US is a good call for Vodafone

What a contrast between the treatment of former Mannesmann chief executive Klaus Esser, and Sir Chris Gent, former boss of Vodafone, which bought the German company in 2000.

Esser is on trial for receiving bonuses for that sale, even though he achieved top whack for his shareholders by selling at the very top of the telecoms bubble, making fortunes for them as well as himself.

Gent, on the other hand, spent billions to secure the company and was given a £10 million prize for doing so. When he retired last summer, he was widely feted. He will appear in court in Germany as a witness, but his successor, Arun Sarin, has his gaze focused on the other side of the Atlantic.

Vodafone owns 45% of Verizon Wireless, America's biggest mobile group. AT&T Wireless, the number two firm, which has many valuable business customers, is up for sale. At the moment, just one bid is on the table, though its major shareholder, NTT DoCoMo, may top this.

What will Sarin do? Vodafone's long-avowed strategy is to gain absolute control of associates. It points out that it has almost half of the best and biggest US group and has so far been happy with this. But in July it has a chance to start forcing the Verizon parent to buy back its shares at a price set by an independent third party.

Despite its substantial shareholding, Vodafone clearly has no influence over the US business. Verizon is to spend billions upgrading its network using a system totally different from the rest of Vodafone's network.

It was only last year, for goodness sake, that customers of the mighty Vodafone were able to send text messages to colleagues on business trips to the States.

And Verizon has now hinted that it might stop paying dividends so it can fund all this spending on a technology that Vodafone hates.

It took a bid for British rival Orange to prompt Gent to launch his hostile takeover of Mannesmann. How much disrespect will Sarin take before he cuts and runs by bidding for AT&T or gets really fierce and goes hostile on the Verizon parent?

Either move would be likely to blow Vodafone's promises to bankers and credit agencies, but with the dollar down in a ditch, will there be a better moment for it to secure control in the US?

America is the last great growth market for mobiles outside risky Asia. Arguably, Vodafone's shareholders-would be better served by a bold move there than by share buybacks or the boring utility company's sop to shareholders - increased dividends.

Titanic Tesco
THE relentless march of Tesco continued last week with the £54 million acquisition of 45 Cullens, Europa and Harts stores.

These are tiddlers and not known for their everyday low prices, so many shoppers will doubtless benefit as Tesco uses its stupendous buying power to squeeze suppliers.

But it is hard not to sympathise with rivals such as Bill Grimsey at the Big Food Group. He says that the High Street convenience market is part of the overall grocery market and Tesco's takeover should be challenged by the competition authorities.

When Tesco bought the T&N convenience chain, the Office of Fair Trading decided that convenience stores were a distinct market, so Tesco could add city centres to its out-of-town supermarket dominance. Yet in a surprising demonstration of, let's call it flexible, thinking, the OFT decided exactly the opposite way in another case last week.

It cleared the Barclay brothers' £590 million purchase of the GUS catalogue business, even though it gives them a cool 73% of the agency home shopping market.

In this case, said the OFT, home shopping is just one strand of a competitive High Street and, even though many of the people who use catalogues have little ready cash or access to credit, they can always go elsewhere. No wonder Grimsey is confused.

Lloyd's closure

MEMBERS of the European parliament are giving Commissioner Bolkestein one last chance to say if he believes the British Government properly regulated Lloyd's insurance market between 1978 and 2001.

Despite years of investigation, the commissioner has so far not given a simple yes or no to this question. In early February, MEPs will table a question in terms plain enough for him to provide that simple yes or no.

There are three possible outcomes. If the commissioner refuses still to give a response, the MEPs plan to take him to the European Court of Justice. If he says he believes Lloyd's was not properly regulated, that will open the way for many who lost fortunes in the market to seek compensation from the Treasury.

If he says all was ticketyboo, the whole sorry saga will end. But at least those who have campaigned for so long will have closure.