Liberty Global says Virgin Media O2 will still play role in consolidation
"I do see us playing a role in altnet (alternative fibre networks) consolidation, which was one of the main benefits of the Netco project that we were exploring together," Chief Executive Mike Fries told analysts after the group reported second-quarter results on Friday.
"I think there are many things about the Netco strategy that Telefonica would agree with and other aspects they don't.
"And so as good partners we will work to find the areas of agreement and head forward."
Telefonica's Chief Executive Marc Murtra told Reuters on Wednesday the plan to spin off Virgin Media O2's fixed network had been scrapped.
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Business Times
an hour ago
- Business Times
Private credit fuels a ‘buy now, pay later' lending boom in Asia
[HONG KONG] Maria Hazel Regalado, a 48-year-old mother of four in the Philippines, needed a computer last year so she could work from home. Regalado, who helps manage rental properties in Australia, did not have the cash or a credit card. A friend suggested she get a 'buy now, pay later' (BNPL) loan from Billease, an online lender. The computer cost 37,999 Philippine pesos (S$854), almost as much as Regalado earns in a month. Still, Billease approved her application within minutes. She agreed to make 12 monthly payments of 4,493 pesos each, including principal and interest. The effective annual rate: 42 per cent. 'At first I was hesitant, but I didn't have much choice,' said Regalado, who lives in southern Manila and had four instalments left as at mid-July. 'I really needed that laptop.' Lenders worldwide last year made US$334 billion in BNPL loans, five times their value from five years before, according to technology analysis and consulting firm Juniper Research. In the US, merchants typically pay any fees, so customers get no-interest loans as long as they keep current. But the developing world has a different model: charging eye-popping interest rates to cash-strapped borrowers. While Indonesia, Malaysia and Thailand have been tightening regulation and warning consumers about the cost and risk of BNPL loans, companies such as Manila-based First Digital Finance, which operates as Billease, say they are opening up consumer finance in underserved markets. They are attracting investors with a socially responsible tilt, such as private equity giant TPG's The Rise Fund, one of Billease's owners. Traditional lenders did not want to take on the risks of extending this kind of credit, said Georg Steiger, Billease's chief executive officer and co-founder. 'Early on, banks were not very comfortable with the type of collateral that we can offer, which is basically secured against a loan book,' he said. So the booming US$1.7 trillion private credit industry filled the gap. These lenders, which make loans outside both traditional banking and the world of publicly traded bonds, initially catered primarily to small and medium-sized companies but have been expanding into consumer finance. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up Billease has tapped private debt investors, including UK-based Lendable, which has raised money from Shell's charitable foundation, development banks and investment firms catering to wealthy families. So have two of its biggest competitors, both based in Singapore: Kredivo Group has borrowed from money manager Janus Henderson Group's Victory Park Capital Advisors, and Apaylater Financials, which does business as Atome, has looked to the growing private credit operations of BlackRock, the world's largest money manager. The private credit companies typically lend out money to South-east Asian BNPL outfits at annual rates of 10 per cent to 15 per cent, making the deals attractive to the companies' investors. In Jakarta, Indonesia's capital, ads for the BNPL companies are almost inescapable both online and on billboards, city buses and commuter trains. One for Kredivo encourages customers to use BNPL loans for smaller daily purchases, even for train fares and items at convenience stores. 'It's that flexible!' the tagline reads. Huy Pham, a senior finance lecturer at the Royal Melbourne Institute of Technology Vietnam who specialises in financial technology, said that BNPL loans can lead to splurges from consumers with unstable incomes, exposing both them and their lenders to growing risks. 'At the end of the day, if customers are not able to pay back the loans, then the platforms will be in trouble,' Pham said. Indonesia's BNPL-related debt in May reached almost US$1.9 billion, up 40 per cent from a year earlier. According to the country's Financial Services Authority, 3.74 per cent was nonperforming-meaning borrowers were more than 90 days behind on their payments-up from 3.22 per cent a year earlier. 'Consumers should assess their ability to repay the debt before using 'pay later' services,' said Agusman, the agency official who supervises financing, venture capital, microfinance and other financial institutions. (Like many Indonesians, he goes by only one name.) The authority has been conducting financial literacy campaigns, aimed particularly at younger borrowers. It recently announced rules that will require individuals to be at least age 18 or married and have a minimum monthly income of three million rupiah (S$237), just under Indonesia's average, before they can take out BNPL loans. Last year, the regulator capped maximum daily interest rates for online personal loans at 0.3 per cent per day, which translates into an annualised rate of 109.5 per cent. BNPL loans can be controversial in Indonesia, a nation of 284 million that has the world's largest population of Muslims, whose religion forbids the charging or paying of interest. The Indonesian Ulema Council, the nation's top body of Islamic clerics, issued a legal opinion on online lending in 2021, saying the practice is 'problematic.' It cited 'usury practices with extremely high interest rates, borrowers failing to repay on time as agreed, and lenders threatening or even physically assaulting those who default.' Last year, the government started requiring debt collectors to stick to certain scripts and visit debtors only during specified times. A 2023 paper by business school professors in Indonesia and Malaysia concluded that consumers generally had positive views of the online short-term loans despite what the academics called unethical interest rates and aggressive debt collection practices. 'People are borrowing beyond their means and buying things they cannot afford, because it's so easy to get loans,' said co-author Sri Rahayu Hijrah Hati, a professor of marketing at the University of Indonesia. BNPL lenders say they obey debt collection rule,s and the rates they charge reflect the risks of the population they are serving. They say they do not purport to be compliant with Muslim law, and most banks in the country also collect interest on loans. Andy Tan, Atome's chief commercial officer, said his company must contend with customers who disappear and erase their online presence, among other kinds of fraud. 'Credit risk is something we monitor day in and day out,' he said. Billease's Steiger said that his company's borrowing cost is close to 20 per cent after factoring in the mid-teens rates it pays on private debt, foreign currency hedges, withholding taxes and other expenses. At the same time, he said, Billease is flexible with clients who need more time to repay their debt. He adds that the company keeps collections in-house, recording conversations between borrowers and the company to prevent rude behaviour, and refrains from charging more in late fees than the loan's original principal. Kredivo CEO Akshay Garg said that his company approves less than a quarter of its loan applications and primarily targets middle- and upper-class borrowers who are likely to repay. 'We are just lending to people who should be getting credit cards,' he said. Kredivo sends payment reminders to borrowers through its app and in e-mails, Garg said, and individuals get to keep the items they bought even if they default because the debt is unsecured. BNPL lenders are betting on customers such as Alexandra Santos, a 31-year-old tech professional in Manila. In 2023, she wanted to tour the province of Albay, in the southeast of the Philippines' Luzon island and famous for its cone-shaped Mayon volcano. She funded the holiday with a Billease loan of 8,200 pesos, payable in six instalments of 1,552 pesos each over three months. That included a total interest of about 1,112 pesos, an effective interest rate of 13 per cent over the period, or 52 per cent on an annualised basis. Santos fully repaid the loan before its final due date and continues to borrow from Billease and other lenders. 'In our culture, being in debt carries a stigma,' she said. 'But in my view, it's not really bad to have debt as long as you know your financial responsibilities.' If she and most other customers can keep paying back their loans, the profit for Billease will be enormous. The company typically charges 3.5 per cent a month on its loans, but it also turns the money it lends over many times a year. Steiger has estimated the expected annual return on this cash: 90 per cent. BLOOMBERG
CNA
2 hours ago
- CNA
Trump wants more American pick-ups in Tokyo and London. That may be a hard sell
TOKYO/STOCKHOLM, August 7 :Donald Trump is right that Japan and Europe buy few American-made cars - but it has little to do with trade barriers. From Tokyo to London, many consumers see Detroit's offerings as simply too big and too gas-guzzling. That view has made Chevrolets and Cadillacs a hard sell, and a rare sight, in cities full of slimmer cars from the Toyota Corolla to Honda Civic, Volkswagen Golf and Renault Clio. Trump often complains about what he sees as a refusal to accept U.S. cars while the Japanese and Europeans sell millions of automobiles a year into the United States. In recent trade deals, both markets agreed to drop or ease safety tests on American vehicle imports. Europe will lower levies on U.S. cars. But it may take more than a change of rules and lower tariffs to convince Japanese and European consumers, who contend with narrow roads and painfully tight parking, to buy big American-made Ford F-150 trucks and Cadillac Escalade SUVs. "American cars are designed for wide roads and freeway driving, so handling them on narrow Japanese streets can be tricky. It takes a bit of technique," said Yumihito Yasue, president of Johnan Jeep Petit in Tokyo, which imports and services vintage cars from the United States. His customers tend to be enthusiasts in their 50s and 60s who grew up seeing American cars on TV and in movies. On a recent weekday, he was servicing two Chevrolets, a lustrous brown 1971 Nova and a low-slung 1986 El Camino, both with their steering wheels on the left. In Japan, steering is on the right. Yasue inherited his love of American cars from his father, who started the business four decades ago and would travel to California to scout for cars. Yasue took over after his father died nine years ago, and sells about 20 vehicles a year. "What makes American cars special is the design. Compared to Japanese or German cars, the body shape is more beautiful. Especially the lines, like the rear lines and the fenders," he said. Some 3.7 million new cars were sold in Japan last year, with a third of those mini or "kei" cars - tiny, fuel efficient vehicles not produced by American automakers. Overall, foreign cars accounted for 6 per cent of new car sales, data from the Japanese Automobile Manufacturers Association showed. Of those, around 570 Chevys, 450 Cadillacs and 120 Dodges were sold, data from the Japan Automobile Importers Association showed. Ford pulled out of Japan almost a decade ago. Tesla makes cars sleeker than some of Detroit's and is becoming more popular. The data does not give a breakdown for the EV maker. 'WE DON'T BUY FORD F-150S' In Europe, smaller locally-made U.S. cars have done well: models like the best-selling Ford Puma and the older Fiesta. But over the past two decades, Ford and General Motors have pivoted towards larger pickups and SUVs, vehicles less suited to Europe's narrow streets and compact-car culture. Ford, a big player in Europe from the early 1900s, has seen sales in the region fall sharply, from 1.26 million vehicles in 2005 to just 426,000 in 2024, according to data from the European Automobile Manufacturers' Association (ACEA). Its market share dropped from 8.3 per cent to 3.3 per cent. "We don't buy Ford F-150s, that's not what our roads are scaled for, it's not what our customers want," Andy Palmer, former CEO of Aston Martin, told Reuters. GM exited Europe in 2017, selling Opel after pulling back Chevrolet, but returned with its Cadillac Lyriq last year. It sold a mere 1,514 of the U.S.-made SUV, according to auto data firm Jato. A GM spokesperson said Cadillac was growing its all-electric lineup in Europe, and the vehicles had been well-received in the markets where they were launched. A Ford spokesperson said the firm exported "passion products" to Europe like the Bronco and Mustang, alongside locally-made models tailored for the market. Clive Sutton, a British car dealer in London who sells luxury American models, said his buyers were drawn to the rarity of vehicles like the giant Cadillac Escalade. But he admitted it was a challenge. "There are people that want that car because of its exclusivity and its perceived status," Sutton said. "But it's not the most easy car to find a parking space for, certainly in central London." COMPETITIVE MARKET Trump has also put pressure on South Korea to open its market to American cars and said duty-free access was part of the trade deal the two countries agreed last week. There, imported vehicles account for less than one-fifth of the car market and U.S. models for only 16 per cent of the imported car segment, which is dominated by German rivals, according to data from the Korea Automobile Importers & Distributors Association. German manufacturers have also carved out a strong presence in Japan's luxury market. Mercedes-Benz sold more than 53,000 vehicles last year, making it the most popular foreign brand, followed by BMW at more than 35,000. Japanese automakers say Europeans have been successful because they committed the time and resources to the market. Detroit carmakers, meanwhile, are often associated with left-hand drive cars, which are more challenging to drive on the left-hand side of the road. But some U.S. manufacturers are changing. GM has offered the Corvette only in right-hand drive since the eighth generation version went on sale in 2021. That may be one reason why some 80 per cent of buyers are new customers, a GM spokesperson said. The Corvette is the only model Chevy offers in Japan, and it has sold fewer than 1,000 of them a year for the last decade. GM this year announced plans for a line-up of right-hand-drive Cadillac EVs and deliveries of the Lyriq started in July. 'WOW, A FOREIGN CAR' Jeep, which sells right-hand drive models, has been the most popular American brand for more than a decade, the importer data showed. It sold just shy of 10,000 vehicles last year in Japan. Yukimi Nitta used to drive a "kei" car but she was drawn to the Jeep Wrangler's appearance, which she described as "friendly" and "outdoorsy". The 42-year-old hair salon owner is now on her second Jeep - a limited-edition beige model - and hopes to switch again to another limited-edition colour. Parking is tight but manageable, she said, and two of her friends have since bought Wranglers. "People often say, 'Wow, a foreign car!' But once you drive it, it feels totally normal. I wish more people would try it," she said. While the Wrangler does burn through fuel quickly, the resale value is good, making it possible to switch out colours, something owners do, Nitta said. A spokesperson for Jeep owner Stellantis said it actively promoted owner events. In July, it announced a collaboration with the "Jurassic World" movie series featuring a limited-edition pink Wrangler, the spokesperson said. Big American cars and trucks might find it hard to follow in Jeep's tracks. Daniel Cadwell, an American living in Tokyo, exports used Japanese camper vans and wagons to the United States. He said he was struck by the size of American cars whenever he went home. "They are just excessively big," said Cadwell, who runs Javan Imports in Portland with his U.S.-based business partner. "I think it is highly challenging for a car of that sort to be seen as attractive in Japan."
Business Times
4 hours ago
- Business Times
Major climate-GDP study under review after facing challenge
[WASHINGTON] A blockbuster study published in top science journal Nature last year warned that unchecked climate change could slash global GDP by a staggering 62 per cent by century's end, setting off alarm bells among financial institutions worldwide. But a re-analysis by Stanford University researchers in California, released on Wednesday, challenges that conclusion - finding the projected hit to be about three times smaller and broadly in line with earlier estimates, after excluding an anomalous result tied to Uzbekistan. The saga may culminate in a rare retraction, with Nature telling AFP it will have 'further information to share soon' - a move that would almost certainly be seized upon by climate-change skeptics. Both the original authors - who have acknowledged errors - and the Stanford team hoped the transparency of the review process would bolster, rather than undermine public confidence in science. Climate scientist Maximilian Kotz and co-authors at the renowned Potsdam Institute for Climate Impact Research (PIK), published the original research in April 2024, using datasets from 83 countries to assess how changes in temperature and precipitation affect economic growth. Influential paper A NEWSLETTER FOR YOU Friday, 12.30 pm ESG Insights An exclusive weekly report on the latest environmental, social and governance issues. Sign Up Sign Up It became the second most cited climate paper of the year, according to the UK-based Carbon Brief outlet, and informed policy at the World Bank, International Monetary Fund, US federal government and others. AFP was among numerous media outlets to report on it. Yet the eye-popping claim that global GDP would be lowered by 62 per cent by the year 2100 under a high emissions scenario soon drew scrutiny. 'That's why our eyebrows went up because most people think that 20 per cent is a very big number,' scientist and economist Solomon Hsiang, one of the researchers behind the re-analysis, also published in Nature, told AFP. When they tried to replicate the results, Hsiang and his Stanford colleagues spotted serious anomalies in the data surrounding Uzbekistan. Specifically, there was a glaring mismatch in the provincial growth figures cited in the Potsdam paper and the national numbers reported for the same periods by the World Bank. 'When we dropped Uzbekistan, suddenly everything changed. And we were like, 'whoa, that's not supposed to happen,'' Hsiang said. 'We felt like we had to document it in this form because it's been used so widely in policy making.' The authors of the 2024 paper acknowledged methodological flaws, including currency exchange issues, and on Wednesday uploaded a corrected version, which has not yet been peer-reviewed. 'We're waiting for Nature to announce their further decision on what will happen next,' Kotz told AFP. He stressed that while 'there can be methodological issues and debate within the scientific community,' the bigger picture was unchanged: climate change will have substantial economic impacts in the decades ahead. Undeniable climate impact Frances Moore, an associate professor in environmental economics at the University of California, Davis, who was not involved in either the original paper or the re-analysis, agreed. She told AFP the correction did not alter overall policy implications. Projections of an economic slowdown by the year 2100 are 'extremely bad' regardless of the Kotz-led study, she said, and 'greatly exceed the costs of reducing greenhouse gas emissions to stabilize the climate, many times over.' 'Future work to identify specific mechanisms by which variation in climate affects economic output over the medium and long-term is critical to both better understand these findings and prepare society to respond to coming climate disruption,' she also noted. Asked whether Nature would be retracting the Potsdam paper, Karl Ziemelis, the journal's physical sciences editor, did not answer directly but said an editor's note was added to the paper in November 2024 'as soon as we became aware of an issue' with the data and methodology. 'We are in the final stages of this process and will have further information to share soon,' he told AFP. The episode comes at a delicate time for climate science, under heavy fire from the US government under President Donald Trump's second term, as misinformation about the impacts of human-driven greenhouse gases abounds. Yet even in this environment, Hsiang argued, the episode showed the robust nature of the scientific method. 'One team of scientists checking other scientists' work and finding mistakes, the other team acknowledging it, correcting the record, this is the best version of science.' AFP
