Market Report: Do competition watchdogs have their eye on the telecoms M&A party?


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The Independent Online

Those pesky competition watchdogs appear to want to shut down the telecoms M&A party. At least that’s what investors feared yesterday as the European Commission blocked the merger of Scandinavian rivals TeliaSonera and Telenor, which were planning to fuse their Danish businesses.

The move caused traders hang up on Vodafone, 3.15p cheaper at 223.95p, and BT, down 9.45p to 422.65p.

The sector has been rampant with deals recently, including Telefonica’s £10.3bn sale of mobile operator O2 to Hong Kong’s Hutchison Whampoa. BT’s own £12.5bn bet on EE is still under the microscope of the UK’s competition authority.

On the wider market, investor focus shifted to the US and the decision on a potential rate hike next week, with plenty of fence-sitting causing the FTSE 100 to fall 38.05 points to 6,117.76. Trading volumes were also noticeably lower.

Aerospace and defence contractor BAE Systems flew 8.5p, or 2 per cent, higher to 451.7p as Kuwait signed a 20-year deal to spend up to €8bn (£6bn) on the Eurofighter jets that BAE builds with Airbus and Italy’s Finmeccanica.

An upgrade to “buy” from UBS helped B&Q owner Kingfisher put on 5p to 365.3p, with the broker cheered by potential savings.

Investors dumped the embattled online white goods seller AO World, down 9p at 153p, even though Odey Asset Management now has over 10 per cent of the voting rights.

Recruiter SThree rose 21.25p to 371.25p as it revealed full-year pre-tax profits are now expected to beat analyst expectations of £35.1m to £38.5m.

On AIM, Oakley Capital fell 1.5p to 143.5p as its net asset value shrank in the first half of the year to 182p per share after a £130m fundraising.

Alarm bells were ringing at e-procurement minnow CloudBuy, whose shares were suspended as its nominated adviser quit, giving it a month to find a replacement before its shares are cancelled on AIM. It’s some way off becoming the world’s biggest tech business, which only last year founder Ronald Duncan claimed it could become. Revenues slumped 40 per cent in the first half to just £887,000.