Telecom M&A

Yet another telecoms industry bid today as Redstone Telecom takes out IDN Telecom. Redstone had already taken on Symphony and Tolerant so this is their third strike.

And behold; after a lousy start to 2006, even Vodafone and BT are in favour now, with share price gains since the summer of 30-40%.

We're also seeing real convergence between fixed and wireless. Redstone's interims stress the acquisition of mobile as well as fixed business, and even Vodafone is now moving into the fixed world. Then you have the strange emergence of Car Phone Warehouse as a telecoms supplier rather than a mobile reseller. Convergence is happening; what intrigues me is that it's happening about five years after everybody thought it would.

The same goes for triple play. It was BSkyB's acquisition of Easynet that kicked this off - and it is still not completely in place, with most smaller ISPs unable to offer the third piece of the jigsaw, TV.

That suggests the market is just recognising the fact that telecoms companies are starting to extract the value from their operations. The typical network fixation of telecoms execs seems to have gone - instead of which they're looking at what their customers actually care enough about to pay for.

Some advice for financial PR firms

I'm getting fed up with financial PR firms. Not all of them - but an awful lot. They keep doing stupid things.

• Emails which say "Please read this announcement." No mention of what the announcement is. For all I know the piddling little mobile phone repair firm might just have bought Microsoft and Google... but if you don't tell me, can I be bothered to read the announcement? It hardly takes much imagination to put a quick summary in the subject line. "Piddling PLC buys Google" or "Piddling PLC interim results".
• Even better if you could be bothered to put an executive summary in the body of the email as well as the full attachment.
• Attachments over 10 megabytes. Do these guys realise that not everyone has an unlimited email account? That I might be accessing my account via mobile, or over a dial up line? That I am getting TWENTY OR THIRTY of these things a day? Do you really need fifteen photographs? Have you compressed the data? I can't believe that a corporate results presentation needs to be this big. In fact, I'd ask some of these agencies: did you bother to look at how big the file is, before you sent it?

This is not rocket science. Podcasting probably is. Using Skype probably is. But being able to send out an email in a form that journalists can, and are motivated to, read ... well, isn't that what PR firms are paid for?

Miniaturisation beneficiaries

I spoke to Sarantel yesterday on their latest results. They've been hit by a major client not delivering the volumes it promised, and have had to retrench.

But they've also now got new deals for their antennas with Hewlett Packard and TomTom. The HP deal in particular should help them get back on track, as they now have better visibility - they're supplying the end users, not just another OEM.

What strikes me as interesting about Sarantel though is that it's a beneficiary of the trend to miniaturisation. Management believes patch antennas are reaching their physical limits, and face unacceptable performance degradation from here on for every millimetre taken out.

'Slimline' TomTom currently means 14mm thick. Sarantel are looking at products only 10mm thick and the size of a credit card.

So there's a second Moore's law at play. Not only do we see the amount of memory/processing power per pound increasing, but at the same time a commensurate decrease in both size and (importantly) power requirements.

A dumb investment?

There's a piece in the Evening Standard 'Homes and Property' supplement promoting Corby as a great place to buy a house.

I'm not convinced. Let's take a look at how it really stacks up.

"An hour's commute from London." This is hopeful. Corby doesn't actually have a station. Commuters either have to drive, or take a shuttle bus to Kettering. From Kettering, services are every half an hour - just about an acceptable commuter frequency, but not more.

"There are plans for thousands of new homes." Are the Evening Standard's journalists completely economically illiterate? The fact that supply is increasing is generally considered to have a downwards impact on prices, but here - as so often with coverage of the Thames Gateway - developers' PRs seem to have convinced them that increased supply is a reason to buy!

Now let's look at what the economy is like. Corby suffered badly in the 1980s after the steelworks closed. It is now seeing new jobs. But they're in food processing and distribution. Might I point out that these are not trades which employ lots of well remunerated young professionals? Many of these factories are probably paying the majority of their workers close to minimum wage. That equates to about £11,000 a year. On that, even applying five times income, and assuming you've got a £10,000 deposit, you'll be able to afford £65k for a property. Needless to say, none of the properties featured in the article are selling anywhere near that level.

I do wonder if buy to let investors are going to head for Corby on the basis of this article. There just isn't any underpinning to the argument. It looks as if someone got hold of a load of press releases and stuck them together, without asking what will drive prices up.