TheChek News Flow

Nouvelles fréquences 4G : pas de cadeau pour Free

L’autorité de régulation
des télécoms considère
que réserver des fréquences à Free est trop risqué juridiquement.

Mauvaise nouvelle pour Free. Le trublion des télécoms voulait qu’on lui garantisse un lot de fréquences 700 MHz destinées à la 4G, pour lesquelles l’Arcep doit lancer un appel à candidatures en juillet, mais c’est plutôt mal parti. D’après nos informations, le régulateur des télécoms, qui vient de fina- liser une analyse sur le sujet, conclut à l’impossibilité d’un tel scénario, trop risqué sur le plan juridique. Or Sébastien Soriano, le président de l’Arcep, l’a encore dit récem- ment sur BFM Business : la procédure d’attribution de la bande 700 doit être « solide juridiquement ». Faute de quoi, si elle devait être attaquée en justice une fois les fréquences attribuées, toutes les autori- sations délivrées pourraient tomber.
Dans ces conditions, l’hypothèse d’un lot garanti pour Free semble donc difficile à
maintenir. Quand bien même, ce type de « réservation » s’est déjà fait dans trois pays européens (Pays-Bas, Royaume-Uni et Slo- vénie), lors de l’attribution de la bande 800 MHz, ces dernières années. Mais jamais en France. C’est un coup dur pour le groupe de Xavier Niel qui a beaucoup milité pour qu’on lui réserve une partie de fré- quences de la bande 700. Le fait est que Free a aujourd’hui beaucoup moins des fréquen- ces que ses concurrents Orange, Bouygues Telecom et SFR. Il considère ainsi qu’on doit lui en garantir, quitte à payer le prix demandé, pour rééquilibrer le marché. Mais pour l’Arcep, Free était candidat il y a cinq ans lors de l’attribution de la bande 800 MHz et a donc alors eu l’occasion d’obtenir des fréquences comme ses concurrents. A l’époque, il a échoué.
Free va devoir convaincre
Bercy et l’Arcep
Pour les « telcos », l’enjeu est de taille : vu l’explosion du trafic mobile, ces fréquences pour la 4G sont vitales. Dites « en or », elles sont d’autant plus convoitées qu’elles per- mettent une couverture à longue distance et pénètrent à l’intérieur des bâtiments. L’Etat, lui, en attend plus de 2 milliards d’euros de revenus. Faute de lot garanti et si un méca-
nisme d’enchères pures devait être décidé, Free redoute que ses concurrents soient tentés de surpayer les fréquences pour l’exclure du marché.
Cela dit, l’analyse juridique de l’Arcep ne préjuge pas de la décision finale que doivent prendre ensemble l’Etat et le régulateur des télécoms. Dès lors, tout le travail de Free va consister à convaincre Bercy et l’Arcep de lui garantir des fréquences quand même, sans passer par un lot réservé. On peut par exemple imaginer qu’un plafond de fré- quences par opérateur puisse être décrété. Les concurrents de Free ont chacun 20 MHz en bande basse. Free, lui, n’en a que 5. Si demain, on impose un maximum de 25 MHz par opérateur, un seul, Free en l’occurrence, pourrait être candidat pour plus de 5 MHz.
Il existe ainsi un champ des possibles entre un lot garanti et des enchères pures et dures, c’est à ce niveau-là que Free a une carte à jouer. Orange, Bouygues Telecom et SFR ne veulent naturellement pas en enten- dre parler. Pour eux, il est hors de question de réserver des lots à qui que ce soit, sous une forme ou une autre. Après tout, avec un mécanisme d’enchères, tout le monde peut jouer. Et que le meilleur gagne. Ou plutôt, celui qui fera le plus gros chèque.

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According to a hedge-fund manager last week, one of the most controversial — and complicated — financial engineering practices related to the bankruptcies of companies like RadioShack isn’t in danger of being outlawed, despite complaints from traders, Kevin Dugan reports.

Traders have complained that shadow bankers like Standard General lent RadioShack money only to force its bankruptcy at a later date — when separate derivatives bets would come due and lead to a major payday.

“It’s the greatest lawsuit that will never be heard,” Michael Lipsky, a partner at hedge fund MatlinPatterson Global Advisors, said during an industry conference on Wednesday.

“I find it very hard [to believe] a judge [would] say, ‘Wait a minute, that’s an unfair practice. You’re actually giving the company more liquidity, more lifeline,’ ” he said.

How a drink for babies became the adult hangover cure of choice

Pedialyte, that perennially popular oral electrolyte for ailing kids, has a new target consumer in mind.

Adult usage of the brand, owned by Similac formula parent Abbott Laboratories, has grown by almost 60% since 2012. Adults now make up more than one-third of Pedialyte’s sales, up from a historical average of 10% to 15%, Heather Mason, an executive vice president at Abbott, said in an interview. The Pedialyte brand doesn’t disclose its actual sales, but Nielsen tracking shows retail sales growing 22% between 2012 and last year to $102 million.

The company, citing Nielsen, said that it has a 58.2% share of the $167 million U.S. oral-electrolyte market and that most of its rivals are retailers’ private-label brands.

While Pedialyte has been used in the past by serious athletes and some college students with hangovers, Mason said the dramatic growth in recent years has been spurred by social media.

“There’s an underground movement in social media to drive word of mouth,” including from celebrities Pharrell Williams, Mason told MarketWatch. “We saw increased use by adults. We have high electrolyte and lower sugar content than common [hydration] beverages. That combination caused us to say, ‘We need to be part of this.’ ”

Williams told US Magazine that he drinks Pedialyte almost every day. And Miley Cyrus was reportedly spotted posing with a bottle of Pedialyte.

The trend is expected to translate to higher sales. While Pedialyte sales have typically grown by percentages “in the mid single digits” annually, Abbott Labs expects sales to jump by a double-digit percentage this year, driven by adult usage.

It’s an opportunity “any time you can both expand your market and get beyond seasonal products,” Mason said, noting that the Pedialyte brand is traditionally tied to the flu and cold season.

The move also will put Pedialyte in direct competition against more traditional adult hydration choices such as PepsiCo Inc.’s Gatorade.

Mason said the company doesn’t plan to change the product makeup of Pedialyte and has no plans to change its name to target adult consumers. The company, however, is introducing larger powdered-stick packs for adults, and adding adult-friendly flavors including strawberry lemonade and orange. In March, it unveiled a “See the Lyte” campaign to promote the brand to adults as part of a plan to double marketing spending this year, mostly on social media and via other online venues.

This year it also will appear in 144 music festivals and sport events in cities from New York to Atlanta to give away free samples.

Mason said Abbott doesn’t plan to sell the brand beyond its traditional food, drugstore and mass-merchant retail customers but said there could be opportunities to feature the brand in different parts of a given store.

Charles Minnick, a 28-year-old financial analyst from St. Louis, said that he and his twenty-something friends swear by Pedialyte to treat their hangovers and keep it on hand for that purpose. “Nothing is better,” he said.

At a bachelor party years ago in Dallas, he said, a friend of the groom “turned us all on to it, and we exported the knowledge back to our respective hometowns.”

Branding experts said that while it makes sense for Pedialyte to expand the definition of its target market, Abbott will have to think seriously about either changing the brand name or formally indicating that the product is intended for adult use.

“Any strategy that you develop to be able to expand the user base is a good one,” Robert Passikoff, founder and president of consulting firm Brand Keys, told MarketWatch. “The question is, ‘Can they do it?’ Pedialyte is known for electrolyte absorption for children. Now you have to try to sell to adults. It’s like going out and having a headache and someone asks, ‘Would you like children’s Tylenol?’ Abbott isn’t going to be the only one doing this. Adults are going to feel they need a product of their own. The name becomes a barrier.”

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Speaking for the first time of his UK plans, he added that new opportunities were arising all of the time. His interest in New Look was first revealed in The Mail on Sunday last October.

The tycoon is also investing in a British start-up called Pep & Co, which is being overseen by former Asda chairman Andy Bond and has plans for 50 stores.

New Look – founded by fashion guru Tom Singh, who is still involved with the business – has been sold by private equity firms Apax and Permira.

The company has 600 stores in the UK and Ireland and another 200 across the Continent, North Africa, the Middle East and Asia.

Wiese described New look as ‘a very exciting business with a wonderful management team’.

Brait also bought an 80 per cent stake in fitness chain Virgin Active for £682million.

Alexis Tsipras letter reveals precariousness of Greece’s finances

Greece came so close to defaulting on last week’s €750m International Monetary Fund repayment the prime minister warned IMF chief Christine Lagarde that he could not pay it without EU aid.

Athens ultimately made the payment without financial assistance from the bloc but only by tapping a rarely used emergency account Greece holds at the fund — an unorthodox transaction that amounted to borrowing IMF funds to pay the IMF.

Alexis Tsipras, Greek prime minister, wrote to Ms Lagarde, warning that the IMF repayment would be missed unless the European Central Bank immediately raised its curbs on Greece’s ability to issue short-term debt.

The letter, first reported by the Greek daily Kathimerini but independently confirmed by the Financial Times, raises questions about how close Athens is to bankruptcy. In addition to payments due to the IMF next month totalling €1.5bn, the Greek government has struggled to meet its wage and pension bills, which must be paid at the end of the month.

The next €300m IMF payment is due on June 5.

Greece is locked in a four-month stand-off with bailout lenders over the release of €7.2bn in aid that Athens needs to pay looming bills.

Creditors will not disburse the tranche without agreement on Greek economic reforms.

The contents of the Greek prime minister’s letter were revealed by Ms Lagarde at a closed-door meeting of the fund’s board on Thursday.

According to officials briefed on the talks, Poul Thomsen, head of the IMF’s European department, warned the board that negotiations on the Greek economic reform package remain so unproductive that the fund may be forced to withhold its €3.6bn portion of the €7.2bn aid tranche.

Mr Thomsen insisted that the fund remained flexible on which reforms Athens needed to implement but told the board the programme must “add up” and begin lowering Greek debt to sustainable levels, officials said.

As a result, any watering-down of Greece’s reform package or lowering its budget surplus targets — positions advocated in some eurozone capitals, including Brussels — may require the EU to consider writedowns on their bailout loans in order for the IMF to assent, Mr Thomsen told the board.

Officials said Ms Lagarde fully backed Mr Thomsen, telling staff that they should not proceed with a “quick and dirty” approval process.

“It’s clear that we are very far from something the IMF will be able to support without fundamentally breaking its own rules,” said one official briefed on the fund’s board discussion.

According to two officials briefed on the talks, at least one board member raised the possibility of presenting a “take it or leave it proposal” to Greece.

However, IMF staff said they still do not have enough data from Greek authorities to put together such a plan.

A similar tactic was used in March 2013, when the Cypriot government was presented with a severe bailout plan and told it must agree or lose ECB support for its failing banking sector.

The idea of a “Cyprus-like” presentation to Greek authorities has gained traction among some eurozone finance ministers, according to one official involved in the talks.

The official noted that the recent public backing by Wolfgang Schäuble, Germany’s finance minister, for a Greek referendum fits into such a scheme. Under this scenario, Mr Tsipras would take the bailout ultimatum to a nationwide vote for approval.

However, another official involved in the talks cautioned that a “take it or leave it” approach remained only one of many ideas being discussed informally as a way to finalise an agreement.

- Forecasts 10Y bund yield will rise to 0.9% by end of 2015 (prior forecast 0.5%)

- Forecasts 10Y US Treasury yield at 2.75% by year end

- Even at these higher yields Goldman believes bonds are still too expensive -- its model suggests economic fundamentals put the proper 10Y Treasury yield at 3.2%.