It has not been a happy two and a half years for Arun Sarin since he took over from Sir Chris Gent at Vodafone and, if the rumours are correct, then today's quarterly subscriber figures are unlikely to lighten his mood.
A resurgent O2 is threatening to snatch market leadership away from Vodafone in the UK but its bigger problems appear to lie overseas. In Europe, margins are being squeezed by sluggish top line revenue growth. In Japan, Vodafone remains a distant third behind NTT DoCoMo and KDDI. And in the US, the group has a vast amount of capital tied up in Verizon, a business which does not pay a dividend, does not use the Vodafone brand and does not answer to Mr Sarin because Vodafone is the minority partner with a 45 per cent shareholding.
Vodafone shares took a battering last week on fears that today's numbers would be lacklustre. But the fact is that they have underperformed the sector ever since Mr Sarin took over as chief executive in July 2003. Even before last November's profits warning, there was the nagging question hanging in the air: has Vodafone gone ex-growth and should it be rated in the same way as a defensive utility stock?
Investors are interested in answers because soon it will be the only mobile company in which they will easily be able to trade. Telefonica's takeover offer for O2 went unconditional yesterday, while Virgin Mobile is soon to disappear inside NTL.
Above all, the question shareholders want resolved is whether Vodafone's ownership of the Verizon stake makes sense any longer. Selling it would signal an end to Vodafone's ambition of being the world's dominant mobile operator. But it would also free up as much as £25bn - cash which Vodafone could hand back to shareholders or re-invest in markets which are growing more quickly. Being American himself, it would be understandable if Mr Sarin were reluctant to throw in the towel, given that the US market is not yet mature with mobile penetration only at 70 per cent. But Sir John Bond, who takes over as chairman in July, carries no such baggage.
Blair's finger on the nuclear button
Alan Johnson already knows the answer to the consultation he launched yesterday on Britain's long-term energy needs. So, surely, do the vast bulk of those who will go through the motions and respond to the Secretary of State for Trade and Industry's "Energy Challenge". Less than three years after the Government's last review, which concluded that renewable energy was the way forward, Tony Blair has torn up the script and ordained that Britain must enter a new nuclear era if it wants a clean and reliable source of electricity. And he is not proposing to hang around. Mr Johnson and his energy minister Malcolm Wicks have been given less than five months to come up with an energy strategy designed to last for 50 years.
Wind, wave, solar and biomass can only ever be part of the solution. It would be a huge act of faith to assume that renewables will achieve the goal of generating 20 per cent of Britain's electricity by 2020. Even if the target is hit it will still not be enough to close the energy gap because by then nuclear and coal plants producing one-third of the country's needs will have shut. Nor does it address the problem, thrown into sharp focus by Gazprom's stand-off with Ukraine: namely that 60 per cent of our energy needs will be met by gas, 80 per cent of which will be imported.
Big uncertainties remain to be resolved before a new nuclear programme can proceed. How will a new generation of reactors be financed and what should be done with the waste they create, given that we have yet to work out how to deal with the legacy of the existing ones?
But the broad thrust of the Government's thinking could scarcely be clearer. Mr Johnson insists all options remain open. But the reality is that he and Mr Wicks have already got their conclusion. Between now and June they have the task of working their way back to the question.
Mr Johnson promises that whatever solutions they come up with, Britain will remain committed to a free market approach to deliver affordable energy. This is one for the birds. Wind power would be a non-starter on economic grounds were it not for the "renewables obligation" which forces electricity companies to buy a certain amount of expensive green energy. Even then, renewables today only account for 4 per cent of our energy mix. A similar arrangement will have to be put in place for other sources of carbon-free energy - whether that be nuclear power or clean coal stations whose carbon emissions will be miraculously "captured" and pumped back into the North Sea.
The upshot is that energy is likely to become a lot more costly. Since 30 per cent of all electricity is consumed by households, energy efficiency will have a big role to play. Thus far it has been an area which successive governments have largely ignored because it is hard to persuade people to conserve something which is cheap. Now the plasma TV generation, as Mr Wicks describes it, will be forced by rising bills to become more sparing in its energy use.
When Mr Johnson does produce his blueprint, the City will have a lot to digest because any new nuclear build will have to be financeable. The fact that long-term energy policy is changing twice in less than three years is not the best message to send out.
A tale of two sell-offs
Hello Tosh, gotta reactor? The £2.8bn sale of Westinghouse, the state-owned nuclear reactor designer, to Japan's Toshiba has raised more than twice the amount expected for the UK taxpayer - another graphic illustration, if one were needed, of the nuclear renaissance which is sweeping the world, not just Britain. When Westinghouse's owner, British Nuclear Fuels, began the auction, the business was not expected to fetch much more than £1bn. But a combination of scarcity value and the Bush administration's keenness to see this US-based company go to an American buyer helped drive up the bidding.
The Treasury was in favour of an early sale of Westinghouse but was persuaded to hold off on the grounds that the longer it waited the higher the proceeds would be. But it is a moot point whether Westinghouse should have been sold at all since it can only become more valuable still as other countries choose to press the nuclear button. The Government's justification for the sale is contorted but it goes something like this: imagine the competition problems that would arise were we to authorise the building of a new generation of nuclear reactors but still retain ownership of one of the world's principal reactor designers? As it is, the spoils will go to the Japanese if Westinghouse succeeds in scooping up a large share of the market with its new AP1000 design - the reactor type Britain is very likely to choose.
Nevertheless, it is hard to argue that Westinghouse, bought for £630m in 1999, represents anything other than a handsome return on investment. Moreover, aside from some sniping by the public sector unions, the Westinghouse sale has raised barely a murmur of protest. If only the Government could say the same about the other privatisation it is pushing through - the troubled flotation of Qinetiq.Reuse content