossing the US and Mexico to record the surroundings and gather images for maps. Uber says it will start driving mapping vehicles in other countries soon.

Flush with cash after raising billions of dollars from investors, Uber is ramping up investments in new technologies such as mapping and driverless cars.

The company has decided to invest $500m in mapping, according to a person familiar with Uber’s plans, as it doubles down its efforts in this challenging space.

Uber’s initial growth was largely enabled by pre-existing hardware and software such as smartphones and cars, but as the company looks to secure its long-term growth it is spending more on original research.

The disruptive car-hailing company has expanded its business to more than 60 countries and provided passengers with more than 2bn rides, and at times has come under regulatory scrutiny including lawsuits and even criminal charges.

By developing its own maps Uber could eventually reduce its reliance on Google Maps, which currently power the Uber app in most of the world.

Although Google was an earlier investor in Uber, the two companies have avoided working closely together and are now developing rival technologies for driverless cars.

Last year Uber hired one of the world’s leading digital mapping experts, Brian McClendon, who previously ran Google Maps and helped create Google Earth.

“Accurate maps are at the heart of our service and backbone of our business,” Mr McClendon said in a statement. “The ongoing need for maps tailored to the Uber experience is why we’re doubling down on our investment in mapping.”

One advantage of in-house mapping is greater precision, for example an exact location marker for the main door of a large office building rather than a side door.

This precision is particularly needed in developing countries where Google Maps and addresses tend to be less accurate. This is so problematic that in many non-western countries Uber drivers tend to call passengers to ask their location before a pick-up.

Ride-hailing companies automatically generate a vast set of data about traffic patterns and locations using information from drivers’ and riders’ phones, and Uber already incorporates some of its own mapping technologies into its app.

Google has started to increase the fees that it charges for the use of Google Maps, presenting concerns about whether it might raise prices further in future.

As Uber prepares to spend $500m on its mapping ambitions, the programme follows earlier investments in mapping that include the acquisition of an imagery collection team from Microsoft’s Bing last June. Last year Uber also acquired deCarta, a mapping company that developed the turn-by-turn directions behind GM’s OnStar software.

Uber has raised more than $13.5bn from investors including Saudi Arabia’s sovereign wealth fund, private equity group TPG, and China’s Baidu, the search engine. The most recent investors valued Uber at $62.5bn, making it the most highly valued private company in Silicon Valley.

A startup that helps businesses determine when drones are flying unwantedly or otherwise into their airspace, Dedrone, has partnered with the electronics division of civil aircraft manufacturers Airbus to bring drone detection to wide open spaces and remote locations.

Through their partnership, Dedrone will integrate Airbus’s long range radar technology into its systems which are comprised of ground-based sensors and data analytics and reporting software in the cloud.

The radar (and data from it) expands the range of the startup’s drone detection systems to a radius of up to 3 kilometers in open spaces, according to Dedrone CEO Joerg Lamprecht.

Dedrone’s standard hardware is more for distributed use. The sensors are set up all around data centers which are often surrounded by trees, embassies, corporate campuses, or stadiums where a small drone could fly not just overhead but indoors and near windows attempting to capture images or hack into internal systems.

But if a business owns and operates something like an airport, water treatment facility, nuclear power plant, or test tracks where new vehicles are driven and safety-tested, Dedrone hardware with long-range communication capabilities via Airbus radar could allow a more centralized set up.

Lamprecht noted, “We have always integrated the best available technology on the market into our systems. We have had surveillance cameras, mics, frequency scanners and now we have the power of the Airbus radar, which will allow us to reach into new industries.”

Dedrone focuses on drone detection and monitoring, not counter measures to bring unmanned aerial vehicles down, or block them from entering a particular space.

Opening up its systems, and integrating with new hardware and data sources like those from Airbus, allows Dedrone to work increasingly in conjunction with other physical and aerial security systems, for example, jamming units that could force a drone to land before crashing into critical infrastructure.