22nd September 2022
Bite-sized business news from the UK and beyond
- Government slashes business energy bills
- French billionaire takes £750m stake in Vodafone
Government slashes business energy bills
Yesterday the government announced it would subsidise energy bills for businesses and public organisations by more than half this winter in a bid to avoid a flood of corporate collapses.
How did we get here?
Unlike households, companies don’t have a price cap to offer a level of protection from rising energy prices. Earlier in the month the government unveiled a new ‘Energy Price Guarantee’ that would limit bills for the average family to £2,500 a year until 2024, more than a quarter below the initial price cap announced by the regulator for this winter.
But details of the support for non-domestic customers was delayed due to the greater complexity and admin needed for corporate contracts. Companies and public bodies like schools and hospitals will get 50% discounts on bills from October until March but this could be extended for more ‘vulnerable’ industries.
Combined, the government package for homes and businesses is estimated to cost £150bn, more than any pandemic-related support. And with prime minster Liz Truss staunchly against tax rises, the funding for the package will likely mean even more government borrowing.
Zooming out: The business energy announcement comes the same day official data showed that the UK’s level of borrowing in August was twice the level forecast in March, due to runaway inflation driving debt-interest costs.
This creates a rather ominous backdrop to the government’s first 'fiscal event' aka mini-budget this week, raising questions about the sustainability of the public finances before the uplift in spending has even begun.
Other stories to keep you in the loop
- Germany nationalises gas giant amid energy crisis
- 999 call handlers to join strikes in October
- EY posts record revenues of £40bn as consulting sales surge
- Another stamp duty holiday set to be announced on Friday
- M&S raises staff pay for second time this year to help with living costs
- US interest rates see third 0.75% rise to tackle inflation
- Oxford Street candy stores to face tougher rules amid claims of ‘dirty money’ and tax evasion
French billionaire takes £750m stake in Vodafone
Yesterday French billionaire Xavier Niel announced he had bought a 2.5% stake worth £750m in telecoms giant Vodafone via his investment vehicle Atlas Investissement.
Who is Xavier Niel?
He’s the founder of French telecoms firm Iliad and has built a telecoms investment portfolio stretching nine countries with nearly 50m subscribers and more than €10bn of revenue. According to Forbes the 55 year-old has a personal fortune of $8bn.
What’s behind the move?
Vodafone is Britain’s third biggest mobile provider and has 300m customers spread across more than 20 countries including Germany, Italy and Spain. The company is also a major player in Africa and has a joint venture in India.
In recent years it’s faced criticism from investors for an overcomplicated business model and a lack of scale that has undermined shareholder returns.
Atlas says it sees an opportunity to streamline operations Vodafone and take advantage of "the solid underlying trends in the global telecommunications sector".
Back in May another industry player became a shareholder. Etisalat, the telecoms giant owned by the UAE government, bought a 9.8% stake in Vodafone for £3.6bn.
Vodafone is not the only UK telecoms company getting interest from overseas
Last year Altice, France’s second largest telecoms operator, bought a 12% stake in BT for £2bn, becoming BT’s largest shareholder. Since then, it’s steadily built up the position to 18%. Analysts say that Etisalat and Atlas could look to emulate Altice by slowing building up their ownership in Vodafone before launching a takeover bid.
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