France Telecom to Sell Orange Swiss to Apax for $2.1 Billion

France Telecom SA (FTE) agreed to sell its Swiss mobile-phone unit to Apax Partners LLP for 1.6 billion euros ($2.1 billion).

The deal is subject to approval by Swiss authorities and will be submitted to France Telecom’s board the week of Jan. 9, according to a statement. Apax, the London-based buyout firm, beat out bids from EQT Partners AB, Providence Equity Partners Inc. and French telecommunications billionaire Xavier Niel, two people with knowledge of the situation said yesterday.

France Telecom is shedding assets in Europe, where multiple phone companies are vying for a shrinking pool of new customers, to embrace faster-growing markets in Africa and the Middle East. The Paris-based mobile operator, France’s largest, is also in talks to sell its Orange Austria unit to Hong Kong-based Hutchison Whampoa Ltd. (13), people familiar with the situation said in October, and is planning to exit Portugal.

“It makes sense to exit the difficult Swiss market and may give them more flexibility on the cash-flow side,” said Giovanni Montalti, a London-based analyst at Credit Agricole Cheuvreux, who rates the stock “underperform.”

Perella Weinberg Partners LP and Lazard Ltd. (LAZ) are advising France Telecom on the Swiss sale. Officials at EQT and Providence couldn’t be reached for comment yesterday by telephone.

Apax’s History

Apax, run by Martin Halusa, has participated in more than 20 deals this year, including last month’s purchase of U.S. wound-treatment company Kinetic Concepts Inc., its largest in 2011, according to Bloomberg data. The firm has amassed about half the 9 billion euros it’s seeking for its latest fund, three people with knowledge of the plans said this month.

The decision by France Telecom to pursue a sale of the Swiss unit to Apax follows last year’s bid to merge the business with rival Sunrise, a deal rejected by regulators. Sunrise’s owner, CVC Capital Partners, was earlier excluded from the sale process for Orange Suisse, although the firm discussed assisting Providence with arranging financing in the hopes of attempting another merger, according to people with knowledge of the talks.

A combination of Orange Switzerland with Sunrise would leave the country of about 8 million residents with two mobile operators: the merged entity and Swisscom AG, the former Swiss phone monopoly. By comparison, the U.K., Germany and Italy all have four full-service mobile-network providers.

Orange Suisse

Orange Switzerland, founded in 1999, had revenue last year of 1.3 billion Swiss francs ($1.39 billion). The company, which employs about 1,200, had a customer base of 1.6 million at the end of September, according to the statement.

The value of the deal is 6.5 times Orange Switzerland’s estimated 2011 earnings before interest, taxes, depreciation and amortization, France Telecom said in the statement. That compares with a median Ebitda multiple of 5.6 paid for Western European telecommunications assets in the last 3 years, according to Bloomberg data.

France Telecom rose 0.8 percent to 11.97 euros in Paris trading yesterday. The shares have sunk 23 percent this year, valuing the company at about 32 billion euros.

The French phone company, led by Chief Executive Officer Stephane Richard, said Oct. 27 that third-quarter profit fell 6.2 percent as a revenue decline at home overshadowed growth in Spain and some African countries. The company said then that full-year operating cash flow will be “slightly” more than 9 billion euros, compared with a previous forecast of that amount.

Almost half the mobile operator’s 45.5 billion euros in sales last year came from France. In October, France Telecom agreed to acquire Congolese mobile operator Congo-China Telecom, entering its third new country in about a year.

Obama: It’s ‘Not Class Warfare, It’s Math’

(Bloomberg) — President Barack Obama called for $1.5 trillion in tax increases over the next decade, largely targeting the wealthy, to help trim the deficit, saying U.S. prosperity depends on paying down the federal debt.

In combination with cuts in spending, Obama said, his plan would reduce the long-term deficit by $3 trillion beyond the $1 trillion that was agreed to as part of a deal to raise the U.S. debt ceiling.

“This is not class warfare, it’s math,” Obama said this morning at the White House as he unveiled his recommendations to a 12-member congressional committee charged with finding ways to trim at least $1.5 trillion from the deficit. “The money’s going to have to come from someplace.”

The proposal puts Obama in conflict with Republican congressional leaders such as House Speaker John Boehner, who last week said his party wouldn’t accept tax increases and urged the bipartisan supercommittee to focus on scaling back entitlement programs such as the Medicare health-insurance plan for the elderly. The panel has a Nov. 23 deadline to come up with a plan.

Obama coupled his proposal with a call to overhaul the tax code. He said his plan would eliminate “special lower rates for the wealthy” which were “meant to be temporary.” He also would close loopholes in corporate tax law.

Differing Visions

The administration and congressional Republicans are at odds over how to re-ignite the economy, drive down unemployment and grapple with the nation’s long-term deficit. Administration forecasters project the U.S. economy will grow at a sluggish 1.7 percent rate this year and the jobless rate will average 9.1 percent in 2011 and show little change in 2012, when the presidential election takes place.

To deal with the deficit, Obama won’t support any increase in the eligibility age for Medicare, as he did while trying to negotiate a broad deficit-reduction package with Boehner in July, according to administration officials, who briefed reporters before Obama spoke on condition of anonymity. The officials said Obama only accepted the measure as a concession to Republicans to assure speedy passage of an increase in federal borrowing authority to avert a U.S. debt default.

Obama will seek $248 billion in Medicare cuts, including reductions in payments to health-care providers and $72 billion in savings from the Medicaid state-federal health program for the poor, the officials said.

Veto Threat

He vowed to veto any deficit plan that reduces Medicare benefits unless wealthy Americans also are asked to pay more in taxes.

Obama also is adopting billionaire investor Warren Buffett’s suggestion that the nation’s “mega-wealthy” pay more taxes, prompting one leading Republican to accuse the president of engaging in “class warfare.”

The provision, which the White House is calling the Buffett rule after the 81-year-old chairman and chief executive officer of Berkshire Hathaway Inc., would require taxpayers with incomes of $1 million or more pay at least the same percentage in taxes as middle-income Americans, according to an administration official.

“Class warfare will simply divide this country more,” Republican Representative Paul Ryan, chairman of the House Budget Committee, said on the “Fox News Sunday” program. “It will attack job creators, divide people, and it doesn’t grow the economy.”

More Than Cuts

Obama rejected that criticism.

“We can’t just cut our way out of this hole,” he said. “It’s only right that we ask everyone to pay their fair share.”

By proposing to put more of a burden on the wealthiest taxpayers and on corporations by ending some tax preferences, Obama is seeking to exert pressure on Republicans and frame the argument he is making to voters about the nation’s priorities.

“Should we keep tax breaks for millionaires and billionaires — or should we invest in education and technology and infrastructure, all the things that are going to help us out-innovate and out-educate and out-build other countries in the future?” Obama said on Sept. 12 as he released the legislative text of his jobs plan.

During his bus tour last month through rural areas of Minnesota, Iowa and Illinois, Obama quoted from a New York Times opinion article in which Buffett wrote that the nation’s richest individuals have been “coddled long enough by a billionaire- friendly Congress.” Buffett argued for raising taxes for the “mega-rich” in the U.S.

Buffett as Adviser

Buffett has served as an informal adviser to the president since Obama’s 2008 election campaign. He plans to hold a Sept. 30 fundraiser in New York for Obama’s re-election bid.

While Obama hasn’t set a minimum tax for those with $1 million-plus in income, his prime target is the differential between the tax rates on capital gains and ordinary income. Today’s 20-percentage-point difference gives taxpayers an incentive to find ways to reclassify wage income as investment income.

In addition to the cuts in Medicare and Medicaid, Obama will seek $260 billion in savings from other so-called mandatory programs not subject to annual appropriations, the officials said. That includes $33 billion in cuts to farm subsidies and $42.5 billion in reductions to federal employee benefit programs covering both civilian workers and military personnel.

Another $1.1 trillion would come in savings from winding down the wars in Afghanistan and Iraq, the officials said.

Jobs Plan

The jobs plan the president has proposed is a $447 billion package of tax cuts and spending. He proposes to pay for it largely by capping itemized deductions and some exclusions for individuals earning more than $200,000 a year and married couples earning more than $250,000.

He also would tax the carried interest, or profits-based compensation, of private equity managers, real estate investors and venture capitalists as ordinary income, instead of more lightly taxed capital gains, and limit the oil and gas industry’s ability to claim domestic manufacturing deductions for drilling.

Obama will incorporate all those tax proposals in his deficit plan, along with the expiration of the tax cuts passed under the administration of President George W. Bush for individuals making more than $200,000 and couples making more the $250,000, an official said.

Just Suggestions

The officials said Obama will frame specific changes as only suggestions to the panel and focus on a call for a tax overhaul that meets the revenue target, complies with his Buffett rule and lowers rates.

The tax increases and spending cuts Obama will propose would come on top of the more than $1 trillion in cuts to discretionary spending that he and Congress agreed to when they raised the national debt limit in August, for a total of more than $4 trillion over 10 years.

–With assistance from Hans Nichols and Catherine Dodge in Washington and Margaret Talev in New York. Editors: Joe Sobczyk, Mark McQuillan.

US growth and eurozone woes hit stocks

Investors are paring positions in growth-focused assets as worries about the US economy and the eurozone debt crisis continue to hit sentiment.
The FTSE All-World equity index is down 1.3 per cent, following a rotten session in Asia and a rough start for Europe. There is broad softness in commodities, where copper is off 1 per cent to $4.07 a pound and Brent crude is lower by 1.3 per cent to $110.85 a barrel. Gold is little changed at $1,884 an ounce.
Wall Street is closed on Monday for the labour day vacation, but in electronic trading the S&P 500 futures contract is down 0.8 per cent.
The action at the start of the week is primarily focused on two themes: the hangover from an extremely disappointing US jobs report on Friday and nervousness ahead of a week of eurozone fiscal and political wrangling.
The former was one of the main reasons why the S&P 500 finished the previous session down 2.5 per cent as investors fretted that the world’s biggest economy was at risk of dipping back into recession.
Bulls had hoped that the market was re-entering that Panglossian state where good data were welcomed but bad data were also considered good news because they may hasten the US Federal Reserve to deliver more support to financial assets as part of its attempt to gird sentiment – rather like was seen a year ago, as QE2 was on the cards,
But it appears that many in the market sense a greater reluctance by the Fed to deliver further quantitative easing, and in any event there is a growing view that any such move may prove counterproductive as it would reinforce a feeling of exasperation. Thus news that no jobs were created in August in the US took the S&P 500 back down to a one-week low and ensured that the volatility seen during August carried over into the fresh month.
Another reason why markets have been so skittish during the late summer is that the eurozone budget crisis is delivering one of its pulses of stress. Fiscal vacillation in Rome and doubts about Greece’s latest bail-out tranche are again causing tremors. Italian 10-year yields have risen for the eleventh consecutive session, up 11 basis points to 5.39 per cent, even as the European Central Bank is seen standing as a backstop.
The ECB will meet on Thursday to discuss monetary policy and the Italian debt purchase programme is likely to be on the agenda.
Traders thus this week are going to have to navigate developments in the discussions between Athens and its lenders and also track the passage of the Italian government’s austerity proposals.
In addition, Wednesday is expected to see a court ruling in Germany that may affect the country’s participation in financial rescue packages – potentially removing the assumption that the region’s biggest economy will stand shoulder to shoulder with weaker peers.
Initial reaction suggests investors are not overly optimistic about these issues. The yield on the 10-year German Bund has hit a recent record low of 1.96 per cent, down 5 basis points on the session.
The US Treasury market is closed, but benchmark yields finished on Friday near record lows too, of 1.99 per cent.
Little surprise, then, that the euro is under pressure. The single currency is down 0.2 per cent to $1.4128 and the Swiss franc is leading the perceived havens with a gain of 0.4 per cent to SFr1.1116 per euro.
European stocks are under the cosh, with the FTSE Eurofirst 300 sporting a loss of 2.1 per cent as miners and financials suffer heavy selling.
Earlier in Asia, the repercussions of the US jobs data rattled investors, pounding exporters, technology shares and commodity producers. Tokyo’s Nikkei 225 lost 1.9 per cent and Shanghai shed 2 per cent as the FTSE Asia-Pacific index declined 2.7 per cent.
The resource-heavy Australian market was badly hit, with Sydney’s S&P/ASX 200 falling 2.4 per cent. But one of the worst performers was the highly sensitive South Korean bourse, where the Kospi tumbled 4.4 per cent as consumer-focused technology plays in particular took a pounding.

News Corp suffers blow in Australia

News Corp suffered another blow on Friday after Australia’s antitrust regulator said a deal by its local pay-TV affiliate to buy rival Austar for A$1.9bn (US$2bn) would hurt competition.

The Australian Competition & Consumer Commission said in a preliminary ruling that Foxtel’s proposed acquisition of Austar would likely result in a “substantial lessening of competition”.

The decision triggered a 20 per cent drop in the share price of Austar, which is majority-owned by US billionaire John Malone’s Liberty Global. It comes amid heightened scrutiny of News Corp’s operations around the globe as the UK phone hacking scandal deepens.

Graeme Samuel, outgoing ACCC chairman, dismissed suggestions that the concerns were linked to the escalating crisis over phone hacking by the News of the World, the defunct UK Sunday tabloid.

“There is not even the slightest scintilla of connection,” Mr Samuel told the Financial Times, adding that Foxtel’s proposed acquisition raised significant competition concerns.

After earlier dropping to A$1.03, Austar shares closed 21 cents lower at A$1.08½, a large discount to Foxtel’s A$1.52 offer price, and underlining market sentiment that the takeover is all but dead.

The setback comes just over a week after Mr Murdoch was forced to withdraw News Corp’s planned bid to take full control of British Sky Broadcasting after the company admitted public condemnation of phone hacking made the climate “too difficult”.

Julia Gillard, Australia’s prime minister, this week called on Mr Murdoch’s Australian subsidiary to answer “hard questions” in the light of the UK phone hacking scandal. The Australian government is also considering a review of the country’s media industry.

Foxtel is half-owned by Australian telecoms group Telstra, with 25 per cent stakes held by both News Corp and gaming tycoon James Packer’s Consolidated Media. It has been courting Austar for the best part of a decade.

Foxtel said the ACCC’s request for additional information from relevant parties formed part of the regulator’s review process. It said it was confident the deal would “not substantially lessen competition in any market,” and that pay-TV operators in Australia faced vigorous competition from commercial and state broadcasters, their digital channels, and online operators.

Austar stressed the ACCC had not made a “final decision” and that the two pay-TV groups remained committed to the deal. The ACCC expects to make its final decision by September 8.

Separately, News Corp has sold its News Outdoor billboard businesses in Russia and Romania to a group of Russian investors led by VTB Capital, the state investment bank, at a steep discount to what it hoped to raise. People familiar with the matter said the businesses had been sold at a value of just $350m, excluding debts, against the $1bn-$1.5bn cash and shares deal it was chasing with JCDecaux, the French advertising group, just three years ago.

8SJQ8EH2DZEZ

Swiss, U.S. in talks on tax probe settlement

The United States and Switzerland are in advanced talks on a multibillion-dollar deal that would let several Swiss and European banks join a common settlement and avoid potential U.S. prosecution for helping wealthy Americans dodge taxes, senior persons briefed on the matter said.

As part of the agreement under discussion, known as a global resolution, U.S. government agencies would invite the banks to pay a fine, exit their undeclared offshore banking businesses for Americans, and turn over client names to the Internal Revenue Service (IRS) and the Justice Department.

In exchange, the agencies would drop an ongoing investigation into the banks.

Three current and former government officials briefed on the matter described the possible agreement but spoke on condition of anonymity on Thursday, citing the wide-ranging investigation of Swiss and European banks by the two agencies.

It could not immediately be determined which banks could be invited to participate in the global resolution.

While U.S. and Swiss authorities were still working out the details, an announcement of a settlement could come as early as July, these persons said.

The fines involved could collectively total several billion dollars, they said.

Banks that “opt out” of the deal could face heightened scrutiny from U.S. authorities, including a possible legal summons for client names from the IRS and tougher scrutiny by the Justice Department.

A resolution would signal another strong blow to the Swiss tradition of client confidentiality, whose laws date to 1934 but whose tradition goes back centuries.

Unlike the United States, the Swiss traditionally distinguish between tax evasion, which they do not consider a criminal matter, and tax fraud, which they do.

A global resolution would also mark a shift in how U.S. officials treat foreign banks suspected of helping wealthy Americans to evade taxes.

“The Special One” Jose Mourinho: A Football Legend

*******************************************************************************************************

Sporting Gijon now have a special, if unwelcome, place in the remarkable list of records that Real Madrid coach Jose Mourinho has already established in his relatively short managerial career.

Gijon’s 1-0 win over Real at the Bernabeu courtesty of Miguel de las Cuevas‘ 79th-minute goal inflicted a first home defeat on Mourinho in 151 league games.

Back in February, Real’s 2-0 win over Levante helped Mourinho mark the ninth anniversary since one of the four teams he has managed since 2002 – Porto, Chelsea, Inter Milan and Real – lost a league match at home.

Prior to Saturday, the last time the self-styled “Special One” experienced a league defeat with a side that he coached was on 23 February, 2002, when Porto were beaten 3-2 by Beira Mar.

Even then, Mourinho could claim extenuating circumstances given his Porto team were down to nine men by the end of the game and played for 65 minutes with less than 11 players.

Jorge Andrade was shown a red card in the 25th minute for a challenge on Beira Mar midfielder Bruno Ribeiro, with Cristiano Rocha’s ensuing free-kick putting the visitors 1-0 ahead.

MOURINHO’S HOME RUN Porto: P38 W36 D2 Chelsea: P60 W46 D14 Internazionale: P38 W29 D9 Real Madrid: P13 W13

Benni McCarthy equalised for Porto just before half-time, before Beira Mar striker Fary Faye restored his side’s advantage early in the second half.

Despite midfielder Deco’s 74th-minute dismissal, midfielder Carlos Paredes pulled Porto level at 2-2, before Faye’s second goal for Beira Mar in the 85th minute ensured defeat for Mourinho’s side.

Since then, Mourinho has established himself as one of the best coaches in world football.

And one man who appreciates the Portuguese’s qualities is BBC Radio 5 live pundit David Pleat.

“Mourinho is very thorough in his preparation and in his methods,” said the Englishman, speaking ahead of that 2-0 win over Levante. “He arranges the coaching sessions and doesn’t leave it to others. It’s obvious that his players have great faith in him.

“He exudes confidences and that percolates through to the players. They play with no fear.”

Pleat describes Mourinho as “imaginative, thoughtful, inventive and creative” and brackets him with other managers that have changed the way football is perceived – coaching greats such as Ukrainian Valeri Lobanovski, Hungarian Bela Guttmann, Italians Helenio Herrera and Arrigo Sacchi, and Dutchmen Rinus Michels and Louis van Gaal.

All of those coaches, like Mourinho, either had low-key professional playing careers or, as in Sacchi’s case, had never played professionally.

“If you haven’t been successful as a player then if you become a coach you have to work harder,” said Pleat.

KEEPING THE RUN ALIVE… JUST 2002 Porto v Belenenses Jankauskas 90+7 FT 2-2 2005 Chelsea v Birmingham Drogba 82 FT 1-1 2006 Chelsea v Arsenal Essien 84 FT 1-1 2009 Inter v Atalanta Cambiasso (equaliser) 80 FT 4-3 2009 Inter v Siena Sneijder (equaliser) 88 FT 4-3

“Coaches like Mourinho were prepared to work at lower levels and then be promoted,” added the former Tottenham and Luton manager, referring to Mourinho’s apprenticeship under Sir Bobby Robson at Sporting Lisbon, Porto and Barcelona as well as Van Gaal at the Catalan club.

“You can see that with young English coaches like Paul Tisdale at Exeter, Eddie Howe at Burnley and Sean O’Driscoll at Doncaster. You can see their philosophy on Saturday in the way their team plays – it is obvious what they have done during the week in their training sessions.

“Brighton manager [Gus] Poyet also stands out as a coach in England. You can tell that his players know exactly what they have to do – they are very well drilled.”

Mourinho has long been associated with the concept of “transition” in a football match – the idea that the opposition is at its most vulnerable when it loses possession.

“At corners, Mourinho would always keep three players up,” said Pleat. “That avoids the penalty area becoming too crowded and allows the goalkeeper a clear run at the ball but it also provides his teams with great counterattacking opportunities.”

Editor of respected tactics website zonalmarking Michael Cox added: “Mourinho always drills his sides primarily in two major formations and has the ability to switch between them quickly and seamlessly.

“At Chelsea and Porto it was 4-3-1-2 4-3-3, at Inter and now at Real it has been 4-3-1-2 and 4-2-3-1, though I think he’s only used 4-3-1-2 once, at home to Valencia.”

Pleat points out that Mourinho has been fortunate to have taken charge of four strong sides packed full of high-quality international players and, in the case of Chelsea, Inter and Real, backed by ambitious owners ready to invest plenty of money to develop the squad.

Luck has also played a part in Mourinho’s unbeaten league run, no more so than on 25 August, 2002, when Edgaras Jankauskas‘s 97th-minute equaliser gave Porto a 2-2 draw against Belenenses.

Miguel’s 79th-minute goal ended Mourinho’s home run

Since that defeat against Beira Mar in February 2002, 147 home league games have come and gone. Of those 147 matches, 122 have been won, with Mourinho’s teams scoring 331 goals and conceding 87.

But Mourinho’s sides have long been associated with a never-say-die attitude.

At Chelsea, goals in the last 10 minutes from Didier Drogba and Michael Essien respectively gave the Blues 1-1 draws against Birmingham and Arsenal in 2005 and 2006.

“Mourinho has always been very astute in the way he has used substitutes and the way he maximised Essien’s versatility was striking at Chelsea,” said former Spurs manager Pleat.

“Essien would often start in the centre of midfield but, if things weren’t going well after half-time, Mourinho would put him at right back and allow him to bomb forward.”

As well as Essien, central midfielders Claude Makelele at Chelsea, Esteban Cambiasso at Inter and now Xabi Alonso play a vital role for Mourinho tactically on the pitch.

“These players are almost like cricket captains in the way they instruct the side,” added Cox. “Cambiasso, in particular, used to become involved in long conversations with Mourinho on the sidelines during games.”

Portuguese defender Ricardo Carvalho has also been a key figure to Mourinho’s home league invincibility, playing for his compatriot at Porto, Chelsea and now Real.

“Carvalho is an excellent reader of the game and is prepared to come out with the ball,” said Pleat. “English centre-backs tend not to do that but it is a great way to take advantage of space.

“When a defender steps up, it allows you to create two-on-one or three-on-two situations – what we call overload.”

As well as Carvalho, two assistants – physical coach Rui Faria and goalkeeper coach Silvino Louro – are highly trusted by Mourinho.

“With Faria the players do not have anything else but the football to work and run with,” said Portuguese journalist Jose Carlos Freitas, who writes for the Record newspaper.

Faria has said of his approach in the past: “They are football players not marathon men. They do not need to run for two hours in the same pace, they need to run when it is necessary with the ball under control.”

Freitas added: “Louro seems to have a special touch because three of the keepers he worked with – Vitor Baia at Porto, Chelsea’s Peter Cech and Julio Cesar at Inter – they all won Uefa’s Best Goalkeeper award.”