You can understand why Sir Charles Dunstone might think it a good idea to drop the non-executive lark and get busy as chairman of TalkTalk. In May 2015, his 31% stake was worth £1.17bn but now, after the plunge in the share price from 400p to 168p, the value has fallen to £500m. That is a strong incentive to spend less time on the yacht.
There is no suggestion that the departing chief executive, Dido Harding, is being pushed out against her will. She has done seven years in the post since TalkTalk demerged from Carphone Warehouse (total shareholder return for TalkTalk in that time, including dividends, has been 79%) and the pair were singing in harmony on Wednesday. Dunstone was lavish in his praise.
The question for other investors is whether the return of a hands-on Dunstone heralds a rapid revival. TalkTalk occupies a tricky position, selling a cheap and cheerful “value” telecoms offer in an attempt to duck and weave between big beasts such as BT, Vodafone and Sky.
An optimist would make two points. First, TalkTalk seems more stable after last October’s “simpler” tariffs and rejig of contracts: the third quarter update said full-year operating profits will be as previously advertised, meaning around the £320m mark. Second, life in the value lane could become easier if BT and Sky press the pedal on prices to pay for their expensive football rights.
Yet progress rarely runs so smoothly. If TalkTalk finds it needs to ShoutShout about its price credentials, more financial ammunition may be required. Half the City expects the dividend to be cut, which is why the yield has hit 9%, because of the hefty load of debt. A divi cut is indeed the way to bet. It is the safe thing to do, and Dunstone can afford to take some upfront financial pain for greater long-term gain.
Sir Ken Morrison’s plain speaking was much admired
In the 1980s and 1990s, the retail industry’s golden years, Sir Ken Morrison, who has died aged 85, was king. Morrisons was never the biggest supermarket chain in the land, but its chairman and driving force would have collected the “most admired” gong in most years.
The admiration of his peers flowed not only from the Bradford-based group’s rigorous attention to detail. It was also because Morrison was gloriously immune to City diktats and fashions. Success, and the family’s shareholding, meant he could do things his way.
He didn’t bother with PR folk and management consultants. Non-executive directors were a luxury he didn’t require – he could hire two shop assistants for the same money and they would be more useful, he used to say. In 2004, on the day after the £3bn purchase of Safeway, he strode into his new acquisition’s head office and ignored standard pleasantries. “This is not a merger, it’s a takeover,” he declared.
The Safeway deal, a disaster in its first few years, forced him to change some of his ways. Non-executives arrived (quite right, too) and Morrison, with his shareholding diluted, was obliged to explain himself to the City. But the plain-speaking remained, most famously after retirement when he turned up at the annual meeting in 2014 to take a pop at the then chief executive Dalton Philips. “I have something like 1,000 bullocks and, having listened to your presentation, Dalton, you’ve got a lot more bullshit than me,” he said.
The chairman at the time, Sir Ian Gibson, thought Morrison’s intervention was “ill-judged, rude and unnecessary”. Perhaps it was. But, as an example of clear communication, it was infinitely better than the robotic utterances one gets from most of today’s corporate crowd.
Is the EU softening its approach to the City?
Michel Barnier, the European Union’s chief Brexit negotiator, gave a sniffy (semi) denial when this paper revealed minutes of a meeting that recorded him saying he wants the bloc to have “a special relationship” with the City of London after the UK’s departure.
But here comes another indication that the EU’s stance on the City may not be as hardline as feared. The European commission’s Brexit negotiators think a “workable” deal with the City is needed. “A badly designed final deal would damage both the UK and the other 27 EU member states,” says a paper drawn up by officials.
It is only a working paper, but it is also a statement of common sense. Several thousand City jobs will inevitably move, but upending the City at the moment of departure is not in either side’s interests. The governor of the Bank of England was right when he said the UK is “the investment banker for Europe”. A sensible agreement ought to be possible.
