Bershidsky on Europe: AT&T Passes on Vodafone
Here's today's look at some of the top stories on markets and politics in Europe.
AT&T declines to pursue Vodafone merger.
The U.K. takeover regulator asked AT&T to clarify whether it intends to make a bid for the mobile operator Vodafone. The U.S. company said it did not, ruling itself out of the bidding for at least six months. This may be a disappointment for Vodafone investors, who priced an M&A premium into the company's share price, but also a smart move. AT&T chief executive Randall Stephenson met informally with chief EU telecoms regulator Nellie Kroes at the World Economic Forum, so he is clearly interested in expanding into Europe. It makes sense, however, to move cautiously because of adverse factors such as the fallout of the NSA electronic surveillance scandal, and inflexible EU rules on bidding for frequency spectrum. AT&T does not want to go the way of Mexican multi-billionaire Carlos Slim, who recently failed to take over Dutch telecom operator KPN because of resistance from a local supervisory body. That does not mean, however, that either AT&T or Slim have given up on European expansion. The former will take a timeout to work with European regulators and make sure of a favorable environment for an entry, and the latter has recently increased his stake in Telekom Austria, gearing up for another try at a full acquisition. Europe is still an attractive telecoms market for outsiders, as Liberty Global's fresh $13.6 billion purchase of Dutch cable group Ziggo proves. It just pays to go step-by-step.
Ukrainian prime minister resigns.
The leaders of the Ukrainian parliamentary opposition, Arseni Yatsenyuk and Vitali Klitschko, have turned down President Viktor Yanukovych's offer of top cabinet posts, but the president and the opposition agreed on two major compromises: the repeal of anti-protest laws passed on Jan. 16 and an amnesty for all arrested protesters. An emergency session of parliament called for Tuesday is supposed to confirm the compromises. It won't, however, end the protests continuing throughout Ukraine, because many of their participants want early elections and an end to Yanukovych's rule. Now that the president is willing to compromise, it is the opposition's business to find out how much of the protest agenda they can carry out peacefully and whether people still manning barricades will accept the outcome of their talks. Meanwhile, Prime Minister Nikolai Azarov, one of the prime targets for demonstrators' hatred, has tendered his resignation. Yanukovych is still hoping the opposition will share responsibility for running the impoverished, conflict-torn country.
RBS to post multibillion-dollar loss because of surprise provision.
The 81 percent-nationalized Royal Bank of Scotland followed Deutsche Bank in warning of massive losses caused by a boost in litigation provisions. They relate to the old scandals still dogging the bank: its purchases of dubious mortgage-backed securities before the 2008 crisis, selling clients unneeded insurance and ill-fated structured products.The provisions have been increased by $5 billion so far, bringing potential 2013 losses to $13 billion, but there may be more gloom coming. "Some problems are still just emerging," said RBS chief executive Ross McEwan. The cleanup he is conducting is laudable but it makes one wonder whether it might not be time for a kind of bank amnesty. Banks and their investors, including unwilling ones like governments, have suffered enough for their old sins. As Sergio Ermotti, the CEO of UBS, said at the Davos forum the banks aren't perfect, "but it is not going to be very helpful to be constantly bashing banks." People like Ermotti and McEwan did not run their banks during the crisis: All they have done is pay for past mistakes, and there has to be a limit to that.
Turkish central bank calls emergency meeting, may raise rates.
Turkey's central bank is likely to raise rates at an emergency meeting today to cut short the fall of the national currency, the lira. It has been the world's fastest-tumbling currency in recent months, having lost about a third of its dollar value since September. The Central Bank has tried to avoid a straightforward rate hike, given Prime Minister Recep Tayyip Erdogan's near-paranoid aversion to increasing borrowing costs. Now, Governor Erdem Basci has run out of options, and analysts predict the central bank's overnight rate will go up at least two percentage points from the current 7.75 percent. It would be a positive signal to the markets if the benchmark rate, too, were raised from the current 4.5 percent, but that may be too much to ask of Basci, operating under political pressure. Turkey needs to act more decisively to stabilize the lira and end its political crisis: Investors' lack of confidence is spreading to other emerging markets and threatening them, and the global economy, with slower growth.
Three-star chef Ducasse starts subscription-based website.
The French are not in the first rank of Internet innovators, but there is a unique area on the Web where they can come from behind and win: Recipe sites. Alain Ducasse, the chef and restaurateur who owns the eponymous three-star restaurant at the Dorchester in London and other Michelin-rated establishments from Monaco to Hong Kong is launching a "Wikipedia of taste." The site, to come online in May, will operate like other recipe resources, inviting submissions from users, but it will also have a section in which celebrated chefs, including 50 from the Ducasse group will offer their recipes. The section will only be available to subscribers paying about $6.8 per month. The subscription revenue will drive the project's business, breaking with the ad-based model most cooking sites use. Creating a "chef web" is an interesting idea: While many celebrities have sold their expertise in the form of cookbooks and TV shows, a Web channel bringing together many stars does not yet exist. To create it, however, Ducasse will need to reach out beyond his group, powerful as it may be.
(Leonid Bershidsky writes on Russia, Eastern Europe and the Internet for Bloomberg View. Followhim on Twitter.)
This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.
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