Screenshot: Ant Group, Jack Ma and China’s power paradox
A weekly column from Morning Wire bringing you all the biggest stories and trends in technology, media and telecoms
This week:
**Media Moment of the Week: Margaret Thatcher takes to Twitter
**Ant Group, Jack Ma and China’s power paradox
**Three’s a crowd: Why a telecoms mast deal could spark more mergers
Media Moment of the Week
Let’s spare a thought for broadcasters, who have had to fill seemingly never-ending hours of airtime this week while waiting for the US to get its act together and finish off the election. With so much pressure and so little sleep, something was bound to go wrong.
Unfortunately for him, it was BBC presenter Matthew Amroliwala who was left red-faced on Wednesday after telling viewers that Margaret Thatcher had just tweeted. No, the Iron Lady hasn’t returned from the dead to share her thoughts on social media — he meant Theresa May.
Ant Group, Jack Ma and China’s power paradox
It’s been a sobering week for Ant Group. The fintech giant had been flying high ahead of its $34bn stock market debut — the largest in history — but it all came crashing down rather abruptly. Just 48 hours before Ant’s shares were due to start trading, Chinese regulators suddenly decided there were “major issues” with the planned dual listing, and slammed on the brakes. The dramatic intervention was ostensibly due to concerns about Ant’s power to issue loans, but China watchers suspect a rather different motivation.
The record-breaking IPO should have been a major coup for China, cementing its status as a technological superpower while also helping to stave off concerns about its unforgiving new regime in Hong Kong. So why would Beijing want to get in the way?
This is where Jack Ma, the eccentric founder of Ant’s parent company Alibaba, comes in. Ma, who is one of China’s richest men, has attained celebrity status in his home country for his fabulous wealth and a series of bizarre stunts that includes performing a Michael Jackson-themed dance routine for his employees and starring in a 20-minute kung fu film.
More troubling for Communist authorities, though, have been Ma’s dissenting comments. The boisterous billionaire may be a card-carrying party member, but he’s not been shy to criticise the authoritarian regime over its banking and tech regulations. This criticism reached a high-point at a summit in Shanghai last month, when Ma branded Chinese banks “pawn shops” over their requirement for collateral and attacked the country’s antiquated financial regulations.
Many analysts think these comments are the true reason for Beijing’s intervention. This is not to rule out genuine concerns about the rise of major fintech firms such as Ant Group and Tencent, which have moved beyond online payments to offer investment and lending services. But the eleventh-hour intrusion into Ant’s mammoth listing is likely to be just as much about taking Ma down a peg or two.
The move, then, highlights the paradox of power in a country that puts the party first. Ma has always been the poster boy for Chinese entrepreneurship and his company is a key asset in Beijing’s tech war against the US, but even this can’t protect him from authoritarian ire. Ant Group will no doubt fall into line and its IPO will go ahead, but the episode will do little for China’s image in the business world.
Three’s a crowd: Why a mast deal could spark more mergers
Over in the telecoms world, the Hong Kong-based owner of Three, confirmed it is closing in on a sale of its mobile mast business to Spanish infrastructure giant Cellnex. The potential deal, which was first reported last month by the Telegraph, would give CK Hutchison a welcome €10bn cash injection and could lead to a further shake-up of the fiercely competitive telecoms market.
The move is in some ways unsurprising. Telecoms firms have increasingly looked to cash in their mobile masts amid rising 5G demand while offsetting wafer-thin margins in a cut-throat sector. But it could also have interesting consequences for the wider market, which is going through a period of frenzied consolidation.
In 2016 Three attempted to take over rival O2 in a £10bn merger, but was scuppered by competition authorities, partly due to concerns that the move would harm Vodafone’s mast-sharing arrangement with O2.
In May, Three successfully overturned the EU’s decision to block the deal. Now, its decision to offload its towers business will reignite speculation that Three could attempt to derail O2’s £31bn mega-merger with Virgin Media and table its own bid. Alternatively, the mobile operator could look to join forces with Vodafone, which recently spun off its European towers business into a new company.
Options are running out for further mergers in the UK telecoms market, so now could be Three’s time to strike.
The algorithm recommends:
- It’s been a good week for newspapers in libel cases. The Sun emerged victorious from its explosive battle with Johnny Depp, which was widely branded the libel trial of the century. Meanwhile, a judge dismissed a case filed against the Telegraph by outspoken Easyjet billionaire Sir Stelios Haji-Ioannou.
- If you’re on the hunt for lockdown viewing, a new BBC drama about life in the City is airing next week. It’s called Industry and it promises an uncompromising look at the workaholic culture of investment bank grad schemes. Not light viewing, perhaps, but entertaining nonetheless.
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