Hello, welcome to countdow. It is 7 00 here in london on this monday morning. Vodafone is looking at a link with liberty global. And talks to buy the portuguese assets. T is all pointing one way analysts expecting a wave of consolidation in the telecom space. Here with more is caroline hyde. Lets start with bt. It has set the cat among the pigeons. It has. We understand it is looking at 02, getting a grip on mobile. It is about quad play. This is the choice of words we use when it comes to telecoms. You have to have all four things if you want to win it. It offers television. Rather nice soccer rights. It now wants to offer mobile as well. The u. K. Is bizarre. We dont often have all four things rolled into one. We like to pick and choose. The way you can make money, the way you can have synergy and stop people moving to rivals is having all four things. Is considering teaming up with its old rival, liberty global. Remember, they used to battle over assets in germany. He were trying to get their hands on that asset. Now they could combine and make 130 billion company. We know the deal hasnt been done yet. They are thinking whether it would work, whether financially it would work. Wouldhether regulation allow those juggernauts to come together in this way. It is also a question of whether bt would get its hands on 02. It is almost as if the world has come full circle, which is et bt was forced by investors. Its not just the u. K. You also have out this altus and your average billionaire on the look for portuguese assets. He already spent 43 billion on the french asset getting into mobile in france. It is a cable play. They built this company up. Now he is looking at assets. Offloade been trying to portuguese assets, because it to do things in brazil and cut back on debt. Maybe this would be a nice way to do that. Has upped his bid. He was offering 7 billion euros. The private against Equity Companies as well. It looks like his steel is good to be that much sweeter. This deal is going to be that much sweeter. John laing the Construction Company is making a nonbinding proposal. The lang may bid for balfour pfi contract. It is making a nonbinding proposal. The proposals were for one billion pounds. Worth one billion pounds in cash. John lang Infrastructure Fund making a nonbinding proposal through its portfolio. One billion in cash following in due diligence. They would seek to finance acquisition. Onfour rejected a full merger proposal. Executives. So many Duncan Mcgraw said he would leave the company. Turbulent ties. It is interesting what happens to the rest. Carillion cant come back until february. They cant come back of their own accord. We will see if anybody comes back with the rest of that business. Lets talk about numbers out of Aberdeen Asset management. Moving in the right direction on a number of levels. Are seeing a 4 decrease. 2 . Pretax profit up at net revenue for percent higher. Assets under management up by 62 . The are talking about integration. That is proceeding on schedule. There could be volatility in markets ahead. Ceo ofsk martin gilbert, Aberdeen Asset management. He joins us on the line. Lets start by talking about where the business has been going. Emerging markets had a turbulent time at the start of the year. Things turned around a little bit. Tell us how that story has been playing out. The final quarter of the last calendar year and the First Quarter of this year were particularly tough for us. Good numbers are pretty considering how much we lost in the you in. The un. If we hadnt done this our earnings would have been down 10 . It is a pretty robust performance. Stand on that trend . What is the investor appetite . Different type of investors, how much of a tie do they have at this point . How much appetite do they have at this point . This quarter that just ended for us, we saw minimal outflows from our equity front. ,he trend seems to have abated hopefully permanently. It has been really tough. We have seen inflows come into emerging markets. You are worried about volatility. You think things are going to remain volatility. What are you talking about . Volatileou think looks at the moment . I think it is geopolitical events around the world. Some markets seem to shrug that off. We are seeing a sharp collapse in the price of oil, a lot of that momentum driven rather than actual supply and demand. Supply does exceed demand. Forppose that is Good Companies such as airlines, etc. , but i think it is the way markets shrug off these severe geopolitical events. Companies impacted is russia. Are you tempted by anything you see there . I am sure some people will make a lot of money in russia. I dont think we are going to be tempted just yet. The cousin of geopolitical grounds. Lets talk about standard because of mainly geopolitical grounds. Lets talk about standard chartered. The current leadership needs to be in place for more time. What you had in november . Believe there is nothing fundamentally wrong with standard chartered, that. Anagement can sort out we think it is probably a Cost Reduction exercise, and as we said before, we would like the incumbent manager management sorted out. We are well aware if they dont sort it out, there are a lot of people willing to help sort it out. Stressed, we genuinely believe there is nothing fundamentally wrong with. Tandard chartered geopolitics influencing some of the Investment Decisions you are making in emerging markets, but what about a little closer to home, the Scottish Independence referendum in the rearview mirror, or is it . We heard that review just last the reaction from the s p if they dont seem to be too happy. Can you firmly put independence of scotland kind you as a business, or do you have to keep a plan just in case, what will . E do if it comes to the fore i think we are fortunate in the Financial Services said are being in Asset Management rather than insurance or banking because they hold the essence on the Balance Sheet and could have held a run on the banks. As far as Asset Managements are concerned, we were relatively unaffected by it. Back burner on the for now. We are more worried about the election and the possible impact on eu membership that we were s p or scottish that we were s p or Scottish Independence. If there was a vote for the u. K. To leave the european union, would that be negative for you . I think so. We have a lot of operations in europe. The Fund Management industry has a heavy presence in luxembourg. There is a lot that would need to be redesigned or such if there was a negative vote, but as i have said many times, we deal with regulators around the world. We operate in many countries, so we can manage whatever the political outcome of that debate is. Thanks for talking to me. The violent clashes between police and prodemocracy protesters in hong kong. Police used pepper spray and water horses in water hoses in battles with protesters. Leaders pledge to escalate the protest. Leaders who plan to visit later this month said they have been banned from entering the territory of made continuing clashes. Is y scene, and that entering the territory amid continuing clashes. An ugly scene. Interesting what he said about the scottish referendum. He said we are more worried about the u. K. Election than we ever were about the Scottish Independence. That was the top line at the end. Coming up, are we about to see a wave of dealmakers in european mobilephone carriers and the telephone sector more generally . Welcome back. Busy times in the telephone sector. Vodafone could be merging with liberty global. The bidding continues for telefonicas u. K. Business. Joining us now is christopher nicholson. Wave ofyou make of this consolidation . A lot of conversations about quad play. Explain what is the big deal about quad play. Good morning, and thanks for inviting us. The big deal is it is possibly the last round for vodafone in terms of consolidation and liberty media. Largert trigger a much consolidations in the european market, which everyone has been talking about for a decade and hasnt yet happened. It is a fabulous bonanza for the investment banks. Lots of things will be spat out at the backs of the deals. Thats why its an interesting thing to have happened over the last few days. But lets break it down. We have bt potentially going after ee. 9 billion pounds those are valued at. Who should they go for and why . Is some of the quad play offers are very compelling. For services with one provider, its actually a huge deal. Consider aople utilities service. To change all four in one go is more of an issue, and thats why there is more inertia. Thats why they want quad play. Whether or not investors go for. T depends in terms of the deals themselves 02, respect to bt going to from our point of view, bt couldnt make it work. It didnt understand the investment requirements. Issue is bt goes back in, which is the right deal . Ee . T he were not sure why telefonica wants to get rid of it. It is a great business, and they have done well out of it. Hat differentiates it from bt if i was in 02 employee i would becauseing owned by bt of cultural issues. , which was originally orange, its culture has changed. Deutsche telekom has been involved as well. Those companies have more in common than one might have imagined. Given that a lot of deals go wrong because the culture has gone wrong, the ee acquisition seems more sensible. If i was looking at it from the outside, i am not that enthusiastic about bt buying a mobile business. Are you excited about the companies coming together . Mutuals market cap is 30 9 billion. Are those hurdles overcome a ball . They probably are because even though the official statistics, the reality is with the amount of qe going on, assets are inflated. Vodafones proportionate debt is lower in real terms compared to what it was before the crisis. For dollar, it costs them less to pare back. Vodafone has restructured largely after selling out of verizon. Strategically it makes sense. It is in line with the message to investors, which is, we will not be building cable networks. We will buy them when we can. Becausee is an issue, if we had an inflation unit, the markets have pretty much rocketed one way or another. You were looking at a premium six months ago. Now if you take the normal premium, you would be looking at 45 and 55ween billion for liberty. I think we could just about swallow five swallow 55 billion. You are often not going to get close to that. Are we right to link in the of those deals . Do you see vodafone in talks . Link any ofght to those deals . Thats an interesting question. I would say vodafone has been thinking about this idea for a while. I would suspect bp has been thinking about its mobile strategy. Telefonica has been saying, maybe its for sale. Bt into probably put looking mode. I suspect they are not directly driven by one anothers announcements, but they have probably been thinking strategically in the same way, that they need to do something and opportunities are coming up. The issue is about price and synergy. Can they deliver the synergy . Inks so much. Coming up, e. Ons energy shift. Thanks so much. Big news in the Energy Markets this morning. Biggest utility is saying goodbye to fossil fuels and will spin off its conventional Power Generation unit. Hans nichols joins us from berlin. If they sell these assets, what are we going to be left with . They will have renewables and energy transmission, but they are no longer going to be for nucleare atom power. They are going to be splitting the company. This is a future without fossil fuels. It is a remarkable action. These are Angela Merkels goals, to wean themselves from fossil fuels. Right now it is 20 of the market that is renewable. They want to move that up. All the way to the 80 renewable. To say what the ceo had about it. He said, we firmly believe creating two independent companies with its own mission is the best way to secure our employees jobs. Right now the company has 60,000 employees. Haveew company will 20,000. The old company, the renewable company, that will have 40,000 jobs. If you look at some of their losses quarter on quarter, they have not had great results. They are also going to have 4. 5 billion in charges. They are disposing of some assets. This is a company under pressure, but they are making some changes. They queue for that. Now we know what they are going to be left with. Thank you for that. Coming up, oil, china, the ecb. We are going to be talking about these issues with the senior Economic Advisor. Insight, ator the the head of the market open. This is where you can find us. Menacegranny. manuscranny. We will see you in two minutes. You are very welcome back. At thepants are looking market dollar. It was on the cusp earlier. 88. 31 is where we are with the dollar index. Manufacturing data in the united states. That is expected to be rising to 55 up from 54. 7. The dollar, it depends what you believe. Mitsubishi would say there are Cheaper Energy prices and a stronger economy. A stronger dollar. Seven year highs on dollar yen. They said, pick a number. Any number. 120. 125. All possible. The swiss voters went to the polls. We have the euro rising. The voters rejected the goal for the Swiss National bank to hold 20 of their assets in gold. Newsmight be good temporarily for the Swiss National bank in terms of their ability to defend the floor they set. They didnt want the swiss franc 120 two theond euro. They would take further measures immediately if required. Beyond one who zero beyond 120 to the euro. Vodafone is exploring a combination with liberty global, predictions. A wave would create a phone, butrnet, and tv giant, there are no formal negotiations underway according to people familiar with the matter. There have been violent clashes between police and prodemocracy protesters in hong kong. Police use batons, pepper spray, and water hoses in battles with protesters Near Government headquarters. Student leaders latched to escalate the protests. Pledged to escalate the protests. Banned tove been enter the territory due to clashes. Givenrman exchequer has an outline of what his priorities will be. George osborne said there should be further savings on welfare paid it payments in order to spend more elsewhere. The government will announce an billion pounds in roadbuilding in england over the next six years. We need to improve rod activity. That the british weakness. We need to make sure we export more. We need to improve road activity. Productivity we need to make sure our kids have the right skills. We need to see all of these things as part of an ongoing plan to repair this country for the challenges we all face in modern economy. We will bring you live coverage this wednesday. The greek Prime Minister says he could be facing a setback in his plan to free greece of oversight from the International Monetary fund. Greece is excepting a full role for the imf in its next aid yield. Oil, coming up, oil, china, the ecb. We will be talking about all that with our next guest, george magnus. Stay tuned for his inside at the head of the market open. At the head of the market open. Time for todays news. How low could opec go . What sort of level are we talking about . The title is oil at 40 possible as market transforms caracas to tehran. You can find that story on bloomberg. Com. Production can continue to flow as prices fall below day today to day costs. Some u. S. Shale producers may breakeven at 40 or less. Most of the share producers return cash at 42 a barrel. Thes why the title of story is oil at 40 possible. Lets check out brent crude since the beginning of 2014. Its pretty clear what has been happening since the middle of the year. Today falling to 68 a barrel. Thats the last three trading days. Caplast three trading days production unchanged. Oil has fallen over 12 . In november oil declined by 18 . The biggest monthly fall since october, 2000 and eight. 2008. That was a ninemonth high. Brent has sunk from there to there, 40 decline. The lowest level since october, 2007. Oil is down by 38 . The worst year since 2000 and eight. 2008. Dont forget what happened then. Oil peaked on september 30. Three months later it was at 36 20. And howws you how fast far oil can go in a short time. Off with whatsh happened in the 1980s. By a crash was brought on saudi led decision to defend its market share. Does that sound familiar . 1980s fell as low as 12 a barrel. Its the question everyone is asking. How low can oil go . Opinionully there is an maker in the room to help us. The senior Economic Advisor at ubs group joins us. You have had the treatment. He was referring to the collapse, the capitulation. As negative on oil as forecasters seem to be . No. Which isa big picture, the supply shock that has come from fracking a few years may be and very importantly there is the demand which comes from china. The idea slower chinese growth would mean less commodity, that is very important. Drivel there is a lot of. Not from our charts. I think there is a lot of drivel being said. Nobody predicted the decline. Nobody i am aware of riddick did this decline. Now everybody claims it is going to carry on dropping another 10 or 20 . I think that is silly. I am not a great bowl about the economy. There is no question this decline in oil prices will act offset to the negative oil news. The stories about china buildingg or stockpiles of oil. Others will do the same. I think there will be a natural floor. Nobody knows where it is. Technicaly from a point of view somewhere around 50 would probably be as low as it would go. I would not be surprised if it bottoms out near their. Give us an idea of unforeseen results. When you see oil moving as fast as it has, it makes you wonder. You can paint a negative picture for those that export oil and a positive one for those that import. Is there a danger someone could position Something Differently and something blows up . How difficult can it be when things move so quickly . Isthe thing in left field the fact that Energy Companies, some Energy Companies may get into financial difficulty. I dont think it is going to be a systemic problem. It is not 2008 all over again. If the price do drop further and it is impacting the credit worthiness of major energy , but i think it is a local issue, not systemic. The ecb president is aggesting oil would be stimulus package. Euro area, oil good or not so good . Lets say this now. We are watching creeping inflation in europe for quite some time. Prices being,l here comes more deflation. Thats not the right way to think about it. If oil prices come down, it does act as a bit of a stimulus to real income and consumption, so we have thought of deflation as Something Different where oil prices are coming down because demand in the euro zone economy is weak. That is what we should have been worried about two years ago, but he isk in and of itself, right about this, but he is talking about this because he wants qe at arms length. Record lows in peripheral bond yields are on the side of the euro. If you cant get qe because germans are not on the line, send a check like they did in the u. S. In 2000. If you cannot do that, by some u. S. Bonds and trash the currency even further. Those are slightly radical thoughts. Many of those work for you . Those work for you . Policymakers have gotten so carried away with the divine andre of central banking qe, which is not the answer to what ails europe. Bond yields are very low. That qe could andsmit lower risk stimulate spending. There is no evidence that is happening in the u. S. Or the u. K. There are other things happening as well. Be thehat the uc they doomething if this qe, i am not sure they are going to announce it. It, but ifconsider they did do it, i think it would lead europe down a slippery path. A. George magnus stays with us after a short break. Thank you. We will be back. Time for todays company news. It is 7 40 eight in london. Glaxosmithkline is said to be considering reorganization that would involve hundreds of job cuts in the united states. Struggling to sell its risk. The machine in the u. S. , which sell its machine in the u. S. , which is its biggest market. The shares have been revised stockrd 50 , and another we will be watching today. Strikesa will be hit by that will last until tomorrow. More than 1300 flights have been canceled. 150,000 passengers will be affected. Left on the has canceled thousand left on the lufthansa has canceled thousands of flights already. To 20 bowlff says up hotels might be open around the world, including bali. It would be between five and seven years. They are shipping. It is about 20 because it responds. [indiscernible] the u. K. Talk about economy. We have George Osborne delivering his statement. Nhs funding, roadbuilding, those seemed to be well trailed in the press this weekend. What do you think he needs to do . What is his strategy going to be . He has been steady as she does. Yes, there was extra borrowing we were not planning for, but the strategy is intact. He is not getting as many tax receipts. Tax receipts as he hoped. That strategy has reached the end of the road. The decline in the governments deficit has been accommodated i the decline in the star plus surplus inine in the the private sector. It has been declining. It is partly what has driven our economy our recovery. The private sector financial balance is zero. Basically what is happening is the government deficit is in effect the a and finance for the rest of the world, in effect being financed for the rest of the world. It looks like it might get eager if the recovery continues. Bigger if the recovery continues. Is a realont hear financing issue for the government. Its not clear how it is going to proceed over the next few years without a tax increase, but the governments not going to be honest about that. Why would they with an election coming in three months . What if the aim is to balance the budget. Realistic without tax hikes, which according to this man right here, is off the table . I dont think it is realistic. The government is continually , andng forward the year the overall balance will be in balance. Balance imbalance. The office for budget responsibility will probably report not just excess borrowing for this year, but also for the next five years as well. That will have to be made good in conjunction with giveaways in terms of infrastructure and nhs and so on. Math isthe budget looking more and more stretched in terms of credibility. It is financial commentators who will recognize it. Its not something the public will recognize yet until it is made clear. Just saiding you about private sector, lack of wage growth, lack of tax receipts, that fits into fits the what sits in front of bank of england. The market is pushing the possibility of rate hikes further away. What is your thinking . Is there another year of big delays in terms of the rate cycle . I think so. We spoke about oil prices coming down, which has an effect on Consumer Price index. We talked about some of the fragility is in the cop in the economy and the labor market, which is central to the banks decisionmaking process. I think we just delay and delay. Its not good in a way, because we should prefer to actually try and restore normality to the cost of cape of capital as quick as possible. You can only do that in conjunction with a wellrounded economic strategy, which we dont have, because it is onehanded. Is a vote ony, britains membership with the the e. U. Something you worry about having an economic effect on the u. K. . Because i think if you look at the background, big current account deficits, Interest Rates that dont look like they are going up anytime soon voluntarily, a fiscal strategy that is running out of road, and if you superimpose on that the possibility of a Weak Coalition after may plus the problem of britains relationship with the eu and england and scotland, it doesnt really feel great. I think sterling is going to be a big casualty. At some point but not yet. We were already asking for a price. Give us a price. Its going down. Where are we today . 1. 56. The dollar itself will probably be quite strong over the next year or so. I think around 1. 40. When does the fed raise rates . Probably not before june. I would say the second half of next year. Your quiz for this morning is now over. Thank you so much. Is next. E move we are going to talk telecoms after the news of possible consolidation, plus spanish pmi and just a few seconds. Stay tuned. In just a few seconds. Welcome to on the move. The startts away from of european trading. A happy monday to you. In a. R him vodafone is said to be exploring a tie up with liberty globe are global. M a. Nster him in a lets talk about the china slowdown. The government gauge of china Manufacturing Sector drops to an eightmonth low in november. Another sign of continued pressure on policymakers to respond. Precious metals drop. Copper slides. Oil prices continued to move south. Brent drops below 17 a barrel. That follows the worst price for in over three years. Those are the three things you will be watching. Futures are lower across mainland europe. You are looking at futures down 22 point. Much futures for the pretty much unchanged. Footsie ftse futures pretty much unchanged. Telecoms are the dominant theme of the day. Sunday in the sunday papers talk of a takeover. John lang going