Why tech belongs at home
AS one of the world’s great f i nancial centres, one might think that funds for investment, capable of taking established companies and start-ups to the next level, would be easy to come by.
Talk Talk, as a no-frills challenger in a telecoms and broadband market which has come into its own in the pandemic, is a case in point.
Founder shareholder Charles Dunstone has chosen to throw his support behind an offer from Toscafund, an aggressive hedge fund, which values the company at £2bn including debt.
The spiel is that Talk Talk needs significant capital investment in systems, marketing and customer service over the next three years and will find it difficult to raise the cash with public shareholders looking over its shoulder.
Given Talk Talk’s relatively good pandemic, and the considerable amount of equity and debt raising that has been possible during the crisis for firms across all sectors, from hospitality at Whitbread to airlines and aerospace, it is hard not to think that a viable challenger to the dead hand of BT couldn’t have won the backing of investors. Dunstone, chief executive Tristia Harrison and the board needed to show more spine and ambition. Allowing the company to be mauled by a buccaneering hedge fund looks to be all wrong.
What we can be sure of after the pandemic is that super-fast broadband, technology, artificial intelligence and robotics will be the wave of the future. The recruitment group Hays has incorporated a training app on its websites recognising the huge need to reskill workers moving across from retail and other sectors to technology, where the jobs market is booming.
Amid all the sexy stuff in Dame Elizabeth Gloster’s report on the London Capital & Finance (LCF) debacle, it would be easy to miss the detail of the Financial Conduct Authority’s (FCA) response. To use the jargon, it is planning to become ‘a more dataenabled regulator’. That means recruiting a chief data, information and intelligence officer and transforming the way the regulator handles and prioritises filings and intelligence.
By moving in a direction which takes advantage of AI, the FCA presumably hopes to keep track of inconsistencies and warning signs thrown up by the analytics of a database of 60,000 regulated entities.
THECompetition & Markets Authority is pursuing exactly the same path in its scrutiny of complex communications markets affected by the Liberty Global-owned Virgin Media merger with Telefonica’s O2 network. In its latest Quarterly Bulletin, the Bank of England reveals that during Covid, half the banks it surveyed have been using machine learning and data science to analyse data on financial services.
The use of artificial intelligence in the public sector has not been an unalloyed success, as we saw last summer with the fiasco over exam results. Because pupils, parents and some schools did not like the outcomes (no one really questioned their validity), the AI- determined results were ditched in favour of human assessment and better outcomes for the complainants. It wasn’t the AI which wrong-footed the Government, but the politics.
As more agencies, corporations, banks and others dip into the new worlds of AI and big data, it is relatively reassuring that so much of the intellectual capacity is here in Britain. The UK’s tech and science-based economy is one of the reasons to feel confident about commerce outside the European Union.
But we shouldn’t kid ourselves that it will come cheap, and the UK needs better, deeper and more patient financing mechanisms if it is to ramp up the sector. DeepMind, the UK’s pioneer in AI, won its colours playing the ancient Chinese game of Go before its genius was recognised by Silicon Valley, and Google took full control.
Latest accounts of DeepMind show that the London-based firm lost £460.9m last year and its Silicon Valley fairy godfather wrote off £1.1bn of debt. The trouble is we can never count on Silicon Valley, private equity or venture capital to do the right thing when it comes to sharpening the UK’s technical edge. Google- owner Alphabet controversially has hived off DeepMind’s health division Streams – along with NHS data – to another part of the empire.
It is a familiar but cautionary tale of the danger to the public interest of overseas and financially drive ownership. Are you listening Charlie Dunstone?