T-Mobile and Sprint decided to have another go at merging, announcing a deal that values the combined company at $146bn, including debt. The pair toyed with the idea of hooking up in 2014. Antitrust regulators were not keen, as a merger would reduce the number of big wireless carriers in America from four to three. That issue will come to the fore again now. T-Mobile and Sprint argue that their new company would have the capacity to roll out a nationwide 5G network quickly. See article.
Competition concerns were also raised in Britain after Sainsbury’s said that it had reached an agreement to buy Asda, which is owned by Walmart. The melding of Britain’s second- and third-biggest supermarket chains would create a colossus in the industry, though both brands would be retained—Asda pitches its appeal to more cost-conscious shoppers than Sainsbury’s. See article.
Steady on
At its latest meeting, the Federal Reserve left its benchmark interest rate unchanged at a range of between 1.5% and 1.75%. The central bank is expected to raise rates at its next meeting, in June. The Fed’s decision came after data indicated that the American economy grew at an annualised rate of 2.3% in the first quarter, the slowest pace in a year.
In an abrupt move, Argentina’s central bank raised its benchmark interest rate from 27.25% to 30.25% in an effort to shore up the peso, which has taken a battering in currency markets amid worries about stubbornly high inflation.
The Trump administration postponed implementing tariffs on steel and aluminium imports from countries in the European Union by a month, saying it wanted more time for negotiations. The Europeans, annoyed that they should be bracketed with countries like China, want permanent exemptions from the tariffs, which Argentina, Australia and Brazil have attained. See article.
In a $36bn deal that creates America’s biggest oil-refining company, Marathon Petroleum said it would buy Andeavor. Andeavor operates ten refineries in the western United States. Marathon owns six, but handles more oil.
Higher oil prices helped lift BP’s headline profit in the first quarter by 71%, to $2.6bn. The energy giant hinted that it would increase its dividend for the first time in four years if oil prices remain buoyant; its stock hit an eight-year high.
A working strategy
Apple reported a net profit of $13.8bn for the first three months of the year. Although the rate of growth in iPhone sales has slowed over the years, revenue from its signature product rose by 14% compared with the same quarter last year, thanks in part to the more expensive iPhone X. With 1.3bn Apple devices in use around the world, its income from associated services, such as music, soared by a third. Swimming in cash, Apple launched another share buy-back plan, worth $100bn.
Xiaomi, a Chinese smartphone-maker, filed for an IPO in Hong Kong. The company is reportedly hoping to raise up to $10bn, which would make it one of the biggest tech flotations to date.
Tesla Motors’ latest earnings report raised more questions for investors about the rate at which it is burning through its cash reserves. Plagued by production problems for its Model 3 mass-market car, Tesla ended the first quarter with $2.7bn in cash on hand, compared with $3.4bn in December. It also reported another headline loss, of $710m.
Cambridge Analytica folded. The data-mining firm hit the headlines for obtaining information on Facebook users that was then deployed to help Donald Trump’s presidential campaign. The firm blamed a media “siege” for its decision to shut up shop.
Ahead of a visit to Beijing by senior economic officials in the Trump administration, China relaxed the restrictions on foreign investors becoming controlling shareholders in joint-venture securities companies, raising the cap on foreign ownership from 49% to 51%. Only financial institutions with a “good international reputation” need apply.
The mouse that roared
Marvel Entertainment, a subsidiary of Disney, broke box-office records with the release of “Infinity War”, the latest of its Avengers movies, beating the global record for an opening weekend with a total of $641m. “The Force Awakens”, Disney’s first Star Wars outing after acquiring the Lucasfilm franchise, still boasts the best opening weekend in America after adjusting for inflation. It is possible that this Avengers adventure may be the biggest yet and take $2bn worldwide.