Key events
BT accused of ‘bullying’ customers by pausing broadband in digital landline push
In other broadband news… BT’s £400m takeover of TalkTalk comes after BT was accused of “bullying” customers by temporarily cutting off their broadband to pressure them to upgrade to a digital landline, as providers race to switch households over before the January deadline.
Telecoms companies have so far migrated 16-17m lines from the old copper network to digital voice over internet protocol (VoiP), which uses a broadband connection instead, in the biggest technological upgrade since the early 00s, when analogue TV was switched off.
However, as the date for the retirement of the old public switched telephone network (PSTN) approaches, Openreach, the BT subsidiary that maintains the vast majority of the UK broadband and telephony network, says there are still about 1.3m copper-based landlines yet to be migrated.
To hit the end-of-January deadline telecoms companies have started to ramp up pressure after years of direct customer communications and awareness campaigns – in BT’s case including using personalities including Moira Stuart and Clare Balding – have failed to prompt some to engage in the migration programme.
‘I didn’t know what to do’: collapse of providers of high-end digs leaves students in shock
I spoke to students heading off to university in recent weeks about finding affordable accommodation.
“It was dead in the middle of summer, it was a shock,” says Nathalie Sriwiboonrattan. The fourth-year game design student at Abertay University was at home with her family thousands of miles away in Thailand when she discovered the owner of her Scottish studio flat had abruptly gone bust.
“I was like, my hands are tied. I’m not in the country. I don’t know what to do,” she says. Sriwiboonrattan was forced to act quickly to secure new housing for the academic year, which has just begun, paying £850 to have her possessions moved.
Her sudden upheaval was emblematic of the wider crisis in student housing. While UK universities face a financial crisis, providers of accommodation are grappling with falling international student numbers, a cost of living squeeze and higher borrowing and build costs, exacerbated by the Iran war, affecting upgrades at older properties.
A string of tower blocks known as purpose-built student accommodation (PBSA), targeted at more affluent students, have run into financial difficulty.
It had been touted as the ultimate student living: smart city centre blocks with gyms, cinemas and rooftop terraces have sprung up across the UK. A world away from the traditional image of dirty and dingy shared digs, the flats have offered a spacious alternative for their relatively affluent residents – often international students. Now, some sit half empty, and several schemes have gone bust.
Sriwiboonrattan was among nearly 70 students in Dundee who were left scrambling to find accommodation in late July after the collapse of the owner of Marketgait Apartments, a 116-room city centre block that had a concierge and a shared games lounge with a pool table.
Despite the boom in housing developed by financial institutions in recent years, many students heading off to university this term faced a different dilemma. Rents at the tower blocks have grown much faster than maintenance loans for British students, leaving PSBAs financially out of reach.
From hotel suites to virtual reality, museums turn to licensing deals as costs rise
They are often free to visit but museums are bolstering their finances by putting their stamp on everything from upmarket hotel suites to trendy jumpsuits and virtual reality experiences.
Forget buying a T-shirt. If you can afford the “from £724” price tag, you can spend the night in the Natural History Museum family suite at the Park Plaza London Riverbank hotel, which has an interior inspired by the museum’s founder, Sir Richard Owen, complete with Tyrannosaurus rex bunk beds.
Deals such as this are becoming more commonplace as cultural institutions look to leverage their renowned collections and trusted brands in the face of funding cuts and rising costs.
Data shows that overall UK sales of licensed merchandise and services grew 7% to $19.2bn (£14.5bn) last year, according to the industry trade body Licensing International.
A breakdown of the UK market figures shows that the “art property” category, which includes museums, grew by more than 8%, while “attractions and promotions” (which includes immersive experiences at museums and art galleries) soared by 53%.
“Our licensing programme continues to grow consistently at about 15% year on year,” said Louisa Skevington, the licensing manager at the Natural History Museum, who added that “experiences” were becoming an increasingly important part of that. “
It’s about finding creative ways to bring the museum and its stories to people wherever they are, while continuing to grow the reach and impact of the programme.
Coach services could be cut due to record diesel prices, UK operators warn
Coach operators have said record diesel prices could force cuts to services including school transport, as hauliers warn rising fuel costs are pushing hundreds of firms out of business.
The average price of diesel on UK forecourts hit a fresh record of more than £2 a litre last week, as the war in the Middle East continues to disrupt global fuel supplies.
Alison Edwards, the director of policy at the Confederation of Passenger Transport (CPT), said the cost of fuel had “surged this year to unsustainable levels, pushing coach operators’ already tight margins to breaking point”.
It is time for urgent action. Without intervention, soaring prices will mean difficult decisions on the availability of services, including home-to-school transport, and the viability of businesses.
Edwards said 85% of independent coach operators are family businesses, and called on the government to provide temporary support with the cost of diesel, adding that the industry “needs help”.
Local bus operators in England have already received help with fuel costs via subsidies to help cover running costs. Coach companies, which say they carry out a similar role, have received no equivalent support.
British government ‘complacent about food as a national security matter’
Let’s take a look at some other stories this morning.
Britain does not have a plan for how to feed people in a crisis and is unprepared for potential future food shortages, according to a warning from more than 150 experts delivered to Andy Burnham.
The climate crisis, geopolitical shocks, cyber-attacks and energy outages are among the threats to food chain security, according to the open letter, which claims the government is “complacent about food as a national security matter”.
Academics, business leaders, community groups and food partnerships are urging the new government to treat food as a national security issue and work to make the UK’s food system more resilient, in a era when food supplies “can be weaponised”, they caution.
The signatories warn that the “just-in-time” delivery system built up over recent decades “is not fit for today’s or tomorrow’s challenges”, as little stock is held along the food supply chain and the UK does not have any national food storage. Ministers wound up the strategic food stockpile that had been in place since the second world war in the 1990s.
Here’s our full story on BT taking over TalkTalk in a £400m rescue deal:
At the energy regulator Ofgem, Tim Jarvis has been appointed as chief executive.
Jarvis, who has served as interim CEO since March, will take up the role on a permanent basis, following a “rigorous and competitive recruitment process,” the regulator said.
Mark McAllister, chair of Ofgem, said:
Throughout his time as interim chief executive, Tim has demonstrated strong leadership, sound judgement and a deep commitment to Ofgem’s mission. He has led the organisation through an important period for consumers, the energy sector and Ofgem itself, while maintaining a clear focus on delivering for consumers and supporting colleagues across the organisation.
The board conducted a rigorous recruitment process and is confident that Tim is the right person to lead Ofgem through its next chapter. His appointment provides continuity, but it is also about the future. It gives Ofgem a clear mandate to build on the progress already made, strengthen our impact for consumers and continue evolving to meet the demands of a rapidly changing energy system.
This winter and the months ahead will be important for millions of consumers. Ofgem has a critical role to play in protecting customers, particularly those who are struggling, while helping ensure the energy system can deliver reliable and affordable energy in the future.
It comes as energy bills are set to hit nearly £2,000 a year. A typical bill is forecast to jump by £276 for about 20 million households in Great Britain from January.
The UK’s telecoms regulator Ofcom has welcomed the deal.
Dame Melanie Dawes, Ofcom’s chief executive, said:
After a prolonged period of uncertainty around TalkTalk Group’s future, we welcome the prospect of a commercial solution that protects customers and secures continuity of critical communications services.
The transaction will now be subject to the appropriate clearances and we’ll be working closely with the government and the Competition and Markets Authority during that process. Existing regulatory obligations will continue to apply. We’ll keep a close eye on the transition to protect consumers and competition, and we have written to BT today to underline our expectations.
If you are a TalkTalk customer, it means that following the sale process, you will become a BT customer. You should be able to continue to use your landline, broadband and pay TV as normal during the transition and beyond, Ofcom said.
Here is some reaction to BT’s £400m acquisition of TalkTalk, and some advice for TalkTalk customers.
Ernest Doku, broadband expert at Uswitch, said:
TalkTalk’s 1.5 million customers will want to know what this morning’s news means for them. The short answer is: nothing changes today. BT has said TalkTalk will keep operating separately while regulators review the deal, so your broadband and landline carry on as normal, and there is nothing you need to do right now.
BT should set out quickly and plainly what this means for contracts, prices and service in the future, so nobody is left guessing. In the meantime, keep paying as normal and leave your direct debit running, as missed payments could put your service at risk. Scammers thrive on moments like this, so if anyone contacts you out of the blue about the sale, hang up and get in touch with TalkTalk yourself through My Account on its website.
If you or someone in your home relies on the landline or broadband for a care alarm or a medical reason, tell TalkTalk now so you’re registered for extra support such as priority fault repair. It’s still your provider for the time being, and it can only look after you properly if it knows who you are.
If the new owner puts up your price beyond what was set out in your contract, or makes other significant changes to it, Ofcom’s rules mean you should be able to leave without an exit fee. For now, carry on as normal. If you’re out of contract, you’re free to look around as you always were, and it’s worth checking you’re still on the right deal.
Eurozone investor morale falls
The rebound in European shares came even though investor morale in the eurozone declined, according to a survey.
The Sentix index for the eurozone roughly halved in October, falling to 2.7 points from 5.1 points in September, which was much worse than analysts had expected.
The drop came after the index reached its highest level in more than four years in September.
Sentix highlighed a “noticeable setback” to investors’ expectations, while investors’ assessment of current conditions was unchanged. The current situation subindex remained stable at -3.3 points in October, while economic expectations fell by 5 points to 8.8 points.
In Germany, by contrast, hopes of an emerging economic upturn remain intact.
However, here too we are seeing a dampening of expectations that should not be overlooked.
The survey polled 1,030 investors, including 218 institutional investors, between 1 and 3 October.
European shares rise after last week’s selloff while French stocks slide
European shares overall have risen after last week’s sell-off, while the French stock market and the euro are under pressure from fiscal fears and share losses in Schneider Electric following a record deal.
The pan-European Stoxx climbed 0.4% this morning after its biggest weekly loss in a month, as soaring bond yields fuelled concerns over worsening government finances.
France’s CAC fell 1%, and the euro hit a 17-month low, as investors worried about the eurozone’s second-largest economy’s debt burden and political gridlock ahead of next year’s presidential election.
Shares of Schneider Electric slumped 8.9% after the French engineering company struck its biggest deal ever, the $22.6bn acquisition of the US software company PTC.
The Spanish stock market rose 0.7% after Pedro Sanchez, the prime minister, called a snap election for 29 November to end parliamentary deadlock, amid a national housing crisis. You can follow the latest news here:
German engineering orders slump 5%, VDMA says
In Germany, engineering orders tumbled in August because there were no big orders, according to industry figures.
Orders in Germany’s mechanical and plant engineering sector fell 5% in real terms in August from a year earlier, after two months of growth, the industry association VDMA said.
Domestic orders fell 2%, while foreign bookings slumped 6%.
Orders from other eurozone countries sank 10%, twice as big as the decline in orders from countries outside the currency bloc. VDMA chief economist Johannes Gernandt said
After two months of growth, this result is a slight dampener. However, it should be noted that, unlike a year ago, there were no large plant orders in August this year.
The sector posted a 4% increase in orders in the first eight months of this year, although Gernandt said that was partly due to a weak year-on-year comparison and a high volume of large orders booked in March and June.
There is still a lack of new investment momentum that would point to a sustained economic upswing.
Between June and August, orders rose 7%. Foreign demand increased 11%, offsetting a 1% decline in domestic orders. Orders from non-euro countries rose 19%, while bookings from euro zone countries fell 9%.
BT shares rose 1.6%, catapulting the company into the top risers on the FTSE 100 index this morning.
Here’s a statement from the administrators, Alvarez and Marsal, who said 900 jobs had been saved at TalkTalk.
The deal includes the TalkTalk Telecommunications Limited consumer business, and the wholesale PlatformX Communications Limited (PXC) division.
Andrea Jakes, joint administrator and managing director of Alvarez and Marsal said:
We are pleased to have secured the future of the TalkTalk and PXC businesses, safeguarding approximately 900 jobs and ensuring continuity of service for more than 2.4 million customers.
TalkTalk and PXC are important businesses within the UK’s connectivity market, with longstanding relationships across customers, suppliers and partners. The transaction gives them a sustainable financial footing under new ownership.
Allison Kirkby, BT’s chief executive, described it as an “exceptional situation”.
Speaking on BBC radio 4’s Today programme, she said:
It’s unprecedented. There was going to be 2.5 million customers, including vulnerable households, and key emergency services who might have lost their services if TalkTalk had failed, which it was on track to do.
So BT stepped in as we were the only viable option to take the business forward.
Broadband is proving to be critical infrastructure that the country needs, and it needs to be owned and operated in a high quality, highly resilient way.
She said she would be
very happy to engage with government and regulators on how we ensure situations like this do not happen again, and we really look at the indebted state of some of the operators in the sector.
While the competition watchdog will look at the deal, she said:
It’s been a very prolonged but ultimately unsuccessful sale process that’s been going on for TalkTalk. There were in the end no other viable alternatives. And we expect the regulator to consider that.
UK intervenes in BT’s TalkTalk takeover, citing risks to public services and vulnerable customers
The UK’s culture Lisa Nandy stepped in to intervene in BT Group’s acquisition of TalkTalk, citing risks to public services and vulnerable customers if the broadband provider’s services were disrupted.
She said the government was concerned because a long sale process had not led to an agreement with a number of potential buyers.
She said:
Phone and broadband services are vital national infrastructure. If TalkTalk services fail, there is a genuine risk to life and public services – including to hospitals, schools and emergency care.
These are unprecedented circumstances that require action now. That is why I am acting with urgency to ensure that impacts on public health, critical national infrastructure and supply to vulnerable customers are fully considered as part of this process.
Nandy’s department said it was acting under Enterprise Act powers after BT agreed to acquire TalkTalk out of administration. This will allow her to consider the wider public interest once the Competition and Markets Authority has reported on competition concerns. She directed the CMA to report back to her by 19 October.
TalkTalk’s customers do not need to take any action, and services should continue as normal. Customers will be contacted directly if there are any changes they need to know about.
Clive Selley will lead the stabilisation and integration planning of the acquisition, BT said. He was appointed as head of BT’s international business in April, after running Openreach for more than 10 years.
Martijn Blanken will take over his role as CEO of BT International, in addition to being CEO-designate of BT’s proposed international joint venture with Verizon.
BT estimates the total cash impact of the acquisition at £400m, comprising transaction and administration costs as well as a trading loss of £60m and non-receipt of £100m otherwise due to Openreach.
Introduction: BT strikes deal to rescue broadband firm TalkTalk; euro slides amid France debt burden fears
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
BT Group has struck a deal to buy TalkTalk out of administration, saving 900 jobs.
TalkTalk’s wholesale and consumer arms will be sold to BT on a debt-free basis. BT said the acquisition would cost it £400m.
BT said it “recognised the risk to the country, and especially vulnerable customers and key public services, should the company collapse”. BT therefore approached the directors of TalkTalk and offered to step in immediately.
By acquiring the business out of administration, BT said it would be providing reassurance for TalkTalk’s employees, its 1.5 million retail customers and its 1 million wholesale customers across the UK. This includes vulnerable households, and connections that support critical national infrastructure providers across health, emergency services, defence, education, transport, banking and government.
During the last 12 months, TalkTalk reported revenues of £1.2bn and was loss-making.
Allison Kirkby, BT’s chief Executive, said:
This is a genuinely unprecedented situation, where millions of citizens and businesses were at risk if TalkTalk had collapsed. BT is the digital backbone of the country, with a presence in every postcode. We have been connecting the nation for generations, stepping up in the moments that matter, and BT acquiring TalkTalk is now the only viable option to keep millions of customers connected and supported.
Our immediate priority is to stabilise the business and provide a safety net for the households and businesses who rely on TalkTalk. Once the regulatory process has been concluded, TalkTalk’s customers will benefit from access to the UK’s best network, and the full range of market-leading products and services that BT offers. And, over a period of time, the transaction will create value for all our stakeholders – customers, colleagues, the country, and our owners.
TalkTalk, the UK’s fourth-largest broadband company was founded in 2003 by Charles Dunstone as a subsidiary of Carphone Warehouse. It has struggled in the highly competitive telecoms market, with its customer numbers shrinking from 4 million in 2019 to about 1.5 million.
In financial markets, the euro sank to a 17-month low amid concerns over France’s debt burden. The currency tumbled more than 0.8% to $1.1161 in Asia, and is now trading 0.5% lower at $1.1192.
The Agenda
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9am BST: Eurozone Services and Composite PMIs final for September
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9.30am BST: UK Services PMI final for September
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3pm BST: US ISM Services PMI for September
