Vodafone’s deals attract attention

ANOTHER day, another rumour about consolidation in telecoms – this time involving Vodafone.

Speculation about potential merger activity in the sector has long done the rounds as mobile operators try to enter the fixed-line and broadband market and vice-versa.

Up until now, most talk surrounding Vodafone has focused on a potential tie-up with Virgin Media owner Liberty Global, particularly after the pair agreed to merge their Dutch businesses last week.

But the latest whisper is that chief executive Vittorio Colao’s charge is attracting fresh interest from the Far East, namely China Telecom (CT), China Mobile and possibly other operators backed by the Chinese government. Majority state- owned CT is rumoured to have advisers running the rule over Vodafone, which has been expanding in Europe through the Dutch tie-up, its acquisition of Germany’s Kabel Deutschland in 2013 and other deals.

CT is thought to be keen to expand internationally to develop its presence and experience in types of network other than its Chinese operation.

Talk has it that the Chinese would need to bid at least 300p a share to win over Vodafone’s shareholders and to fight off other parties thought to be keeping their eye on the situation, such as America’s AT&T.

A Vodafone spokesman declined to comment. The group’s shares rose 2.7p to 215.65p.

Any deal involving Vodafone would represent the latest shake-up in an industry rushing to cater for consumer demand for all-inone packages, including so-called ‘quad-play’ of mobile, fixed line, TV and broadband.

BT’s (up 9.6p to 467.45p) £12.5bn swoop for EE has put it back in a market it left in 2001 when it spun off its BT Cellnet business. Mobile operator Three, owned by Hong Kong conglomerate Hutchison Whampoa, has been attempting to persuade UK regulators to allow it to buy O2 from Spain’s Telefonica. There has even been idle speculation that Vodafone could do a deal with Sky (up 4p to 1022p), although the talk has stayed just that.

The FTSE 100 Index rose 87.5 points to 6037.73 as mining shares hardened on the back of strengthening metal prices. The price of copper hit a two-week high after the head of China’s securities regulator resigned and an uptick in the country’s steel industry sparked hope of a revival in metal demand.

The Footsie’s progress came despite falls in the pound amid concerns about a British EU exit and a drop in banking heavyweight HSBC, whose shares were 4.25p off at 445.6p following worse- than- expected annual results. Investment bank Jefferies raised its target price on Anglo American, which has gained more than 50pc this year, but retained its ‘under-perform’ rating on the stock. Anglo’s shares rose 47.5p to 484.15p.

‘The risk to the Anglo share price is to the downside in the near term, especially after the recent rally,’ analysts at Jefferies said.

JP Morgan upgraded UK equities to ‘overweight’ from ‘underweight’, a position it had held for three years, despite the risk of a British EU exit.

‘The JPM base case is that the UK stays in Europe, but admittedly it is likely to be a close call. Once campaigning starts in earnest, we believe the bulk of businesses will fall in the “stay” camp,’ the broker’s analysts said in a note.

Home Retail soared 19.9p, or nearly 13pc, to 173.5p on news late on Friday of a rival bid for the Argos owner from South African retail group Steinhoff International, which owns UK furniture chains Harveys and Bensons For Beds. The Takeover Panel yesterday extended the period by which Sainsbury’s has to table a firm offer for Home Retail until March 18. Shares in Sainsbury’s, which has already proposed a potential £1.3bn offer for Home Retail, fell 5.9p to 255.2p.

Shares in electronics distributor Premier Farnell sparked up 12.25p, or 11.67pc, to 117.75p on apparent short-covering.

Premier faced takeover speculation last year, with activist investor Go Investment Partners said to be pushing for a shake-up including a possible merger with rival Electrocomponents. The latter’s shares rose 6p to 235p.

In oil, Cairn Energy spurted 6p to 161.4p on news that the explorer and producer had bought an extra 4.5pc stake in the Kraken development in the UK North Sea.

Nostra Terra Oil & Gas, which is active in the US and Egypt, was 20pc slicker at 0.1p after buying production assets in the Permian basin of New Mexico from Alamo Resources.

In mining, Regency Mines ticked up 0.3p, or 92pc, to 0.62p as it bought a 5pc stake in the Horse Hill oil project near Gatwick Airport.