The tale of three operators -- a very British farce

Those at the helm of the UK’s best-known telcos are probably the only people in the country to have some sympathy with British Members of Parliament. Many have been pilloried and ridiculed and are liable to lose their jobs at the next election, if they aren’t sacked first.
 
For over two weeks now, The Daily Telegraph newspaper has published details of expenses claims for MPs’ second homes (funded by the tax payer on the grounds they need a home near their place of work, the Houses of Parliament, as well as in their constituencies).
 
The duck house on a floating island for £1,645 has had a good airing as has the practice of flipping – being able to switch which home an MP classes as their second residence, thereby being able to charge the tax payer for doing up two or even three houses in a shamefully short space of time.
 
There is no fury equal to suffering the consequences of other people’s mismanagement when the perpetrators appear to be chugging along cheerfully on the gravy train.
 
Vodafone is in big trouble, whichever you look at it – see today’s news story – and plummeting profits and multi-billion pound court cases aren’t its only problems. It has issues in its own back yard too.
 
More than 435,000 subscribers left Vodafone in the UK in Q1, while the UK’s biggest mobile operator, O2, added 141,800 – in part due to O2’s exclusive iPhone deal and in part due Vodafone upsetting prepaid customers with big price rises and a reputation for highhandedness with customers. Vodafone’s subscriber base stood at around 18.7 million at the end of Q1.
 
Shedding subscribers at this rate has driven Vodafone to cancel its exclusive three-year deal with high street phone-and-service retailer Phones4U as part of its efforts to recruit the retailer’s larger rival, Carphone Warehouse, according to telecomtv.
 
Vodafone UK spurned both an iPhone deal with Apple and Carephone Warehouse. Whoever made those decisions probably doesn’t feel quite as bad as the bloke in the record company that turned The Beatles away, but it should be a close run thing.
 
Then we’ve got BT bleating about the new wholesale broadband prices imposed by Ofcom last week, saying it won’t be able to afford the £1.5 billion it needs to build a new national fibre backbone network. Not only that, it is trying to persuade the regulator that it should be allowed to load some of its massive pension deficit onto what it charges competitors for access to its local loop.
 
What happened to the notion of transparency and charges reflecting costs, the cornerstones of competition?
 
BT has already been told by Ofcom that it will be free to set is own wholesale prices on the national network infrastructure it is to build – in effect, it won’t be obliged to make it accessible to competitors at a viable price until its has recouped its investment.
 
If the UK is serious about Digital Britain and public spending to pull us out of recession, then we should adopt the Australian approach – in April after being unable to reach agreement with the Telstra over building of the National Broadband Network (NBN) the Aussie government said it would fund that NBN and exclude Telstra from the entire proceedings. Telstra changed its tune mighty fast, even offering to spin off some of its business units if only the government would include it.
 
And the third of this unholy trinity is Cable & Wireless, that hang-over from the days of the British Empire. Although it failed to meet analysts’ expectations with its annual report and forecast last week announced C& it would pay out £32 million to managers this year as laid out in its incentive plan, which is based on total shareholder return and is supposed to underpin the company's performance.
 
In the event, net debt exceeded analysts' expectations. C&W switched from net cash of £243 million last year to net debt of £377 million at March 31, mainly due to the Thus acquisition, which has shed a number of customers since C&W acquired it last year.
 
The Financial Times reports C&W disclosed managers were selling shares that vested after performance conditions were met. Tony Rice, head of C&W's international business, sold 3 million shares which, based on last night's closing price, would net him £4.3 million.
 

Which rather puts the duck house into perspective. 

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