Rumoured Mergers could change the face of UK Telecoms Industry
It has been recently revealed that BT is considering buying the O2 mobile network, and is in the early-stages of talks with the UK’s largest mobile network, EE. This comes 13 years after BT themselves sold the company that became O2, and marks a dramatic change in policy, which could spark a string of mergers in the telecoms and media sectors. In this respect the UK is actually slightly behind the rest of Europe, as the concept of a communication supergroups offering everything from Premier League football to internet services, is already established on the continent.
BT’s move back into mobile could also help those waiting for a faster internet connection as competitors retaliate. It is possible their main rivals such as Vodafone and TalkTalk may choose to hit back where BT is strongest, by stepping up investment in their own superfast fibre networks.
The UK Telecoms Industry at a glance:
BT
UK customers: 9.8 million for home broadband and phone
Products: TV, broadband, land line
SKY
UK customers: 11.5 million
Products: TV, broadband, land line
VIRGIN MEDIA
UK customers: 4.9 million
Products: TV, broadband, land line, mobile
TALKTALK
UK customers: 4.2 million
Products: TV, broadband, landline, mobile
EE
UK customers: 25 million
Products: TV, broadband, mobile
O2
UK customers: 22 million
Products: mobile
VODAFONE
UK customers: 20 million
Products: mobile, soon to launch broadband and TV
THREE
UK customers: 8 million
Products: mobile
Oil price is skidding towards $80 a barrel
Brent Crude suffered its biggest financial slump in four years in London yesterday, testing the $80-a-barrel mark.
In June, Brent Crude hit $115 but since then the price has slumped by more than 30%. With a 15% decrease this month alone. The price for December settlement, the forward month contract, fell $1.88, or 1.5 per cent, yesterday to $80.46 a barrel.
Traders are braced for further falls today when the Energy Information Administration, the statistical unit of the US Department of Energy, pub-lishes its inventory update, which is expected to show that stockpiles rose by more than 250,000 barrels last week.
Falling crude prices have had little impact on shale oil drilling in the United States, with output from the largest shale fields showing no sign of slowing. Yet if prices fall much farther, production will become less viable because of the high cost of extraction.
Other factors weighing on the energy market include concerns that Opec appears unable to settle on a united plan to cut production that would stop the plunge in crude prices.
The oil producers’ cartel, which will meet in Vienna this month, supplied 31 million barrels a day last month, more than 3 per cent above its target of 30 million barrels, adding to global stockpiles when growth in the big oil consuming nations appears to be slowing. On Monday analysts at JP Morgan slashed its Brent price forecast for 2015 by $33 to $82 per barrel.
According to Opec’s own estimates its share of the global oil market could shrink to 37 per cent in 2017 from 40 per cent last year. That would be the lowest in more than 25 years and far below its peak of 54 per cent in 1973.
Meanwhile, the loading dates of at least four cargoes of Forties crude, the largest of the four North Sea streams that underpin the Brent oil benchmark, have been delayed amid lower-than-expected production. Fifty oilfields are connected to the Forties pipeline.
Ofcom finds 4G Twice As Fast As 3G
4G speeds in the UK are more than double the speed of 3G, according to new data from Ofcom. The average speed was found to be 15.1mbps, 3G averaged 6.1mbps.
Data was collected from mobile networks in five major cities in the UK including London, Birmingham, Glasgow, Manchester and Edinburgh.
London came top of the speed league table for 4G, but was actually the slowest for 3G. Load times were fairly consistent across networks, with Three coming out on top.
On average, it took 0.72 seconds to load a standard sized web page on 4G in London, compared with 1.2 seconds on 3G.
In Glasgow it took 0.82 seconds to load the same page via 4G, the slowest of the cities tested. The fastest 3G browsing speeds were found in Manchester, where the average load time was 1.01 seconds.
It emerged that Edinburgh had the fastest download speeds for both 3G and 4G, while London was slowest for both. These results may be surprising for some, and come as a clear indication that both old and new technologies are patchy and at times inconsistent. Ofcom chief executive Ed Richards said however that it does make a good case for the overall performance of 4G.
“Today’s research shows 4G is providing a significantly enhanced mobile broadband experience to customers, which we expect to be available to 98% of the population by 2017 at the latest.”
Matthew Howett, Ovum analyst added the following: “I expect some consumers might have held off upgrading in the belief that the network performance wouldn’t be that much different, or because of a bad 3G experience, but this report clearly highlights the difference, so for operators this is probably a welcome piece of work,”
“Ofcom’s latest report shows that 4G speeds are undoubtedly improving, but with the chosen test locations in key urban centres, it’s not a real representation of the UK as a whole. The true picture for those based outside of major towns and cities – where it is often needed most – is still uncertain.” said Ernest Doku, telecoms expert at uSwitch.
Wages To Outpace Inflation By End of 2015
The Bank of England has declared that wages are set to rise significantly faster inflation by the end of 2015. This will mark the end of the longest pinch on living standards in recent times.
Since the start of 2008 average earnings in the UK have fallen by 7.5 per cent, although accounting for inflation they are no higher than in 2003. Many have felt the squeeze as a result of this despite modest recovery on paper.
The Bank is now forecasting wages to climb at a rate of 3.5 per cent by the end of next year, a good deal higher than the predicted inflation of 1.4 per cent. The interest setting committee of the Bank Of England said it “expects annual real pay growth to pick up from about zero now to about 2 per cent by the end of next year, returning it to normal levels not seen since before the crisis.”
It emerged today that the squeeze on household finances was finally easing after after six years of hardship. Average pay in the third quarter grew by 1.3 per cent compared with the same period last year. Meanwhile, inflation over the same period was at 1.2%, according to the Office for National Statistics.
Bonuses fell by an average of 5.3% per cent over the same period, meaning total pay growth remained below inflation. Wages overall have been in recovery for five consecutive months and grew even more in the month of September.
Rising wages and low inflation will combine for the first time in years to provide a glimmer of hope to UK households. On top of that, oil prices are in decline, pushing down the cost of heating and petrol. The cost of food is also increasing at it’s lowest rate since 2002.
Paul Hollingsworth, expert in UK economics at Capital Economics said: “A recovery in real wages looks set to provide timely support to the economic recovery.”
With the news that 112,000 people found employment in the second quarter of this year, rate of job creation in the country is also encouraging. In the past year almost 700,000 new jobs have been created. Youth unemployment fell from 16.9 per cent to 16.2 per cent.
Despite the encouraging figures, a stark reminder of the state of affairs came from chief economist, Matthew Whitaker: “The depth of the six-year pay squeeze is such that we can’t expect average pay to return to its pre-crisis levels until the end of the decade,”
Gas glut could see household bills fall
People in Britain may soon be seeing the benefits of a glut in global gas supplies, with average household bills falling despite a growing dependence on imported fuel.
The news of falling bills follows on from disastrous week for global stock markets in the energy sector. Brent Crude suffered its biggest financial slump in four years in London yesterday, testing the $80-a-barrel mark. This is more than a 30% fall this year, 15% of which has been in the last month.
While investors have been watching aghast as billions of pounds were lost to market gyrations, a fuel glut and a slowing global economy have driven the oil price down to a level that could save the world $1.8bn a day on everyday fuel costs.
As a result many countries are building facilities for exporting liquefied natural gas (LNG) and Britain has ample capacity to import it at terminals in Milford Haven, Pembrokeshire, and the Isle of Grain, Kent.
According to a report by UK Energy Research Centre claims that Britain is facing rising gas prices because of the decline in North Sea production are unfounded.
“By the early 2020s there might be an oversupply of LNG and in such circumstances the UK is well placed to attract increased supplies,”
The study also highlighted the risk that that Gazprom, the Russian state-owned gas company, could be forced to cut the cost of gas in Europe in response to competition from LNG, particularly from the US, which is converting import terminals to export some of its vast supplies of shale gas.
He said: “There is no reason to just have a scenario where gas prices go up. There is no shortage of gas [globally].”
Switching to burning more gas in power stations will help Britain meet its climate change targets because it has half the emissions of coal, the study found. However, its authors criticise the government for exaggerating the potential for shale gas in Britain.
Ministers have suggested that widespread fracking to extract shale gas could bring down energy prices, improve security of supplies and boost the economy in the northwest of England.
The report says: “Any talk of shale gas making the UK self-sufficient [in gas] again, let alone allowing significant exports, is far-fetched.”
