It is hard to fault Labour's commitment to giving these two organisations the same independence over competition policy as the Bank of England now has over monetary policy. But it will also be interesting to see exactly how ministers decide to frame the rules that the two organisation will be expected apply when vetting mergers and takeovers in this new globalised world.VodafoneVodafone IS a remarkable company by almost any yardstick. From a standing start, it has whipped BT Cellnet into a very poor second place in the UK mobile market. It is now the second most valuable company in Britain with a worth of £133bn and, alongside BP, one of the few exports from these shores with worldwide recognition. Chris Gent calls it Vodafone's footprint and at the last count, his size tens covered 83 million customers in 29 countries spanning five Continents Last year Vodafone made an operating profit of £7bn.
Its bottom line loss (£8bn) was enormous as well but this was due to goodwill write-downs and, as every finance director knows, the secret of goodwill is to make it so huge that the analysts look straight through it.And yet, what have his shareholders to show for all this? The answer is not a great deal judging by the stock price which is actually lower now than before Vodafone began its quest for world domination two years ago with the purchase of first Airtouch in the United States and then Mannesmann of Germany. The extraordinary rise in the market capitalisation of Vodafone has been achieved issuing shares 52 billion in the last two years while the price of them has gone nowhere. Now Mr Gent has grown tired of printing more shares in order to plant his flag in more countries. The watchword now is consolidation or to give it its Vodafone codename Operation Momentum. Put simply, Mr Gent has decided to eschew further acquisitions for the time being and concentrate on making the most of what he already owns.In one sense, this is a strategy which has been thrust upon him. The printing press ran dry after the £3.5 billion worth of shares it pumped out to finance the purchase of BT's interests in Japan and Spain.
And even though Vodafone's borrowings look like a molehill compared to the mountain at BT, Mr Gent cannot afford to add much to the group's debts of £7bn without putting his credit rating at risk.Nevertheless, the policy makes sense. Over the next few years, Vodafone will have to spend something like £10bn building out its third generation networks. At the same time, the mobile market is becoming more mature after the exponential growth of recent years.All of this will test Mr Gent's ability to boost margins. He has made a start by removing handset subsidies and discouraging pay-as-you-go subscribers.
