Vodafone's $130bn Windfall After Verizon Deal

Vodafone has confirmed it is selling its stake in America's largest mobile phone company in the third largest corporate deal in history.

Verizon Communications will buy the British firm's 45% stake in their joint US venture Verizon Wireless for $130bn (£84bn), in an agreement which could provide a boost to the UK economy.

Verizon Wireless is most profitable mobile service provider in the US and the new agreement is the culmination of Verizon Communications' decade-long attempt to win full control of it.

Under the terms of the deal, Vodafone would get $58.9bn (£38bn) in cash, $60.2bn (£39bn) in Verizon stock, and an additional $11bn (£7bn) from smaller transactions that would take the total deal value to $130bn, Verizon said.

The deal marks the British telecom giant's exit from the large but mature US mobile market.

The windfall would allow the FTSE 100 company to plot further expansion and return cash to shareholders.

There is speculation it would issue a special dividend which could yield investors up to £40bn in total - cash that might find its way back into the economy, partly through tax.

However, there is also the possibility of controversy over the way the deal is arranged amid reports that Vodafone's tax liabilities will be minimised by completing the transaction through its Luxembourg subsidiaries and other offshore companies.

Verizon Communications will have full control of Verizon Wireless

Margaret Hodge, chairwoman of the Commons Public Accounts Committee which has investigated corporate tax avoidance, said she wanted the deal to be examined in detail.

"Clearly there are concerns on this deal," she said.

"I just want some assurance that HM Revenue and Customs (HMRC) will be going through this deal with a tooth comb to ensure that the taxpayer gets the proper benefit under the law of the tax that Vodafone should pay on this massive windfall profit that they are making."

Mrs Hodge urged HMRC to ensure there was no "aggressive tax avoidance" in the way the deal was done.

Vodafone chief executive Vittorio Colao told Sky News: "We apply standard rules and we have to apply standard laws in all the countires.

"If this transaction happened in the UK, under UK standard rules this transaction would not be taxable. These rules have been there for years.

"Now the transaction happens in Netherlands which are the exactly the same rules as the UK. Now the important thing is there are £54bn going back into our shareholders many millions fo whom are UK and will benefit from transaction."

The only larger deals in corporate history were Vodafone's $183bn acquisition of Mannesmann in 2000 and internet giant AOL's $182bn takeover of Time Warner in 2001.

Verizon has had a long-standing interest in buying out its partner, but the two companies have never managed to agree on a price until now.

Analysts said Verizon wanted to pay around $100bn for Vodafone's stake, while Vodafone had been pressing for the higher sum.

Vodafone shares, which rose sharply last week, rose 4% in early trading on Monday before extending those gains past 12% in the afternoon.

The change is not expected to have much of an effect on Verizon consumers or on its operations as Vodafone had little influence on Verizon Wireless' operations.

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Young Brits 'Could Miss Digital Jobs Boom'

Up to 750,000 jobs could be created in the next five years to fuel Britain's "burgeoning" digital economy, a report has predicted.

Mobile phone giant O2 said the continued growth of the digital sector offers "fantastic opportunities for tech-savvy young people", but warned not enough was being done to harness their skills.

Ronan Dunne, chief executive of the company's parent firm Telefonica, told Sky News: "If we don't generate those jobs using British youngsters with the right skills, businesses will have to look overseas.

"With the situation in the UK, where one million young people are out of work, we have to make sure we get the schooling elements right, the employer elements right and the readiness for work right."

Research by O2 suggests that 20% of the 750,000 possible vacancies would be entry-level jobs, suitable for people entering the world of work for the first time.

Many roles would be linked to the nationwide roll-out of 4G technology, which offers faster mobile internet speeds.

However, Mr Dunne said employers must show a greater willingness to recruit school leavers in order for the digital jobs boom to have a noticeable impact on youth unemployment.

"The onus cannot be on the Government alone," he said.

"Businesses must proactively seek out opportunities to collaborate to maximise the digital growth opportunity and harness the potential of the next generation.

"As digital natives, young people possess valuable skills that will be the future fuel of our economy, but not enough is being done to harness them."

Mr Dunne's comments came at the opening of Campus Party Europe, one of the world's biggest technology festivals.

Up to 60,000 young people are expected to attend the week-long event at The O2 in London.

As well as 100 guest speakers, the event features a digital skills marketplace, where school leavers can meet potential employers, and a hackathon, which aims to teach young people basic coding skills.

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Bank Complaints Hit Record Amid PPI Scandal

Complaints about financial firms have surged to a record high as the effects of mis-selling continue to weigh on banks.

The Financial Ombudsman Service (FOS), which settles disputes between consumers and financial firms, said new complaints rose 15% to 327,035 between January and June over the previous six months.

That was driven by a 26% increase in complaints about payment protection insurance (PPI), where people were charged for loan insurance which they did not need or could not claim on.

The ombudsman said some lenders continue to drag their heels on repaying mis-sold PPI, causing "long waits and unnecessary delays" for customers.

Complaints about Lloyds Banking Group were almost five times higher than a year earlier, at 129,293.

They also rose 38% on the previous six months to make the part-nationalised lender the most complained-about group.

The FOS upheld 80% of complaints against Bank of Scotland, owned by Lloyds, while 86% of complaints against sister firm Lloyds TSB were also upheld in customers' favour.

Lloyds was fined £4.3m in February by the Financial Services Authority for delaying PPI compensation to 140,000 customers.

The group released separate figures showing complaints it received fell 36% to 548,403 in the first half compared with the year before - including a 39% drop in PPI complaints.

Barclays was the second-most complained about group in the FOS figures, with 44,223 cases lodged with the ombudsman, up 81% on a year earlier.

It was followed by Royal Bank of Scotland (RBS), responsible for 22,940 complaints and HSBC, which saw 18,444 complaints lodged with the regulator.

Complaints about PPI made up more than 80% of those received by the ombudsman, with new PPI complaints hitting 266,228.

FOS chief executive Natalie Ceeney said: "Disappointingly we are still seeing cases where businesses are not following our long-standing approach to PPI, resulting in long waits and unnecessary delays for consumers.

"But, more positively, we are seeing encouraging signs from some major businesses that are starting to recognise the value of getting things right for their customers - with an increased focus on sorting out problems and concerns as quickly as possible."

The banking industry has so far set aside more than £18bn to cover the cost of PPI - more than double the cost of the Olympic Games.

Customers typically complain directly to an institution before then appealing to the ombudsman if they are still unhappy.

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Crayola Turns Dried-Up Markers Into Fuel

Crayola has developed a way of converting dried-up marker pens into diesel and other liquid fuels that can be used in ships and cars.

The company, which produces up to 700 million markers a year, has joined up with New York clean energy company JBI to create the Colorcycle initiative.

Around 600 schools across the US have joined the scheme which will see their used marker pens recycled for free.

The dried-up markers are melted and compressed in machines at JBI and processed into fuels, Fox News reported.

The machines process around 2,000lbs (907kg) of plastic an hour and can produce a few gallons of fuel every minute.

John Bordynuik, chief of technology at JBI, told Fox News: "It's an excellent way to handle un-recyclable plastics, and it's a very critical one as only 8 to 9% of the plastic in the US is actually recycled. The rest of it goes to landfill.

"You can take it and use it as it is. The only thing we'd have to add for transport use is a lubricity additive for engines.

"But other than that, it is the cleanest, straight chain fuel you could ask for a vehicle."

Peter Ruggiero, executive vice president for global operations at Crayola, said the scheme would help children understand how they can improve their environment.

So far around 17,000 marker pens have been recycled.

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Microsoft's Nokia Move A Bid To Rival Apple

In the oft-confusing world of tech mergers and acquisitions where the ultimate intent is often opaque, shrouded in mystery, only to be revealed at a later date with some snazzy product launch, Microsoft's purchase of Nokia's handset business can easily be understood, and summed up in seven words.

An attempt to stuff Apple and Google.

Trying to gauge the likely success or otherwise of the strategy will take a little longer, I'm afraid.

Certainly, both are companies whose star has been waning of late.

Nokia remains the world's second largest manufacturer of mobile devices behind Samsung - but not in the top five when it comes to smartphones.

As a brand name, Microsoft remains iconic. Yet it, too, has struggled to make inroads into mobile; too slow, say some, to respond to market demand.

Sales of its Surface tablets can most charitably be described as sluggish (if a $900m charge to last quarter's accounts, thanks to the underperforming Surface, can ever be charitably described).

Microsoft has struggled to make inroads into the mobile phone market

Prior to the deal the two companies had been working together to try to make inroads into the smartphone market.

A partnership formed in 2011 placed the Windows Phone (WP) operating system in Nokia's Lumia devices, and sales of Lumia have seen WP's global market share rise to 3.3% - beating BlackBerry.

Still, Google's Android and Apple's iOS remain dominant, in 90% of smartphones.

So in buying Nokia's mobiles and patents Microsoft is making clear it thinks it can do better with overall control of the devices on which its OS (largely) runs, and continuing with CEO Steve Ballmer's plan to restructure the software company into a devices and services organisation.

A little like Apple, you might say.

Microsoft and Nokia's problems are legion and well-documented, but worth briefly reflecting on.

Despite dominating the software market for nigh on 30 years, the company has struggled to adapt as demand for PCs has waned.

Increasingly our online experience is through tablet and smartphone - benefitting Apple, with its iconic iPhone and iPad, and Google, with its market-dominant Android OS.

Nokia has seen sales fall 24% in the three months to June, compared to last year. Just 53.7 million phones were sold, down 27%.

Some have argued that the price agreed by Nokia, roughly a quarter of sales last year, amounts to "fire sale" prices of a 150-year-old company that once dominated the mobile market.

For my part, when a business is so clearly in freefall, with no guarantee of a return to rising sales and profitability, such a sum looks pretty close to fair.

Others say that Microsoft itself is pursuing a pretty risky strategy - the second most expensive acquisition in the company's history essentially commits them to the highly competitive mobile devices market, where margins are more often than not pretty low.

Again, one would ask: what's the alternative?

Microsoft cannot ignore mobile, and with precious little hope that other manufacturers will at this late stage choose to adopt Windows Phone, why not purchase the company it was already investing huge sums in to keep afloat?

Nokia's 150-year history is not entirely at an end. Microsoft can use the Nokia brand for at least 10 years, and what remains of the Finnish company - its networks business, mapping and what's left of its patents portfolio - now has a sizeable pot of cash to invest.

Nokia may well return to form.

The same is true of Microsoft. But consider those they will have to "stuff" in order to get there.

Apple and Google are no strangers to, er, competitive marketing strategies. They hold huge brand recognition - and, more importantly, brand loyalty.

To gain more than a foothold in this market Microsoft's new devices arm will need to innovate.

The deal will conclude early next year. They'd best have something to announce between now and then.

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Microsoft To Pay £3.2bn For Nokia Phones

Microsoft Buys Nokia Handsets

Updated: 12:02pm UK, Tuesday 03 September 2013

By Niall Paterson, Media and Technology Correspondent

In the oft-confusing world of tech mergers and acquisitions where the ultimate intent is often opaque, shrouded in mystery, only to be revealed at a later date with some snazzy product launch, Microsoft's purchase of Nokia's handset business can easily be understood, and summed up in seven words.

An attempt to stuff Apple and Google.

Trying to gauge the likely success or otherwise of the strategy will take a little longer, I'm afraid.

Certainly, both are companies whose star has been waning of late.

Nokia remains the world's second largest manufacturer of mobile devices behind Samsung - but not in the top five when it comes to smartphones.

As a brand name, Microsoft remains iconic. Yet it, too, has struggled to make inroads into mobile; too slow, say some, to respond to market demand.

Sales of its Surface tablets can most charitably be described as sluggish (if a $900m charge to last quarter's accounts, thanks to the underperforming Surface, can ever be charitably described).

Prior to the deal the two companies had been working together to try to make inroads into the smartphone market.

A partnership formed in 2011 placed the Windows Phone (WP) operating system in Nokia's Lumia devices, and sales of Lumia have seen WP's global market share rise to 3.3% - beating BlackBerry.

Still, Google's Android and Apple's iOS remain dominant, in 90% of smartphones.

So in buying Nokia's mobiles and patents Microsoft is making clear it thinks it can do better with overall control of the devices on which its OS (largely) runs, and continuing with CEO Steve Ballmer's plan to restructure the software company into a devices and services organisation.

A little like Apple, you might say.

Microsoft and Nokia's problems are legion and well-documented, but worth briefly reflecting on.

Despite dominating the software market for nigh on 30 years, the company has struggled to adapt as demand for PCs has waned.

Increasingly our online experience is through tablet and smartphone - benefitting Apple, with its iconic iPhone and iPad, and Google, with its market-dominant Android OS.

Nokia has seen sales fall 24% in the three months to June, compared to last year. Just 53.7 million phones were sold, down 27%.

Some have argued that the price agreed by Nokia, roughly a quarter of sales last year, amounts to "fire sale" prices of a 150-year-old company that once dominated the mobile market.

For my part, when a business is so clearly in freefall, with no guarantee of a return to rising sales and profitability, such a sum looks pretty close to fair.

Others say that Microsoft itself is pursuing a pretty risky strategy - the second most expensive acquisition in the company's history essentially commits them to the highly competitive mobile devices market, where margins are more often than not pretty low.

Again, one would ask: what's the alternative?

Microsoft cannot ignore mobile, and with precious little hope that other manufacturers will at this late stage choose to adopt Windows Phone, why not purchase the company it was already investing huge sums in to keep afloat?

Nokia's 150-year history is not entirely at an end. Microsoft can use the Nokia brand for at least 10 years, and what remains of the Finnish company - its networks business, mapping and what's left of its patents portfolio - now has a sizeable pot of cash to invest.

Nokia may well return to form.

The same is true of Microsoft. But consider those they will have to "stuff" in order to get there.

Apple and Google are no strangers to, er, competitive marketing strategies. They hold huge brand recognition - and, more importantly, brand loyalty.

To gain more than a foothold in this market Microsoft's new devices arm will need to innovate.

The deal will conclude early next year. They'd best have something to announce between now and then.

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Wonga Confirms Weekly Profit Of More Than £1m

One of the biggest names in the controversial payday loans industry has confirmed it is making more than £1m in profits every week.

As first reported by Sky's City Editor Mark Kleinman, a surge in customer numbers helped Wonga earn profits, after tax, of £62.5m during 2012 - a 36% increase on the previous 12 months.

The company, which offers short-term loans to households and businesses, said revenues rose by 67% in the period to £309.3m and it lent £1.2bn - 68% more than in 2011 - in total to more than one million people.

The number of borrowers defaulting on their loans rose in 2012, to 7.4% from 6.4% the year before.

The payday industry is currently facing a Competition Commission inquiry amid concerns over how it operates.

Dozens of firms have left the payday market amid regulatory scrutiny

Today, Wonga's founder and chief executive Errol Damelin insisted the online lender was "upfront and transparent", adding it makes 5p of profit on every £1 it lends - typically £15 on every loan.

He said: "This is not about people on breadlines being desperate and us being a lender of last resort. We reject two-thirds of applications."

Instead, he said, the industry has been tarred by behaviour of other high-interest lenders.

"There's a lot wrong in how other parts of the industry operates," he said.

The industry denies imposing extortionate penalties for missed payments

And Mr Damelin insisted the company's profit margins were "not outrageous in any way to us".

He added: "Our customers are telling us that we provide very good value for money."

Wonga, which was involved in controversy recently when the Archbishop of Canterbury said he wanted the Church of England to "compete" it out of existence, also cast doubt over whether the Church can be a realistic competitor.

Mr Damelin told Sky News: "Two out of three applicants for Wonga loans are rejected. The market the church will get will be those rejected by Wonga.

"It's a market that needs to be serviced, and we are happy to see that market serviced. It's an important initiative."

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Ex-Tory Treasurer Spencer Targets Invoice Firm

By Mark Kleinman, City Editor

An investment vehicle whose directors include Michael Spencer, the former Conservative Party Treasurer, is in advanced talks about an acquisition that would trigger a stock market flotation.

Sky News understands that Tungsten Corporation, which was set up last year by Edi Truell, a financial services entrepreneur, is in discussions about buying a major stake in OB10, a business-to-business electronic invoicing provider.

A deal has yet to be finalised and its value is unclear, but one source close to the talks said that it could be completed within days.

The transaction would be likely to involve OB10 being reversed into Tungsten, which plans to raise funds from City investors to finance the takeover of fast-growing financial services businesses.

Mr Truell, whose brother Danny, a senior investment executive at medical charity The Wellcome Trust, is also involved and is understood to be attracted to technology companies operating in the financial sector.

Tungsten intends raising funds from City investors to finance the deal

OB10's existing shareholders include Fleming Family & Partners (FF&P), the investment firm with links to Ian Fleming, author of the James Bond novels.

The company describes itself as "the leading global B2B e-invoicing network", and claims that it can reduce the cost of paper invoice processing by 60%.

It is unclear whether FF&P or OB10's other investors plan to sell out altogether as part of the deal; one source close to Tungsten cautioned that the OB10 investment was "only one piece of the jigsaw".

City investors are expected to back Mr Truell's vision of creating a much larger business in the space following his successful track record at Duke Street Capital, the private equity group which ran into difficulty after his exit, and Pension Corporation, which masterminded the takeover of company pension liabilities.

Tungsten has been linked with a string of other acquisitions since it was formed, including the general insurance arm of the struggling Co-Operative Group and Scottish Widows, which is owned by the state-backed Lloyds Banking Group.

Mr Spencer agreed to join the vehicle's board as a non-executive director ahead of a flotation, which was originally scheduled for June last year but aborted because of adverse market conditions.

Spokesmen for Tungsten and FF&P both declined to comment.

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Walkie-Talkie Skyscraper Beam 'Melts Cars'

Blinding rays of light from a skyscraper in the City of London are being blamed for melting parts of vehicles below it.

City AM journalist Jim Waterson managed to fry an egg in the glare of the skyscraper where the temperature was measured at 92.6F (33.7C). 

Developers of 20 Fenchurch Street, better known as the "Walkie-Talkie" because of its distinctive shape, are investigating reports of the damaging glare, and a number of nearby car parking spaces have been suspended, say reports.

One journalist fried an egg in the high temperatures caused by the building

Businessman Martin Lindsay said he was distraught when he returned to find his luxury Jaguar XJ saloon with warped panels along one side.

The wing mirror and badge had also melted from the heat of the reflected sunlight, he claimed.

"They're going to have to think of something. I'm gutted. How can they let this continue?"

The 37-storey skyscraper is still being built and the developers are trying to find a way of sorting out the problem by putting up cladding and scaffolding to cover the area of pavement on Eastcheap where the Jaguar melted.

Businessman Martin Lindsay was 'distraught' about his car

A joint statement from Land Securities and Canary Wharf said: "We are taking the issue of light reflecting from 20 Fenchurch Street seriously, and are looking into the matter as a priority.

"The phenomenon is caused by the current elevation of the sun in the sky. It currently lasts for approximately two hours per day, with initial modelling suggesting that it will be present for approximately 2-3 weeks.

"As responsible developers we are making every effort to keep local businesses informed and we have communicated with them regularly since the issue first appeared. While we investigate the situation further we have liaised with the City of London to suspend three parking bays in the area which may be affected.

"In addition, we are consulting with local businesses and the City to address the issue in the short-term, while also evaluating longer-term solutions to ensure the issue cannot recur in future."

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Lloyds Boss Praises Coalition On Economy

The chief executive of Lloyds Banking Group has told Sky News that Government action in support of first-time home buyers is already proving a "game changer for the British economy".

The boss of Britain's largest mortgage lender, Antonio Horta-Osorio, dismissed suggestions of a looming house price bubble arising from the Help-to-Buy and Funding for Lending Scheme initiatives.

He backed Government support for the UK residential market because, he said, until three months ago house price rises remained significantly below the level of inflation.

"This is a temporary scheme to correct a market anomaly," he said. 

Mr Horta-Osorio, told business presenter Jeff Randall that such schemes were helping instil confidence in a fragile economy.

Antonio Horta-Osorio was interviewed at the bank's HQ by Sky's Jeff Randall

He also expressed his view that the Government should not be a shareholder in UK banks.

Lloyds Banking Group, which also owns Halifax and Bank of Scotland, required a massive Government bailout in 2009 following the takeover of HBOS.

It remains 39% taxpayer-owned.

"It was an exceptional thing which should not happen again," he said

Shares were on Tuesday trading near the average price the taxpayer paid

"It's up to the Government to decide when and how to sell the shares." But he said: "We've done our bit" by restructuring the bank.

"Selling Lloyds shares is the right thing to do," he insisted.

The group had already announced half-year profits this summer of more than £2bn and Mr Horta-Osorio said the share price had now risen to a point where taxpayers could have their money back at a profit.

The bank has been beset by a number of embarrassing scandals.

Compensation for the mis-selling of payment protection insurance (PPI) has cost Lloyds Banking Group £7.3bn so far.

Mr Horta-Osorio described that sum as a "monumental bill" but maintained it was important to "break with the past".

Next week, 631 Lloyds branches are to be hived off to form TSB Bank.

It follows the collapse in May of a plan to sell the branches to the Co-operative Group.

Mr Horta-Osorio dismissed the suggestion that the decision had been a grisly blunder but insisted it was the "best alternative" at the time.

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