London Evening Standard, market report column [London Evening Standard]
(Evening Standard (London, England) Via Acquire Media NewsEdge) Dec. 17--Telecom shares took a big hit today over fears that Britain's forthcoming auction of 4G mobile-phone spectrum will cost more than expected after Holland's sale of airwaves smashed forecasts. Vodafone, one of the successful bidders in Holland, was the second-worst faller on the FTSE 100, diving 4.5p or nearly 3 percent to 156.45p.
Dutch-based telecoms firm KPN suffered even worse, with its shares slumping 13 percent to euro 4.01 (243p), as it warned it must slash its dividend payouts for both this year and next.
Analysts fretted that KPN had over-paid in the Dutch auction, which raised pounds sterling 3 billion. There looks to be a clear read-across to the UK, a much bigger market. Chancellor George Osborne caused some controversy when he said in his Autumn Statement this month that Britain's 4G auction is likely to raise pounds sterling 3.5 billion, with some critics suggesting he was being optimistic. But, given the Dutch experience, his forecasts might turn out to be conservative.
Mobile giants such as Voda have to take part in the 4G auction to get access to this new spectrum as consumers demand super-fast broadband on their smartphones and tablets.
Markets were subdued as the pre-Christmas slowdown began, with the FTSE 100 index, dropping more than 0.5 percent or 36.52 points to 5885.24.
The wooden spoon went to generator supplier Aggreko, whose shares cratered 17 percent on fears about the "uncertain" economic outlook in 2013, and there were jitters over other companies in the power sector. Energy supplier Hunting was the worst performer on the FTSE 250, tumbling 7 percent.
There was better news for investors in Egypt-focused miner Centamin, which rallied 27.17 percent or 9.41p to 44.05p. Shares plunged last week when fuel supply and operations at Sukari were temporarily suspended but Centamin said it expected things to return to normal "in the coming days".
Emerging markets might be risky but they can provide big returns. Fortune Oil has sold its gas division to China Gas Holdings for $400 million (pounds sterling 247 million) -- a 35 percent premium to the entire market capitalisation of Fortune Oil. Shares in the London-listed firm surged more than 20 percent or 1.89p to 11p. Broker VSA Capital says its "break-up valuation" has increased and it has a punchy target price of 28p.
Russian telecoms giant MegaFon isn't faring too badly since it floated last month in London. Shares hit a new record high, rising $0.42 to $23.97, and they are now more than 20 percent above the float price three weeks ago. That's good for MegaFon's controlling shareholder Alisher Usmanov who is also the second-biggest shareholder in Arsenal, which has enjoyed rather less success of late.
(c)2012 London Evening Standard
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