BusinessDay 06 Mar 2018
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A2 BUSINESS DAY<br />
C002D5556 Tuesday <strong>06</strong> <strong>Mar</strong>ch <strong>2018</strong><br />
FT<br />
NATIONAL NEWS<br />
US national security regulator delays Qualcomm vote<br />
ARASH MASSOUDI AND<br />
ROCHELLE TOPLENSKY<br />
The US government has ordered<br />
chipmaker Qualcomm<br />
to delay an upcoming shareholder<br />
meeting by a month, as it<br />
investigates whether a proposed<br />
takeover by a Singapore-based rival<br />
would put national security at risk.<br />
The intervention comes as the<br />
US company’s shareholders were<br />
set to vote on whether to replace six<br />
of its directors on Tuesday with candidates<br />
put forward by Broadcom,<br />
which is seeking to force through<br />
a $142bn takeover of the company.<br />
The US Treasury department,<br />
which leads an inter-agency regulator<br />
called the Committee on<br />
Foreign Investment in the United<br />
States, said in a statement that a<br />
30-day delay of the vote “will afford<br />
Cfius the ability to investigate fully<br />
Broadcom’s proposed acquisition<br />
of Qualcomm”.<br />
Broadcom responded by saying<br />
it was “disappointed” by the<br />
decision. It added: “Broadcom was<br />
informed on Sunday night that on<br />
January 29, <strong>2018</strong>, Qualcomm secretly<br />
filed a voluntary request with<br />
Cfius to initiate an investigation,<br />
resulting in a delay of Qualcomm’s<br />
annual meeting 48 hours before it<br />
was to take place.<br />
“This was a blatant, desperate<br />
act by Qualcomm to entrench its<br />
incumbent board of directors and<br />
prevent its own stockholders from<br />
voting for Broadcom’s independent<br />
director nominees.”<br />
Qualcomm did not comment.<br />
The delay is the latest escalation<br />
in a tensely fought hostile takeover<br />
battle, as Qualcomm’s management<br />
look to maintain the company’s<br />
independence.<br />
In recent weeks, US lawmakers<br />
have become more vocal with their<br />
concerns about any potential takeover.<br />
Some have urged the Trump<br />
administration to open an investigation<br />
into the bid, arguing it would<br />
be “deeply concerning” if a foreign<br />
company took control of a US group<br />
through a proxy fight without first<br />
gaining the approval of the Cfius.<br />
Broadcom was previously a USbased<br />
company but it redomiciled<br />
to Singapore to gain tax benefits<br />
following a takeover in 2015. The<br />
company’s chief executive Hock<br />
Tan went to the White House in<br />
early November to publicly declare<br />
in front of President Donald Trump<br />
its plans to move back to the US.<br />
The move came just a day before<br />
its plans to bid for Qualcomm, in<br />
what would be the largest tech deal<br />
ever, were revealed. “It should be<br />
clear to everyone that this is part of<br />
an unprecedented effort by Qualcomm<br />
to disenfranchise its own<br />
stockholders,” Broadcom said.<br />
UK-US Open Skies talks hit<br />
Brexit turbulence...<br />
Continued from page A1<br />
ership and control regulations post<br />
Brexit,” said International Airlines<br />
Group, which owns British Airways.<br />
Virgin Atlantic said it remained “assured<br />
that a new liberal agreement<br />
will be reached, allowing us to keep<br />
flying to all of our destinations in<br />
North America”.<br />
Chris Grayling, UK transport<br />
secretary, declared in October that<br />
he was making “rapid progress”<br />
in reaching ambitious new airline<br />
agreements with the US and other international<br />
partners. According to FT<br />
estimates, the UK must renegotiate<br />
and replace about 65 international<br />
transport agreements after Brexit.<br />
In its opening stance the US<br />
side rolled back valuable elements<br />
of the US-EU agreement, the most<br />
liberal open skies deal ever agreed<br />
by Washington. Its post-Brexit offer to<br />
the UK did not include membership<br />
of a joint committee on regulatory<br />
co-operation or special access to the<br />
Fly America programme, which allocates<br />
tickets for US government<br />
employees. Washington also asked<br />
for improved flying rights for US<br />
courier services such as FedEx.<br />
The UK has also yet to formally<br />
offer the US access to overseas territories<br />
such as the British Virgin<br />
Islands and Cayman Islands, which<br />
were not included as part of the original<br />
US-EU deal, according to people<br />
familiar with the talks.<br />
There are also potential issues<br />
over the continuation of antitrust<br />
exemptions, permitted by the US-EU<br />
open skies agreement, which allow<br />
airline alliances to set fares and share<br />
revenue, according to people familiar<br />
with talks.<br />
The biggest sticking-point is a<br />
standard ownership clause in Washington’s<br />
bilateral aviation agreements<br />
that would exclude airlines from the<br />
deal if “substantial ownership and<br />
effective control” does not rest with<br />
US or UK nationals respectively. In<br />
effect it requires majority ownership<br />
by one of the two sides if an airline<br />
is to benefit.<br />
London asked the US to adjust<br />
its long-held policy since it would<br />
exclude the three main British-based<br />
transatlantic carriers, which all fall<br />
short of the eligibility criteria. These<br />
are IAG, the owner of British Airways<br />
and Iberia; Virgin Atlantic; and Norwegian<br />
UK.<br />
Sir Richard Branson owns 51 per<br />
cent of Virgin, making it majority UKowned.<br />
But he is in the process of selling<br />
31 per cent to Air France-KLM,<br />
which could complicate Virgin’s access<br />
rights to the US. US airline Delta<br />
owns the remaining stake.<br />
The challenge is most acute for<br />
Willie Walsh, IAG chief executive,<br />
whose group must also clear the EU’s<br />
50 per cent ownership threshold to<br />
avoid losing his European operating<br />
rights after Brexit, when UK nationals<br />
are no longer counted.<br />
Theresa May and Michel Barnier: the standard line in Brussels is that the UK is still trying to leave the bloc while retaining<br />
many of the benefits of membership<br />
Europe’s strategic choices on Brexit<br />
The EU is a legal order, but it can be flexible when it wants to be<br />
GIDEON RACHMAN<br />
Talk to EU policymakers and you<br />
will be told that Britain has yet<br />
to make the hard choices on<br />
Brexit. The standard line is that Theresa<br />
May’s government is still trying to<br />
“have its cake and eat it” — leaving the<br />
EU, but retaining many of the benefits<br />
of membership. Britain must drop this<br />
“magical thinking” and make some<br />
crucial decisions. Once that is done,<br />
the structure of the future EU-UK<br />
relationship will be dictated by law<br />
and precedent.<br />
That argument has some truth to<br />
it. But what it misses is that the EU<br />
also has important choices to make.<br />
By treating Brexit as, above all, a legal<br />
process, the EU is largely ignoring the<br />
political and strategic implications<br />
of Britain leaving the EU. That is an<br />
intellectual failure that could have<br />
dangerous consequences for all sides.<br />
It is clearly true that the EU is a legal<br />
order. But it is also a political organisation.<br />
The EU is perfectly capable of<br />
creating new laws — or interpreting<br />
current ones with extreme flexibility —<br />
China’s dominant social media<br />
platform WeChat has reached<br />
1bn accounts worldwide, highlighting<br />
how the pervasive service that<br />
is used for everything from communication<br />
to shopping is continuing to<br />
extend its reach.<br />
Pony Ma, chief executive of Tencent,<br />
the country’s most valuable listed<br />
company which owns WeChat, said<br />
the platform had hit the landmark<br />
figure during last month’s lunar new<br />
year festival. He made the remarks on<br />
the sidelines of the opening of China’s<br />
rubber-stamp parliament on Monday,<br />
to which he is a delegate.<br />
when it is politically necessary.<br />
There are many examples of this<br />
flexibility in action. France and Germany<br />
broke the EU’s Stability and<br />
Growth pact — rather than accept<br />
legally mandated fines for breaking<br />
its budget-deficit rules. There was a<br />
“no bailout” clause for the euro, but<br />
Greece was bailed out. Now the European<br />
Commission is pursuing Poland<br />
for breaching the rule of law, but<br />
ignoring equally egregious breaches<br />
in Hungary.<br />
So the EU can cherry-pick the law,<br />
when it is politically convenient. It can<br />
therefore make strategic and political<br />
choices on Brexit. And, broadly speaking,<br />
it has three options.<br />
Staying tough means sticking with<br />
the current line. Britain has chosen to<br />
be a third country. There can be no<br />
special deals — no “cherry-picking”<br />
in the EU’s favoured jargon. There are<br />
only two viable models for a “third<br />
country”: Norway (which involves<br />
membership of the single market)<br />
or Canada (which is a pure free trade<br />
agreement). Britain must pick one and<br />
then accept the consequences.<br />
Although Mr Ma referred to “users”,<br />
a company spokesperson clarified<br />
that this meant “user accounts”, not<br />
individuals.<br />
Tencent often refers to “MAUs” in<br />
its quarterly reports, a term that typically<br />
means monthly active users and<br />
is used by Silicon Valley companies to<br />
highlight their popularity and reach.<br />
But the Chinese company is referring<br />
to accounts rather than individuals.<br />
WeChat users sometimes register<br />
multiple accounts, for example, one<br />
for work and another for personal use.<br />
The company reported annual<br />
growth in WeChat user accounts of<br />
15.8 per cent last September.<br />
<strong>Mar</strong>ket research firm e<strong>Mar</strong>keter<br />
has estimated that WeChat had<br />
The arguments for this purist<br />
stance are that it protects the integrity<br />
of the EU’s single market. If Britain<br />
keeps some benefits of EU membership,<br />
while ditching many of its obligations,<br />
then all 27 members of the<br />
EU might seek special deals, and the<br />
single market could unravel.<br />
By contrast, if Britain suffers economically<br />
from Brexit, that could actually<br />
benefit the EU. It would underline<br />
the negative consequences of leaving<br />
the organisation and undermine Eurosceptic<br />
parties across the continent.<br />
And jobs and tax revenues could migrate<br />
from Britain to the EU.<br />
Compromise on Brexit, the second<br />
option, would mean embracing the<br />
idea that there should be special arrangements<br />
between Britain and the<br />
EU. Britain is not any old third country.<br />
It has been crucial to the European<br />
balance of power for centuries. It has<br />
been a member of the EU for decades.<br />
And it is currently a major trading<br />
partner and military ally for most EU<br />
countries. So it sounds unrealistic to<br />
say that the UK must be treated exactly<br />
like Norway or Canada.<br />
China’s WeChat hits 1bn user accounts worldwide<br />
Social media app that dominates home market continues to extend reach<br />
YUAN YANG<br />
494.3m individual users in China<br />
last year.<br />
The service dominates China’s<br />
app market. It is used as a social messaging<br />
app that has largely displaced<br />
work emails, but also as a platform for<br />
mobile payments, e-commerce, train<br />
bookings and blogs, as well as being<br />
host to a universe of other apps. Chinese<br />
users often jokingly call WeChat<br />
a public utility.<br />
“Much of the growth in [accounts]<br />
is likely to have come from overseas,<br />
in south-east Asia, Europe and the<br />
US,” said Matthew Brennan, founder<br />
of WeChat-focused consultancy ChinaChannel.<br />
Chinese migrants abroad use it<br />
to keep in touch with those at home.<br />
FT top MBAs for<br />
women ranking <strong>2018</strong><br />
From career progression to gender pay gap,<br />
here’s why we created a new ranking<br />
An MBA is a fast ticket to the big<br />
time. On average, those who<br />
complete a course with a top<br />
school can expect to earn six-figure<br />
salaries three years after graduation.<br />
But despite generous scholarships<br />
and campaigns to encourage them<br />
to apply, women are a minority on<br />
prestigious business school courses.<br />
Four in 10 applicants on two-year,<br />
full-time MBAs in 2017 were women,<br />
compared with 33 per cent in 2013, according<br />
to the Graduate Management<br />
Admission Council. But women’s<br />
growing interest in business education<br />
has not led to more diverse MBA<br />
cohorts. Five years ago, women accounted<br />
for a third of students on the<br />
top 100 MBA programmes ranked by<br />
the Financial Times. Today, the figure<br />
has barely budged.<br />
The average cost of an MBA is<br />
$100,000 plus an average opportunity<br />
cost, or the income lost from not working,<br />
of $103,000, FT data show. Given<br />
that women’s salaries on average were<br />
91 per cent of their male peers before<br />
joining MBA programmes ranked by<br />
outcomes for women, saving up the<br />
cost of such personal investment is a<br />
greater sacrifice for women.<br />
And there is evidence to suggest<br />
that an MBA exaggerates the gender<br />
pay gap: three years after graduation<br />
women on average made 86 per cent<br />
of their male peers’ pay, the data<br />
reveal.<br />
Women receive a lower return on<br />
investment, says Elissa Ellis Sangster,<br />
executive director of Forté Foundation,<br />
a consortium of business schools<br />
and companies trying to improve<br />
women’s access to business education.<br />
But, she adds, “the return will<br />
still be high”.<br />
Either way, women need to know<br />
that their investment is going to pay<br />
off. That means taking into account<br />
which MBA will help them counter<br />
future pay discrimination, and which<br />
schools are best at teaching and developing<br />
their female graduates while<br />
promoting them to employers.<br />
The FT’s Global MBA ranking,<br />
published in January, does not capture<br />
whether women do as well as<br />
their male peers on graduation. That<br />
is why, for the first time, the FT has<br />
ranked business schools according<br />
to their outcomes for women — and<br />
the results are significantly different.<br />
The top MBAs for women ranking<br />
tells us at which schools women<br />
perform best, and where there seems<br />
to be a gap between the outcomes of<br />
male and female graduates.<br />
Some schools that rank in the midrange<br />
of the Global MBA ranking shoot<br />
to the top in this new ranking. Most<br />
of those are based in China, including<br />
Shanghai Jiao Tong: Antai, which<br />
tops the list.<br />
Emily Jin graduates from Antai’s<br />
part-time MBA programme in May.<br />
She says Chinese women’s interest in<br />
business education is growing as they<br />
get richer. “Especially in Shanghai,<br />
women are more and more independent<br />
and decide to spend their own<br />
money to develop themselves,” says<br />
Ms Jin.