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The Ring: comedy and 
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CLASS Page 14 


FINANCIAL TIMES 


Europe’s Business Newspaper 


US warns Iraq 
over any future 
threats to Kuwait 

Armed with a new United Nations resolution 
warning of "serious consequences” if Iraq once 
again menaces Kuwait, the US threatened immedi- 
ate milit a ry action for any repetition of this 
month's huge Iraqi troop build-up near the Kuwaiti 
border. Warren Christopher, US secretary of state, 
said the UN resolution, passed unanimously by the 
security council late on Saturday night, put Iraq's 
President Saddam Hussein "on notice . . . that he 
must not again threaten Kuwait”. Page 6 

UK ministers rush to defend the monarchy 




Senior UK government ministers tried to queQ pub- 
lic anxiety about the future of the British monarchy 
following the publication of extracts from a contro- 
versial book about the Prince of Wales and his 
failed marriage to Princess Diana. Page 20 ; Queen 
Elizabeth visits Russia, Page 4 

Merck, biggest drugs company in the US. is 
offering users of its prostate drug Proscar satisfac- 
tion or a refund on the cost of the drug. Page 20 

N Korean leader appears In public: Kim 

Jong-il’s first public appearance In almost three 
months signalled that he would soon be formally 
named as North Korea's new leader. Page 20 

Haitians stay calm as Aristide returns: 

Haitians largely heeded the call of their president, 
Jean- Bertrand Aristide, to avoid violence in the 
wake of his return to the country at the weekend 
after more than three years in exile. Page 4 

Crackdown on Hamas: Yassir Arafat's 
crackdown on the extremist Islamic Hamas group, 
responsible for the kidnapping and killing of a Jew- 
ish soldier last week, has saved the Middle East 
peace process foam collapse. Page 6 

Perry, welcomed in Beljfngr William Perry, US 
defence secretary, received an enthusiastic welcome 
m Beijing at the start of a visit to discuss Increased 
Sino-US defence cooperation. Page 4 

France names trade minister: Josfe Rossi, of 
France’s Republican party, was appointed as minis- 
ter for trade and industry, replacing Girard Lon- 
guet who resigned on Friday. Page 2 

UK groups proas for compensation: British 
businesses which paid a total of $2m in retainers to 
US company Bond Street Commercial in the hope of 
raising finance which they say never materialised 
have joined forces to press the US and UK authori- 
ties for compensation. Page 21 

Cuban fund planned: Beta Funds, a 
London-based company, is planning to launch a 
S50m investment fund for Cuba and has created the 
first investment management company to be repre- 
sented on the island. Page 2S 

Indonootaui leodoro c ha llenged : It is a 

generally held view that Indonesia's P re sident 
Suharto and his senior cabinet ministers stand 
above the law, but two court cases in the next few 
weeks will challenge the government’s authority at 
its highest level Page 7 

European Monetary System: The Irish punt 
last week slipped two places in the SMS grid, but 
the spread between strongest and weakest curren- 
cies was Little changed. Yesterday's German elec- 
tions and the Finnish referendum on the European 
Union may affect the grid currencies this week. 
Currencies, Page 29 


EMS? Grid 


Guilder . 
B.Franc " 
D-Mark 
Irish Punt 

f .Franc 
DXrone 
Escudo 

Peseta 


October 14. 1994 



'001% 2% 3* 4% . s% e% 

The chart shows the member currencies of the 
exchange rate mechanism measured against the 
weakest currency in the system. Meed of the curren- 
cies are permitted to fluctuate within 15 per cent of 
agreed centred rates against the other members of the 
mechanism. The exceptions are the D-Mark and the 
guilder which move in a Z25per cent band. 

£1 .94m ter fugWv* Nissan UK boss: Octav 
Botnar, chairman of Nissan UK, for whom an arrest 
warrant has been outstanding for more than 254 
years, was paid £L94m ($S.lm) last year m his rote 
as chairman of Nissan UK Holdings and its subsid- 
iary Nissan UK. Page 8 

Retreat over Italian central bank: Italy’s 

government has backed down in its attempt to 
impose an external candidate as the new second-in- 
command of the Bonk of Italy, according to wide- 
spread reports in Italian papers. 

Bangladesh ferry sinks: More than 100 people 
were feared drowned in the second Ban g ladesh 
ferry disaster In two months. The ferry, carping a 
wedding party, went down in high seas in the Bay 
of Bengal. 


MONDAY OCTOBER 17 1994 


Kohl coalition claims victory 
in close-run German election 


Ruling parties likely to remain in 
power with wafer-thin majority 


By Quentin Peel fn Bonn and 
Judy Dempsey fn Berlin 

Chancellor Helmut Kohl claimed 
victory last night in the German 
election, but looked set to rule 
with at best a wafer-thin majority 
for his conservative-liberal coali- 
tion. The final result depended 
on the success of a handful of 
candidates belonging to the 
reformed communist party in 
east Germany. 

The first projections of the out- 
come suggested the coalition 
would have a majority of 
between three and 10 seats over 
the combined forces of the left - 
the Social Democratic party 
(SPD), the Green party, and the 
party of Democratic Socialism 
(PDS), the former communist 
party. 

According to voting projections 
from the government statistical 
office in Berlin, the PDS would 
win four direct seats, one more 
than the minimum necessary to 
get its full proportional represen- 
tation in the Bundestag, esti- 
mated at around 27 seats. 

Mr Kohl last wi ght d mcr ib ed 
the predicted outcome, a majority 
of less than 10, as “a perfectly 
good working majority*. He said 
the ex-Chancellor Helmut 
Schmidt had governed with a 
majority of just 10 in 1976. 

“The projections suggest that 
we have won the alKSenoan elec- 
tions," Mr Kohl told cheering 
party workers in Bonn. 


HOW THEY VOTED 
(8pm exit polls) 

% of 


vote 

CDU-CSU 

41.8 

Free Democrats 

6.9 

Soda! Democrats 

36.6 

PDS 

3.9 

Alliance '90-Greens 

6.9 

Others 

3.9 


Mr Rudolf Scbarpmg, the SPD 
leader, appeared to be conceding 
defeat when he said the coalition 
appeared to have a majority of 
“one, two or three." 

"It has been very narrowly 
endorsed,” he said, “and there- 
fore it is a coalition of losers.” He 
said Mr Kohl was determined to 
go on with his present alliance, 
but he claimed: “We have a very 
strong position. We will use it to 
promote our policies of social jus- 
tice and economic growth." 

The biggest losers on the night 
were the Free Democratic party 
(FDP), the minority partners in 
the ruling coalition, who woe set 
to lose about 30 seats. 

In spite of the setback, how- 
ever, a deli ghted Mr Klaus Km- 
kel the party leader and foreign . 
minister, was last night celebrat- 
ing, because with its vote fore- 
cast at about 7 per cent of the 
vote, the party would keep. 


its place in the parliament. 

Mr Kohl’s own Christian Demo- 
cratic Union, with its Bavaria- 
based sister party, is set to 
remain the hugest group in the 
future Bundestag, with some 284 
seats, against around 250 seats 
for the Social Democrats. Neither 
has an absolute majority alone, 
so the smaller parties in the elec- 
tion - the FDP, PDS and the 
Greens - will dictate the final 
coalition possibilities. 

The forecasts would allow two 
possibilities for the future Ger- 
man government to the current 
alliance - a grand coalition 
between the CDU/CSU and SPD, 
or a so-called “rainbow coalition” 
between the SPD, Greens and 
FDP. 

However, both are less likely 
than the continuation of the pres- 
ent government. Mr Wolfgang 
SchAuble. parliamentary leader 
of the CDU/CSU group, said the 
result was “stiff a victory", and 
the coalition would continue. 

But Mr Ludger Vollmer. joint 
leader of the Greens, warned that 
the coalition would be unstable. 
“1 am not at all sure that Rnhl 
and Kinkel will be able to survive 
a fuff four years," he said. 

The Greens succeeded in 
regaining their seats in the Bund- 
estag with about 7 per cent of the 

Continued on Page 20 

Election Background, Page 3 
~ Lex, Plage 20 
Bonds, Page 26 










One man’s choice: Cbaucellor Helmut Kohl -easts his vote in his home 
town of Oggersheim in Germany’s general election yesterday 


Finland votes decisively for EU membership 


By Hugh Camegy in HebMd 

Finland voted decisively to join 
the European Union yesterday in 
the first of three Nordic ballots 
that could enlarge membership of 
the EU from 12 to 16. 

The final result showed 57 per 
cent in favour of membership 
and 43 per cent against on a turn- 
out of 74 per cent The outcome 
was welcomed by Mr Esko Aho. 
fin* Finnish prime minister. 

However, the margin was less 
than pro-EU supporters had 
hoped for. and fell below Aus- 
tria’s more convincing Yes vote 
of over 66 per cent in June. 

The toughest test for EU 
enlargement is still to come, as 
opposition to membership in 


uics uecisiveiy lur xlu mei 

Result may boost Yes campaigns in Norway, Sweden 

Sweden and Norway has been In Sweden, which is next to external affairs, welcomed thi 
much stronger than in Finland vote on November 13. most opin- Finnish result and said he hoDe< 


Sweden and Norway has been 
much stronger than in Finland 
and Austria. Both Sweden and 
Norway are due to hold referen- 
dums next month. 

Both the Social Democratic 
leadership in Sweden and the 
Labour party government in Nor- 
way looked to Finland for added 
momentum in their campaigns 
for a Yes vote. 

The Finnish vote was sched- 
uled first in tbe hope of achieving 
a Nordic domino effect The three 
countries have close ties through 
the Nordic cooperation organisa- 
tion and pursued their EU appli- 
cations in concert 


In Sweden, which is next to 
vote on November 13, most opin- 
ion polls have shown a slight but 
unsteady lead for the Yes side 
since the summer. In Norway, 
where a referendum will be held 
on November 28, the No camp 
continues to hold a solid lead. 
But a weekend opinion poll far 
the first time showed a clear 
majority for membership based 
on a Yes in both Finland and 
Sweden. The poll showed 46 per 
cent in favour to 41 per cent 
against — a turnaround hum last 

mf>nth 

In Brussels, Mr Hans van den 
Broek, the EU commissioner for 


external affairs, welcomed the 
Finnish result and said he hoped 
it would help a Yes vote in Swe- 
den ami Norway. 

Finnish membership will mean 
a direct frontier between the EU 
and Russia for the first time, 
along the 1,270km Finnish- 
Russian border, and extend 
Union territory north into the 
Arctic circle. It will also mark an 


historic shift for Finland, ruled 
by Moscow until 1917, away from 
cold war neutrality into the west- 
ern European political sphere. 

Tha majority of the political 
establishment and the country’s 
business leaders also argued that 
membership would underpin the 
Finnish economy which this year 
has started to recover from a 
crippling recession. 

Fears grow that Brussels will 
turn Into Babel, Page 2 


New York 
State plans 
takeover 
of power 
company 

By Richard Tomkins in New York 

The State of New York has 
decided to buck the worldwide 
trend towards privatisation by 
announcing plans for a $2.53bn 
takeover of the Long Island 
Lighting Company, a private sec- 
tor electricity company quoted 
on the New York Stock 
Exchange. 

While some electricity compa- 
nies in the US have always been 
publicly owned, this is believed 
to be the first time a state has 
proposed buying out tbe share- 
holders of a private-sector com- 
pany and bringing it into public 
ownership. 

Mr Mario Cuomo, the Demo- 
cratic governor of New York 
State, says the aim is to reduce 
electricity prices for Long Island 
consumers and businesses. At 
present, the rates charged by the 
Long Island Li ghting Company - 
known to its few friends as Ulco 
- are the highest in the US, if not 
the world. 

The bid is likely to prove popu- 
lar with the voters of Long 
Island. Significantly, it also hap- 
pens to have been launched at a 
time when Mr Cuomo is locked in 
a fierce battle for re-election. 

Lilco's electricity prices are 
high because the company te bur- 
dened with $&3bn worth of debt 
the legacy of spending $5.5bn 
between 1973 and 1984 building a 
nuclear power station at Shore- 
ham mi Long Island, which was 
dismantled because of public con- 
cerns about safety. 

At present Utea’s electricity 
rates are 16.1 cents per kWh for 
residential customers and 12.35 
cents for industrial customers, 
roughly double the US average. 
Mr Cuomo says a takeover by the 
state will result in an immediate 
10 per cent cut in those rates, 
plus another 10-15 per cent cut 
later. 

The fi n ancial logic of the bid is 
beguiling. Mr Cuomo says that 
under public ownership, Lilco 
will no longer need to pay federal 
taxes or shareholder dividends, 
resulting in immediate savings of 
5250m a year. Later, its debt will 
be refinanced with cheaper pub- 
lic sector debt The bid Itself will 
be financed through an issue of 

Continued on Page 20 


Ford to pay $50m for 7% 
stake in Indian carmaker 



GENEVE 


By Kevin Done, 

Motor Industry Correspondent 

Ford of the US, the world’s 
second-largest vehicle maker, is 
taking a minority stake in Mahin- 
dra & Mahmdra, one of the top 10 
private sector groups in India. 

Ford's move into the fast-grow- 
ing Indian market follows recent 
similar initiatives by several 
leading carmakers. Including 
General Motors, Volkswagen. 
Mercedes-Benz and Daewoo. They 
are scrambling to establish a 
presence in newly emerging mar- 
kets, particularly Asia and Latin 
America. 

Ford said it would pay about 
550m (£31. 6m) for a 7 per cent 
stake in Mghindra & Mahlndra, 
the automotive and tractor man- 
ufacturer. 

The two companies are to 
launch a feasibility study into 
the manufacture of Ford vehicles 
in indie, which should be con- 
cluded by mid-1995. It is expected 
to lead to a joint venture com- 
pany with equal Ford and Mahm- 
dra shareholdings, which will set 
up a new plant - probably for the 
ass embly of vehicles developed 
by Ford in Europe. 


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Ford’s acquisition of a minority 
stake in the Indian group must 
be approved by Mahindra share- 
holders at a meeting cm Novem- 
ber 10. 

Mr Alex Trotmaru Ford chair- 
man »»id rhigp executive, thp 

US carmaker intended “to be a 
significant participant in India’s 
automotive industry In the near 
future”. Last year, Ford started 
production of aluminium radia- 
tors in a plant near New Delhi in 
a joint venture with Sumitomo 
and MarutL 

In other moves this year in 
India; 

• GM of the US has formed a 
joint venture with Hindustan 
Motors to invest about 5100m to 
assemble the Opel Astra, G&Ts 
best-selling car in Europe, 
with production planned to 
begin in the third quarter of 
1995. 

• Mercedes-Benz, the automo- 
tive subsidiary of Daimler-Benz 
of Germany, has fenced a joint 
venture with Tata Engineering & 
Locomotive (Telco) of India, one 
of the world's leading makers of 
commercial vehicles, with an 
investment of about DM250m 
(£ 102.4m) for the assembly in 


CONTENTS 


Ftetoras 


Cleaned 

36 

Lite Png* 

19 



Letttra 

18 

IMAtf 

_ 21-23 

Ctmr 

19 

tbriwta 


itanganm 

11 

TTatakse 

24 

Mate 

IS 

UsttfraMsdara— 

25 

Arts 

17 

Wb*f Bert Matas 

26 

Btatou Trawl ___ 

U 

Bajty Mates 

25 


India of Mercedes-Benz E-Class 
executive cars as well as petrol 
and diesel engines. Daimler-Benz 
holds a stake of just over 10 per 
cent in Telco. 

• Volkswagen of Germany, the 
leading European carmaker, 
si gnprf a memorandum of under- 
standing last month with Eicher 
Goodearth to study the feasibility 
of joint vehicle production in 
India. The Eicher group produces 
Mitsubishi light commercial 
vehicles under licence in 
India. 

• Daewoo, the South Korean 
conglomerate and the country’s 
third-Iargest carmaker, has 
bought a majority stake in DCM- 
Toyota, an Indian truck maker, 
which It plans to transform into 
a carmaker under the name 
DCM-Daewoo Motors. 

Volkswagen said that Asia 
offered the strongest prospects 
for growth in the world car mar- 
ket - annual sales in India are 
expected to double to between 
450.000 and 500,000 by 2000. The 
Indian car market is dominated 
by Maruti. a car produced 
through a joint venture between 
the Indian government and 
Suzuki of Japan. 


Ucn«y Market*. 



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HTtfeoore Section U) 


£ the FINANCIAL TIMES LIMITED 1994 No 32,489 We^Noji. 


LONDON - PARIS - FRANKFURT - NEW YORK • TOKYO 


.» 



FINANCIAL TIMES MONDAY OCTOBER 17 1994 


NEWS: EUROPE 


Balladur 
acts to curb 
upheaval 


Corruption rocks French ship of state 

Resignations have holed Bahadur’s government and ambitions, writes John Ridding 


fouf S4MA t*SQU*i S Sw3T 
Eft! *]ftui£ OU AiLLSUW { 



Mr Balladur tells Mr Mitterrand In this morning's Le Monde; 
■Right, I will answer for those locked up or elsewhere' 


By John Ridding in Paris 

Mr Jose Rossi, general 
secretary of France’s Republi- 
can party, was yesterday 
appointed minister for trade 
and industry in the country’s 
centre-right government, repla- 
cing Mr Gerard Longuet who 
resigned on Friday following 
growing allegations of corrup- 
tion. 

Th*:- swift appointment and 
the decision not to implement 
a broader cabinet reshuffle, 
reflect Prime Minister Edouard 
Bahadur’s attempt to limit the 
upheaval in his government 
with presidential elections lit- 
tle more than six months 
away. 

Mr Balladur is seeking to 
play down the effects of the 
corruption scandals that have 
rocked the administration and 
which have prompted the res- 
ignation of two cabinet minis- 
ters in the past three 
months. 

The appointment of Mr Rossi 
enables Mr Balladur to main- 
tain the balance between the 
various parties in the ruling 


RPR-UDF coalition. The Repub- 
lican party, which is still 
headed by Mr Longuet, is the 
largest element of the UDF. 

Nlr Rossi, 50, is thought to be 
to the right of the Republican 
party and Is considered a 
potential supporter of Mr Bal- 
ladur in his undeclared contest 
with Gaullist rival Mr Jacques 
Chirac for the conservative 
candidacy In next year's presi- 
dential election. 

The new minister will 
inherit a broad and sensitive 
brief. In addition to trade and 
industry, the position also cov- 
ers postal services and tele- 
communications. 

Mr Rossi will be presented 
with some important projects 
not completed at the time of 
Mr Longuet's resignation. 
These include the search for 
industrial partners for Groupe 
Bull, the loss-making computer 
manufacturer. Mr Longuet was 
also pushing for reform of the 
legal status of France T&I&com, 
which would allow the 
exchange of equity invest- 
ments with other international 
telecoms operators. 


A nnouncing his resigna- 
tion at his prime minis- 
ter's Matignon office 
on Friday evening, Mr Gerard 
Longuet, the industry minister, 
described himself as calm and 
serene. He claimed he could 
now counter allegations of cor- 
ruption concerning the financ- 
ing of his Saint Tropez villa 
and a separate probe into the 
funding of his Republican 
party. 

For Mr Edouard Balladur. 
the prime minis ter, however, it 
Is difficult to be so sanguine. 
Mr Longuet leaves a govern- 
ment badly shaken by corrup- 
tion investigations which are 
threatening Mr Balladur's pres- 
idential aspirations and which 
have prompted comparisons 
with Italy's “clean bands" anti- 
graft campaign. 

Mr Longuet’s departure com- 
pounds the blow sustained by 
the government a few days ear- 
lier when Mr Alain Carignon, 
the former communications 
minister, was detained in a 
Lyon jail. Mr Carignon had 
resigned in July after being 
accused by an investigating 
magistrate of receiving illicit 
payments in return for the 
award of public works contract 
in Grenoble, where he is 
mayor. 

Although less dramatic, Mr 
Longuet's resignation is more 


significant. A heavyweight in 
France's centre-right adminis- 
tration, the industry minister 
is the most senior figure yet 
ensnared by the corruption 
probes which are rocking 
French politics and business. 
His departure represents a 
landmark in the investigations 
and demonstrates the 
increased vulnerability of 
French establishment figures. 

For Mr Balladur, the events 
of the past week add up to his 
most serious challenge since 
his centre-right administration 
took office last year. In addi- 
tion to the damage wrought by 
two ministerial resignations, 
his personal ambitions have 
been undermined. 

With bis eyes set on next 
spring's presidential elections, 
the French prime minister 
looked to Mr Longuet as a vital 
ally in his battle with his 
Gaullist rival, Mr Jacques Chi- 
rac, for the conservative candi- 
dacy in the forthcoming polls. 

The French prime minister 
now finds his strategy and his 
standing undermined. “It is no 
longer a question of cracks but 
of gaping holes in the Balladur 
system”, said Liberation, the 
daily newspaper, in an edito- 
riaL Le Figaro, the conserva- 
tive daily, highlighted the 
growing threat posed by Mr 
Jacques Delons, the president 


of the European Commission 
and a possible socialist candi- 
date in the French presidential 
elections, who has closed the 
gap on Mr Balladur in recent 
opinion polls. 

The risk is that the corrup- 
tion affairs affecting his gov- 
ernment may not be so easily 
tamed. A report into the 
finances of the Republican 
party by Mr Reynand Van 
Ruymbeke. an investigating 
magistrate, could drag other 
senior party figures into the 
firing Hue, including Mr Fran- 
cois Leotard, the defence min- 
ister, and Mr Alain Madeira, 
minis ter for economic develop- 
ment and small businesses. 

Of broader concern, are the 
growing wave of probes which 
have seen the chairmen of 
some of France’s largest busi- 
ness groups, from Saint 
Gobain, the glass and building 
materials company, to Alcatel 
Alsthom, the transport, tele- 
coms and engineering concern, 
placed under investigation for 
alleged corruption. The cases 
have ensured that corruption 
will be a central theme in the 
presidential polls and have 
fuelled pressure for an Italian- 
style “clean hands" operation. 

Mr Balladur, along with 
other senior politicians and 
businessmen, deny that corrup- 
tion is endemic in France and 


reject the comparison with 
Italy. He argues that the spate 
of investigations reflects a 
freer hand enjoyed by the judi- 
ciary in pursuing cases which 
mostly date back to the 1980s. 
Mr Pierre Mghaignerie, the jus- 
tice minister, concurs. “We are 
cleaning up the problems of 
the past On the ground, cor- 
ruption is receding." 

There is some truth in these 


claims. The case involving the 
Republicans, for example, cen- 
tres on allegations that the 
party received illicit funds and 
favourable terms for the con- 
struction its Paris headquar- 
ters between 1987 and 1991- 
Few would claim, however, 
that the problem of corruption 
is resolved. 

Despite his initial claims 
that the existing legislation 


will resolve the problem, Mr 
Balladur has bowed to mount- 
ing pressure and proposed a 
strengthening of safeguards 
against corruption. He is call- 
ing for a panel to perform an 
annua! audit of the assets of 
minis ters. MPs and senior local 
officials. He also proposed that 
prefects, the chief government 
representatives In the regions, 
be empowered to suspend sus- 
pect public works contracts. 

For some, however, such pro- 
posals do not go far enough. 

Mr Thierry Jean-Pierre, an 
investigating magistrate, and 
now a Euro-MP, demands 
increased resources for magis- 
trates investigating political 
and white collar corruption 
and the formation of judicial 
t^arns to specialise in financial 
cases. According to Mr Jean- 
Pierre, failure to act swiftly 
against corruption will push 
France down the road to “Ital- 
ianisation", undermining polit- fi 
leal institutions and playing 
into the hands of demagogues 
such as Jean-Marie le Pen. 
leader of the extreme right 
National Front 

Such an analysis, is itself, 
extreme. But the rising wave of 
corruption probes have already 
rocked the French ship of 
state. Mr Balladur has yet to 
show that he can steer it back 
on course. 


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Fears grow that 
Brussels will 
turn into Babel 

By Emma Tucker In Brussels Estimates suggest that room 

needs to be found for about 
Against the sombre backdrop 1,300-1,700 Finns, Swedes. Aus- 
of high unemployment, there trians and Norwegians. In the 
are a few Europeans for whom past, space was created by 
job offers are overflowing: offering golden handshakes to 
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Greeks able to translate com- Van Miert, commissioner 
plex documents into Norwe- responsible' for personnel 
gian, not to mention Spanish issues, has ruled out this 
natives well versed in Swedish, approach as too expensive. 

As Brussels prepares to open - Demographic factors could, 
its arms to Norway, Sweden, however, come to his rescue. 
Finland and Austria, the Ian- “The commission was set up in 
guage services of the European the 1960s, so people who joined 
Commission, parliament and then in their 30s are now retir- 
council of ministers, are busily ing,” pointed out an official “If 
recruiting interpreters for the you allow for a lengthy transi- 
extra languages the newcom- tion period, we should be able 
ers will bring to European pro- to absorb the newcomers fairly 
ceedings. easily.” 

The cost of expanding the But this approach creates a 
already elaborate language ser- new problem; it will stop virtu- 
vices has caused consternation ally all recruitment of existing 
in certain quarters. One specu- member states for tour to five 
lation is that the total number years, something which certain 
of language combinations nee- countries, notably Spain and 
essary at any official meeting the UK who are under repre- 
will rise from 72 to 132; new seated at the commission, may 
booths will have to be built to be unwilling to accept 
house the translators, and the Meanwhile, tension over lan • 
mound of primed translations guage in the Commission press 
will topple over. room is rising, with non- 

Conservative MEP James French speaking journalists 
Elies believes the ElTs commit- increasingly unhappy about 
meat to translate official docu- the obligatory use of French at 
merits into all nine, soon 12 , the midday b riefing s for which 
languages, and to provide com- no translation is provided, 
prehensive translations at offi- Many non-French-speaking 
cial meetings is unrealistic, journalists do not understand 
and a drain on the public the proceedings and have to 
purse. put questions in faltering 

“Can we really assume that French to English-speaking 
all documents and all meetings spokesmen and women, who 
can be covered in all the neces- are obliged to answer in 
sary languages? Why is it that French, 
an international institution a, Je veux demands r ques- 

such as the EU needs to have . tion sur les bent bananes,” is 
every single document in every not untypical of the type of 
single language when the mangled questions asked. With 
United Nations and the Coun- the arrival of the three Nordic 
cil of Europe seem able to oper- countries and Austria, the case 
ate with only a few?" he asks, for providing an En glish trans- 
Mr EUes, says the commis- lation in the press room is 
sion, exaggerates. First, the streng thening Last week jour- 
translation service commonly nalists voted in favour of such 
uses a "pivot" system for a move. Their wish, however, 
simultaneous translations, may not be granted. Commis- 
This means that a central sion officials fear that allowing 
interpreter translates from the in English means allowing in 
less well-known languages, German, and Italian and Span- 
such as Danish, into a com- ish and so del This, they say, 
monly-used one such as French would be too expensive, 
or English, from which other Further, Mr Jacques Delors, 
interpreters then translate it is said, does not want to go 
into, for example. Portuguese. down in history as the French 
“You don’t have to have president of the Community 
someone in the Danish booth who allowed English into the 
who can translate Into Portu- press room, 
guese or Greek," said a com- 
mission official. “The system is 
not perfect, as it slows down 
the rate of translation, but it 
does reduce the number of lan- 
guage combinations." 

Second, at least as far as the 
commission is concerned, offi- 
cials take a pragmatic 
approach to which language 
they use for everyday business. 

"The parliament, for all the 
usual democratic reasons, has 
to work in all the languages of 
the member states, whereas 
the commission just gets on 
with things in the three official 
languages: French, German 
and English," said an official. 

As for documents, "we are 
reinforcing our language teams 
in order to produce documents 
in the final language, hut that 
Is an obligation to the outside 
world." 

All this, says the commis- 
sion, creates the need for about 
400 extra language posts. A Ear 
more pressing problem is find- 
ing jobs at all levels of the 
commission for civil servants 
from the new member states. 


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FINANCIAL TIMES MONDAY OCTOBER 1 7 1994 


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NEWS: EUROPE 


Kohl win removes uncertainty 

Muted effect 
on markets 
expected 



GERMAN 


By Andrew Fisher in Frankfurt 


The prospect of 
victory, 
although nar- 
row. for Chan- 
cellor Helmut 
Kohl's conser- 
vative coalition 
in yesterday's 
German gen- 
eral election, 
was welcomed 
last night by 
economists and 
_. is expected to 

ELECTIONS remove an ele- 

October 16 ment of uncer- 
tainty from 
financial markets. Both the 
bond and stock markets have 
swung from pessimism about 
the possibility of an opposition 
victory to optimism mid gains 
last week as polls showed Mr 
Kohl’s government was likely 
to be re-elected. Although early 
results indicated Mr Kohl’s 
majority would be wafer-thin, 
there was relief that the Free 
Democrats (FDP), the junior 
coalition party, had succeeded 
in reentering the Bonn parlia- 
ment after failing in recent 
state elections. 

Because a victory for Mr 
Kohl, head of the Christian 
Democratic party (CDU), had 
been discounted in financial 
markets, economists did not 
aspect bond and equity mar- 
kets to show further gains 
today. 

“If the results are as the exit 
polls suggest, the effect on 
markets will be rather mod- 
est,” said Mr Kermlt Schoen- 
holtz, senior economist at Salo- 
mon Brothers rntowiatMinaT in 
London. “I would not be sur- 
prised to see the initial reac- 
tion rather muted, " agreed Mr 
Richard Raid, Frankfurt-based 
economist with DBS Global 
Research. Noting that bond 
markets had been affected by 
concern over global inflation, 
he said Mr Kohl’s likely victory 
had now removed -any extra 


All party leaders find some cause for comfort 


worries over political stability 
in Germany. 

“This has got to be good for 
bonds and stocks,” he added 
Even though the majority of 
the Bonn e nulitjni i, also includ- 
ing the Christian Social Union 
(CSU) of Bavaria, looked thin, 
he said: “These coalitions tend 
to work very closely.” 

He thought, too. the election 
result should make easier the 
Bundesbank’s job of control- 
ling the money supply and 
inflation. “It removes a big 
question mark.” Ever since 
unification in 1990, the year of 
the last general election, the 
central b ank has been con- 
cerned about the impact on 
prices of the high public spend- 
ing needed to rebuild the east 
German economy. 

Despite the coalition's appar- 
ent victory over the Social 
Democrats (SPD), Ms Alison 
Cottrell, international econo- 
mist at Kidder Peabody's Lon- 
don operation, noted "it's 
going to be a very splintered 
parliament”. The Greens won 
more seats and the east Ger- 
man-based Party of Democratic 
Socialism (PDS) looked likely 
to benefit from discontent in 
fiie east 

Thus she thoug ht that, wbQe 
markets would react favoura- 
bly to last night's result, inves- 
tors and traders might con- 
sider Mr Kohl’s freedom of 
manoeuvre - especially in fis- 
cal policy - to be more Kwutprf 
As for the Bundesbank, she 
mH the reaction there mi ght 
be one of caution. If budgetary 
and tax packages, needed to 
continue paying the high cost 
of German integration, took 
too long to get through parife- 
ment, “the Bundesbank might 
flex its muscles”. But this did 
not mean it would immediately 
put interest rates up. 

Mr Schoenhohz th o u g ht the 
central bank could take com- 
fort from steady economic 
growth which did need not 
need the aid of lower interest 
rates. - 


By Quentin Peel in Bonn 

All the main party leaders in 
Germany appeared to be cele- 
brating last night, although 
really only the former east Ger- 
man communists had good rea- 
son to do so. 

Chancellor Helmut Kohl 
appeared beaming with 
self-confidence in hunt of his 
Christian Democratic Union 
party workers, declaring his 
wafer-thin majority, and the 
party's worst vote since 1949, a 
victory. 

The CDU and its Bavaria- 
based sister party, the Chris- 
tian Rorfai Union, remains the 
biggest single group in the 
Bundestag, but government 
will be difficult. 

Mr Rudolf Scharplng, the 
Social Democratic party (SPD) 
leader, has failed to dislodge 
Mr Kohl from his office. 

But he was able to cheer a 3 
percentage-point improvement 
in the party’s score, to around 
37 per cent of the vote. 

He denounced the Kohl coali- 
tion as “a coalition of losers”, 
al thoug h he had foiled to win. 

As for Mr Claus gfakai, the 
foreign minister and leader of 
the Free Democratic party 
(FDP), anyone might have 
thought he had won, as he 
burst, confetti-covered, into his 
party headquarters. 

“We have made it, and I am 


happy,” he said. “It was incred- 
ibly difficult to get there.” 
What ha meant was, getting 
back into tha Bundestag at all 
For the FDP had lost ground 
from U per cent of the vote 
last time to around 7 per cent 
yesterday, seeing its represen- 
tation slump by 30 seats to 
under 50 in the 656-member 
parliament. 

In the other three state elec- 
tions yesterday - In the Saar- 
land, Mecklenburg-Vorpom- 
mern and Thuringia - the FDP 
foiled to cross the 5 per cent 
hurdle needed to get into the 
state parliaments. But it man- 
aged it in the federal parlia- 
ment, which means that Mr 
Kohl’s coalition can just sur- 
vive. 

The man who really bad 
cause to celebrate, however, 
was Mr Gregor Gysi, the parlia- 
mentary leader of the PDS, the 
Party of Democratic Socialism, 
based on the old communist 
party of East Germany. 

For according to mid-evening 
predictions, he and his col- 
leagues were set to win four 
seats in east Berlin outright on 
the first vote, giving the party 
the right to foil parliamentary 
representation of around 27 



SPD leader Rudolf Scharping gets a kiss yesterd a y from a well wisher in Lahnstein 


“It would have been good If 
we could have forced a change 
of government," he said. “But 
for the PDS, this was an his- 


toric achievement, because we 
did it against the opposition of 
ail the other parties." 

The PDS is also left holding 
the balance of power in both 
the east German states which 
voted last night 


According to the latest pro- 
jections, the party polled 23.2 
per cent in Mecklenburg-Vor- 
pommern, against 38.9 per cent 
for the CDU and 27.8 per cent 
for the SPD. 

That means that the two big 


parties will have to form a 
coalition, unless the SPD does 
a deal - against everything the 
party leadership has promised 
- with the PDS. 

In Thuringia, the PDS was 
forecast at 17.5 per cent, 


against 412 per cent for the 
CDU and SPD 28-9 per cent 

Neither the FDP nor the 
Greens managed to gain 5 per 
cent, leaving the PDS again 
controlling the balance of 
power. 

The one party which suffered 
a complete defeat was the fer- 
right Republicans, who looked 
unlikely to gain even 2 per 
cent of the vote, leading most 
political commentators to pre- 
dict a total eclipse of the com- 
ing years. 

The support or the PDS 
remains overwhelmingly in 
east Germany, where the party 
was forecast last night to win 
some 19.2 per cent of the vote, 
against just 0.9 per cent in 
west Germany. 

The largest party in the east 
remains Mr Kohl’s CDU, with a 
predicted 39.7 per cent, while 
the SPD was expected to win 
3L5 per cent. 

In the Saarland, the 
third state to vote yesterday, 
Mr Oskar Lafontaine of the 
SPD narrowly retained his 
overall majority but saw a 
drop to around 50.1 per 
cent of the vote, compared 
with over 54 per cent four 
years ago. 

Yet again, the FDP foiled to 
get into the state parliament, 
although the Greens were on 
the verge of doing so, with 4J9 
per cent 


FDP members jubilant after clearing poll hurdle 


By Michael Undemann in Bonn and 
Judy Dempsey in Berlin 

It was all over in a second. An empty 
blue television screen, then a pie 
chart First the two big parties and 
then yells and cheering of the sort 
reserved for football terraces: the 
FTee Democratic party bad made it 
bade into parliament 

People threw themselves into each 
other's aims, managing only just to 
keep their drinks in their glasses. 
The first exit poll showed the FDP 
had won 7 per cent, 4 per cent less 
than in 1990 but enongfi to get its 
representatives harfr into the Bundes- 
tag, file lower house of parliament 

For the first time in yean it was a 
dose shave for the party, which has 
only once scored more than 12 per 
emit 

hi recent weeks polls had shown 
FDP support slipping steadily. One 
poll even gave the party 4 per cent, a 
result which would have left ft out- 
side the federal parliament for the 


first time since the second world war. 

The party lost out in five state elec- 
tions this year and also lost its seats 
in the European parliament Many 
people who bad previously voted FDP 
now wondered whether there was 
any paint: the liberals had moved too 


Gartner, a 21-year-old who runs the 
Young Liberals in the northern state 
of Schleswig-Holstein. *Tve met (Km- 
keJ). He’s very nice. . . but he's no 
good for the Job of party leader. He’s 
a civfl servant He doesn't have what 
it takes.” 


exit polls came in. The PDS had suc- 
ceeded where the other parties failed. 

It relied on a loyal and large grass- 
roots organisation whose members 
an kno w n locally. It tapped the vote 
of former Communist party members, 
many of whom were dismissed from 


The PDS was helped by the governing Christian Democrats 
who repeatedly accused them of being fascists painted red 


close to Chancellor Helmut Kohl's 
Christian Democratic Union, they 
said, given up the civil rights 
and free market economics they once 
stood for. 

Even as Mr Flans ffinkel, the for- 
eign minis ter and FDP leader, pushed 
his way through a ferret of cameras, 
some party members warned that the 
bad result meant his days as party 
leads* were numbered. 

This is a very poor result for the 
party leadership,” said Mr Tobias 


At Berlin's Congress Hall, mean- 
while, the Party of Democratic Social- 
ism was bolding its election party. 
“We voted for the PDS because we 
want them to be the voice of the east 
Germans in the Bundestag," said 
Karin Neubert 

The hall was awash with posters of 
Mr Gregor Gysi, the charismatic par- 
Ham eatery leader of the PDS, with 
Us recognisable round silver rimmed 
spectacles. 

The shoots went up whenever fresh 


their jobs after unification and who 
now feel marginalised. It managed to 
act as a protest party for the unem- 
ployed. Above all, it acted as the 
party which could represent the voice 
and interests of the east Germans. 

Mr Gysi frequently referred to the 
free and widespread kindergarten 
system, holiday camps for children, 
and the sense of solidarity among 
people under the communist system, 
all of which virtually disappeared 
after unification. The unique act of 


combining a sense of nostalgia for 
the past with providing some sense of 
east German identity won over the 
voters, even the younger generation. 

Indeed, tike the other former com- 
munist parties in eastern Europe, the 
PDS represents one of the phases in 
the t ransition from a communist to a 
post communist culture. 

The PDS, however, was undoubt- 
edly helped by the campaign run by 
Chancellor Kohl's governing Chris- 
tian Democrats, who repeatedly 
accused the IDS and its supporters of 
being fascists painted red. “It played 
right into our hands. It was free 
advertising. It made east Germans, 
many of whom never supported 
either the former communists, or 
even the PDS, swing over to ns,” said 
Mr Lothar Bisky, leader of the PDS. 

The other success of the PDS was 
the weakness of the Social Demo- 
crats, which foiled to establish itself 
as a left-wing party both in east Ber- 
lin and throughout eastern Germany, 
as weQ as the other political parties. 



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FINANCIAL TIMES MONDAY OCTOBER 17 1994 


NEWS: INTERNATIONAL 


Haitians stay calm as Aristide resumes power 


By Ted Barctacke In Port-au-Prince 

Haitians largely heeded the call of 
their returned president. Jean- Ber- 
trand Aristide, to relax and avoid vio- 
lence in the wake of bis return over 
the weekend to Haiti after more than 
3 years in exile. 

President Aristide did his part to 
keep the peace by remaining in the 
presidential palace on Sunday morn- 
ing, skipping a mass he was sched- 
uled to attend. 

The president’s low profile 
was a victory for US security 


forces who are afraid that numerous 
public appearances would make Mr 
Aristide an easy target while 
simultaneously whipping his support- 
ers into a fervour that could get out 
of hand. 

The president made a speech on 
Saturday inside a box of bullet-proof 
glass and was never got within 100m 
of the general public. At the same 
time US army vehicles circulated 
amongst the crowd playing anti-vio- 
lence messages through huge loud- 
speakers. 

In the speech from the steps of the 


national palace to a crowd of fewer 
than 100,000, far less than organizers 
had expected, Mr Aristide pleaded 
with Us people to shun the violence 
that has torn this country 
apart for the past 3 years of military 
rule. 

At one point he asked the crowd to 
take an oath against vengeance and 
for reconciliation. The crowd reply 
affirmatively with a roaring “yes." 

Mr Aristide's sway over much of 
the population, even among those 
who did not attend the rally, was 
evident. “Aristide told ns to stay 


cool, so we are going to stay cool We 
love the man,” said Ms Dienla Paul 
as she walked to church on Sunday 
morning. 

Some are questioning how long the 
president, known for his love of mix- 
ing with the people, can remain 
inside his box and still have his anti- 
violence message remain effective 
beyond this honeymoon period. 

Already there have been reports of 
at least three attacks on supporters 
of the military coup in the country- 
side, where Mr Aristide's call may be 
more faint and the US military pres- 


ence is less forceful than in the capi- 
tal 

The task of rebuilding the coun- 
try's economy and spirit will never- 
theless be easier now that there is a 
government that can begin work. 

“We have a few meetings scheduled 
for later this week,” said Lt Raymond 
Kelly, head of the international 
police monitoring programme. “The 
government knows what needs to be 
done, it just has to move 
forward quickly while everything is 
calm.'’ 




f* .► .. .. n» ■_/*** 






l:: 






BWli 



A US soldier (top left) and happy Haitian crowd (bottom left) welcome back Aristide (top right), with Warren Christopher n* 

Big brother’s Haiti blueprint 

A 5 soon as Haiti’s President. Father divided. Some feel a Truth Commission they are not under attack. 

Jean-Bertrand Aristide, stepped which would name those responsible for The centre-right is expected to be held 
out of a US military helicopter on the estimated 5,000 murders under the mil- check by liberal economic reform ai 


A s soon as Haiti’s President. Father 
Jean-Bertrand Aristide, stepped 
out of a US military helicopter on 
to the grounds of his national palace, Mr 
Warren Christopher, US secretary of state, 
was studying his every move. 

The Americans have made a big invest- 
ment. both political and financial, in 
bringing Fr Aristide back to power, and 
now they want their dividend; a stable 
Haiti. 

That is why. on leaving Haiti late on 
Saturday, Mr Christopher stressed the US 
would continue its military' presence until 
the country was “secure", and President 
Aristide would be firmly pushed to bring 
his enemies into the political process. 

In the task or “institution building", 
Haiti would receive important guidance 
from the state department's Agency for 
International Development (USAID). 

As the US military’s Haiti mission was 
ambiguous on arrival and largely shaped 
by events on the ground, the US blueprint 
for creating democratic institutions and 
ensuring development of a political centre 
that will hold is in a constant state of 
revision. “Developing policy in Haiti is 
like going around a blind curve at 
lUOmph." says one USAID official.. You 
simply don't know what’s next." 

Nevertheless, the central issues, culled 
from previous US experience in El Salva- 
dor. Panama and South Africa, have 
largely been defined. The Aristide govern- 
ment is being pressured to construct a 
wide political centre that shuns mob vio- 
lence ami paramilitary terror, wrest judi- 
cial task-- away fmm the army and police 
force, and build up other branches of gov- 
ernment. notably the legislature and 
municipalities. 

Crucial in completing these tasks is find- 
ing the right mix of reconciliation and 
justice But here. US policy officials are 


divided. Some feel a Truth Commission 
which would name those responsible for 
the estimated 5,000 murders under the mil- 
itary government but not prosecute them 
would be enough to calm many of Presi- 
dent Aristide’s followers. 

By doing this. President Aristide could 
quickly change himself from a polarising 
force into a cohesive, healing figure, simi- 
lar to the political transformation under- 
gone by his friend Nelson Mandela. But 
unlike the anonymous death squads in El 
Salvador, Haiti’s killers are well-known 
public figures and President Aristide, 
without being specific, seems to be leaning 
towards some form of prosecution. 


Ted Bardacke on US 

efforts to create a 
workable government 


“Aristide understands the need for recon- 
ciliation but not so far as to establish 
impunity," said a US official who believes 
if Haitians are ever to believe in their 
justice system, they must be shown that it 
can produce upright results. 

Still, President Aristide may find that 
forgiveness is politically more astute, 
given his need to cajole moderates into 
legitimate political participation. 

“In Haiti, you don’t have a governing 
class, you have a ruling class," says Mr 
Rick Barton of the State Department’s 
office of transition initiatives (OTU. He 
says that for the political system to be 
inclusive, a broad coalition witling to play 
by new and unfamiliar rules must be cre- 
ated, and to do this, people must feel as if 






iz.*' - ■ y 


Crowning glory 
for the last 
of his line 

Russia’s harassed president will 
meet Queen Elizabeth II today 

W hen Queen Elizabeth as a subject of conversation 
meets Mr Boris Yelt- between the toasts, 
sin. on her first state Mr Charles Anson, the 


they are not under attack. 

The centre-right is expected to be held in 
check by liberal economic reform and 
what US officials hope will be a new prime 
minister from outside the president's inner 
circle. The violent and extreme right has 
to deal with the US military. 

If a centre can be found and security 
ensured, then OTTs job of demobilising 
those ousted from the military for human 
rights violations will be easier. OT1 is the 
brainchild of USAID head Mr Brian 
Atwood, who believes the cycle of poverty 
and humanitarian assistance cannot be 
broken until basic issues of governance 
are solved. 

OTI will jay the salaries of former mili- 
tary and police officers for six months and 
voluntarily relocate them to other parts of 
the country, where their reputations are 
less of a threat to their own security. OTI 
teams will ask local community leaders to 
nominate upstanding young people as new 
members of Haiti’s police force, who will 
then be trained by another state depart- 
ment agency. 

Interim budgets for local judges, to be 
autonomous from the military and pc Hoe 
force for the first time, is also part of 
USAID’s financial assistance package. 
Bringing in mentor judges from the 
nearby French-speaking countries of 
Guadaloupe and Martinique is also befog 
considered. Much of the Americans' politi- 
cal development plans and budget will go 
towards providing a check on President 
Aristide’s power by attempting to 
strengthen other areas of government 

Programmes for raising tax revenue on 
a local level will be implemented, while 
the legislature is to be prodded into 
expanding the constitutional authority of 
local governments. The goal Is to restrain 
both a president on the left and rural 
strongmen on the right 


W hen Queen Elizabeth 
meets Mr Boris Yelt- 
sin. on her first state 
visit to Russia which starts 
today, she will be greeting a 
man who is certainly the last 
of his line. No future president 
of Russia will be a former 
member of the Politburo of the 
Communist Party of the Soviet 
Union. 

Mr Yeltsin has fought hard 
to avoid the fate of befog “the 
Queen of England”, as the dec- 
orative presidency to which 
the former Supreme Soviet of 
Russia wished to confine him 
was popularly known in Rus- 
sian political circles. 

John Lloyd looks 
at the royal visit 

But In that struggle, which 
reached its climax a year ago. 
he exhausted himself, unable 
now to muster the consistent 
energy needed to build institu- 
tions of democracy. That 
leaves him occupying one of 
the most powerful presidential 
chairs in the world without the 
appetite or will to use its 
power in a way which will 
fully meet the challenges 
which press on him. 

From the Queen’s point of 
view, the timing or the publica- 
tion of Prince Charles’s author- 
ised biography has cast an 
unfortunate shadow over the 
beginning of her visit That is 
not the only potential embar- 
rassment The last Tsar of Rus- 
sia, Nicholas n, and the Tsar- 
ina Alexandra, both close 
relatives of the Queen's grand- 
father George V, were killed on 
Lenin’s personal orders. 

Mr Yeltsin, in his Bolshevik 
period, levelled the house in 
Ekaterinburg where the Tsar's 
family met their deaths, in 
order to remove its potential as 
a shrine and presumably to 
advance his career. 

The bodies were buried In 
roadside graves from which 
they were exhumed only after 
the end of the Union of Soviet 
Socialist Republics; they have 
not yet been reburied, though 
are due to be, in the Peter and 
Paul Fortress in Petersburg, 
which the Queen will visit. 

The last Russian royal fam- 
ily is thus unlikely to come up 


as a subject of conversation 
between the toasts. 

Mr Charles Anson, the 
Queen’s press secretary, said 
yesterday the issue had been 
discussed at diplomatic level 
but “the question of the rebu- 
rial of the Russian royal family 
and the Queen's visit are 
entirely separate issues". 

Though President Yeltsin 
has made at different times 
before different audiences 
denunciations of co mmunis m 
and has apologised directly to 
the Japanese for Soviet treat- 
ment of their prisoners of war, 
he has not alluded publicly to 
the circumstances of the Tsar’s 
death. Russia is not and per- 
haps cannot be a penitent 
nation as Germany has been. 

The British royal house also 
has a historical black spot 
which may inhibit it from 
pressing the matter.. Ring 
George V, a man who professed 
Nicholas II to be a close friend 
as well as a relative and so like 
him physically as to seem in 
photographs more a twin than 
a cousin, personally refused 
the Tsar’s family visas. 

Professor Dominic Lieven. in 
his biography of Nicholas, says 
"the King...took the lead in 
closing off the possibilities of 
asylum... fearful of reaction 
from British socialists and the 
labour movement. King George 
did not want his dynasty to be 
associated in the public eye 
with the hated and now fallen 
Russian Tsar, let alone with 
his half-English wife." 

Awkwardness of a different 
kind now attends Queen Eliza- 
beth n as she. a British mon- 
arch, comes to Russia for the 
first time. Still, the visit of 
western Europe’s most promi- 
nent constitutional monarch 
serves the purpose of high- 
lighting President Yeltsin's 
crowning achievement. 

Like Mr Mikhail Gorbachev 
before him, he has realised, in 
what has been, for both men. 
the greatest test of their erratic 
but high courage, that it is not 
possible to take refuge for any 
length of time in the mailed 
fist 

The process which Mr Yelt- 
sin inherited from Mr Gorba- 
chev roars on; he rules over it 
a little more than the Queen 
rules over her kingdom, but 
not much. 



en 





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IMTERNATIONALNEW^OIGEST 

US defence chief 
on China visit 

ess a-asrisssj-Sss 

discuss increased Sino-US defence He is tort 

US defence chief to visit (£ma 

killings of June 1989. when China s military turnedits guns on 
pro-democracy protesters in and around Beijing s central 

XW was greeted by General Chi.Haotian. Ch^ 

defence minister, and other senior officers. 

uty chief of the general staff of the People s 

and the commander-in-chief of the navy. The «sti follows toat 

of other senior US officials, including most recently Mr Ron 

Brown, commerce secretary, who headed an investment mis- 

S *These exchanges Indicate a desire on both sides to 'UPS^de a 
sometimes fractious relationship. Among issues to be dis- 
cussed are regional security, arms control. 
and peacekeeping activities. US officials say there are no plans 
to lift sanctions on military sales to China imposed after June 
1989. Tony Walker in Beijing 

Chinese investment surges 

Capital spending In China in July and August surged by more 
than 54 per cent per cent compared with the same period last 
year, adding to continuing worries about pressures on prices 
and an overheating economy. The State Statistical Bureau 
reported that the “overall scale of investment was still inap- 
propriate". Fixed-asset investment in the first eight months far 
exceeded the 25 per cent growth target for the year. 

The bureau said that to August, investment by state enter- 
prises. which account for the bulk of capital spending, jumped 
by 44 per cent or Yn492^bn (£33bn). Coastal regions were 
reported to be the main culprits in exceeding the capital- 
spending growth targets. The bureau’s report accused the 
prosperous east coast provinces of wilfully ignoring govern- 
ment directives. Tony Walker in Beijing 

Toy stores disarm in US 

Toy stores across the US will this week be removing toy guns 
from their shelves, after a decision by some of the biggest 
retailers to stop selling weapons that could be mistaken for 
the real thing. The move has been prompted not by concerns 
that the sale of toy guns encourages violence, but because of 
safety fears. With many young people In the US these days 
carrying real guns, there is a danger that children carrying 
Imi tation firearms could be seen as a threat. In two Incidents 
in New York over the past few weeks, youths brandishing toy 
guns have been shot by police who thought the weapons were 
reaL One of the hoys, a 13-year-old, died. 

Toys “R" Us, the biggest US toy retailer, announced at the 
end of last week that it would stop selling all look-alike toy 
guns including western -style rifles and revolvers, plastic hand- 
guns and any weapons that could be modified to look reaL It 
was joined by Kay-Bee Toy Stores, another big toy retailer, 
which said it would immediately start removing and destroy- 
ing guns that resembled military or police-style weapons. 
Richard Tomkins, New York 

Italian unions call protest 

Italy’s three main trade union federations have called for a 
mass demonstration in Rome on November 19. following up 
Friday’s general strike to protest against proposed pension 
and welfare cuts. The unions also called for a further eight 
hours of strikes between now and the middle of next month. 
But most government ministers remained firmly committed to 
the 1995 budget, which looks to find savings and new revenues 
of L50,000bn (£20bn) to reduce next year’s deficit. 

Mr Silvio Berlusconi, Italy’s prime minister, missed the 
general strike because he was on an official visit to Russia, 
but at the weekend he dismissed further industrial action as 
futile. “The government has inherited an economic situation 
with figures that no demonstration can alter," he told journal- 
ists in Moscow before returning to Italy. Friday’s four-hour 
general strike paralysed Italian cities and angry but peaceful 
demonstrations attracted at least 3m people onto the streets, 
according to organisers. Andrew HUl, Milan 

EU satellite liberalisation 

The European Commission has used special powers to force 
through a directive on liberalisation of satellite equipment and 
services throughout the EU. The directive liberalises both 
establishment and operation of satellite networks, as well as 
associated satellite dishes, across the EU. The commission said 
the move would help businesses in retailing distribution and 
the financial sector along with similar potential users who 
have pan-European reqirements but limited means of exercis- 
ing them. 

“Due to liberalisation, a 10-fold Increase in the volume of 
satellite communications before the year 2000 can be expec- 
ted.” said the commission. The situation In Europe contrasts 
sharply with the US. where an “Open Sides” policy in the 
early 1980s led to rapid stimulation of the satellite market. 
Emma Tucker, Brussels 

UK-Argentine gas venture 

British Gas and YPF, Argentina’s privatised oil company, have 
been discussing the formation of a joint venture to explore for 
hydrocarbons in disputed South Atlantic waters. “We would 
both like to form a long-term partnership," said Mr John 
Bueno, general manager of British Gas Argentina. Such an 
a l liance would, in addition to other projects, seek to explore 
waters between Argentina and the Falkland Islands. 

British Gas already has a big presence in Argentina with 
important stakes in privatised gas distribution and power 
companies. But Mr Bueno stressed that talks between the 
companies could go no further until the British and Argentine 
governments had constructed the political framework within 
which exploration could proceed. Although Argentina was 
defeated in the 1982 war over the Falklands, it has not relin- 
quished its claim over the islands, ownership of which was 
recently enshrined in the constitution. Buenos Aires disputes 
Britain’s right unilaterally to exploit a non-renewable resource 
in internationally disputed waters. David Pitting, Buenos Aires 

Confusion in Chechnya 

The situation in Russia's breakaway Chechnya region grew 
ever more confused yesterday, when both the government and 
opposition forces claimed to have gained the upper hand after 
fighting m the capital Grozny. The Chechen leader. Mr Dzbok- 
tor Dudayev, appeared on TV to announce an attack by 
Moscow-backed opposition forces on Grozny overnight had 
been repulsed, Itar-Tass news agency said. But sources within 
the frail coalition of opposition groups said the assault on 
Grozny had been a reconnaissance mission which showed the 
city could be captured at any time. Reuter. Moscow 


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6 


financial times 


MONDAY OCTOBER 17 1994 « 


NEWS: MIDDLE EAST 


US warns Iraq on new build-ups 


By George Graham fn Washington and 
Michael Littlejohn? In New Yoric 

Armed with a new United Nations 
resolution warning of "serious conse- 
quences” If Iraq once again menaces 
Kuwait, the US yesterday threatened 
immediate military action for any repe- 
tition of this month's huge Iraqi troop 
build-up near the Kuwaiti border. 

Mr Warren Christopher, US secretary 
of state, said the UN resolution, passed 
unanimously by the Security Council 
late on Saturday night, put Iraq’s Presi- 
dent Saddam Hussein “on notice. ..that 
he must not again threaten Kuwait If 
he does, we feel we have all the neces- 
sary authority to act against him. I 
think nest time we'll probably not 
wait.” Mr Christopher said yesterday. 


The US does not expect to start with- 
drawing the tens of thousands of troops 
it has sent to Kuwait until several 
weeks after Iraq has completed the 
reversal of Us own troop build-up. US 
officials said they were still watching 
two brigades near Nasiriyah, although 
the Iraqi troops appeared to be moving 
in the right direction. 

Washington Is anxious not to have to 
perform the same costly troop deploy- 
ment all over again, weeks or months 
from now. if Iraq were to start moving 
troops back towards its border with 
Kuwait The passage of Saturday’s UN 
resolution followed a day of diplomatic 
wrangling in New York, as Russia and 
Prance quarrelled with the tough lan- 
guage proposed by the US and UK. 

Russia demanded the inclusion of lan- 


guage welcoming “all diplomatic and 
other efforts to resolve the crisis," a 
reference to the mission of Mr Andrei 
Kozyrev, Russia’s foreign minister, to 
Baghdad. 

Mr Kozyrev is due to meet Mr Chris- 
topher in New York today; Mr Thriq 
Aziz, Iraq's deputy prime minister, was 
reported to be on his way to New York 
for talks with Security Council mem- 
bers. The next review of sanctions will 
be on November 14, which apparently is 
why Mr Aziz has decided to conduct yet 
another lobbying campaign, this time 
with help from Mr Kozyrev. 

In a communique issued by Iraq and 
Russia after Mr Kozyrev's visit to Bagh- 
dad last week. Moscow promised to sup- 
port an easing of the economic sanc- 
tions Imposed by the UN, while Iraq 


offered to recognise Kuwait’s borders 
and sovereignty. But the US remains 
adamant that Saddam should not be 
rewarded for stepping back from the 
threat he mounted 10 days ago. It con- 
tinues to demand Iraq comply with the 
full list of UN resolutions against it 
"Our goal is to have him comply with 
all UN resolutions, all of them, includ- 
ing respect for ethnic minorities, 
including the return of Kuwaiti prison- 
ers." Mr Christopher added. Arab diplo- 
mats say Mr Saddam is convinced the 
US will never allow the lifting of sanc- 
tions so long as he holds power, 
although he has never come close 
eno u gh to compliance for this theory to 
be tested. Any possibility of relaxing 
sanctions depends on Baghdad’s recog- 
nition of Kuwaiti independence. 


Crackdown on Hamas 
raises stakes for Arafat 

Julian Ozanne writes on the PLO leader’s choices 



M r Yassir Arafat’s 
crackdown on the 
extremist Islamic 
Hamas group has saved the 
Middle East peace process but 
has polarised Palestinian poli- 
tics and raised the prospect of 
internal Palestinian conflict. 

Last week’s kidnapping and 
death of an Israeli soldier dur- 
ing a raid by Israeli forces on 
the kidnappers’ hideout, 
starkly revealed the difficult 
political choices facing the Pal- 
estinian leader. Mr Arafat 
must keep the peace process 
going by conceding Israeli and 
western demands for a decisive 
blow against Hamas, at least 
its military wing. However, 
this would risk conflict or the 
possibility of continuing delays 
in the tortuous peace negotia- 
tions which each day erode his 
popular support 
Israeli cabinet ministers yes- 
terday praised Mr Arafat's 
arrests of up to 300 Hamas 
activists in Gaza and decision 
to disarm the militant organi- 
sation which opposes peace 
with Israel. 

The Israeli government, 
embarrassed by the fact that 
the kidnapped soldier was 
being held in the Israeli-occu- 
pied West Bank and not, as 
they had insisted, in Palestin- 
ian-controlled Gaza, said they 
would today lift the closure 


imposed on Gaza after the kid- 
napping. The cabinet also said 
it would resume suspended 
peace talks in Cairo tomorrow 
with the Palestine Liberation 
Organisation. 

Mr Shimon Peres, Israeli for- 
eign minister, said over the 
weekend that Israel was satis- 
fied with Mr Arafat’s “readi- 
ness to counteract the dangers 
of Hamas”. However, Mr Ara- 


Israeli Prime Minister Yitzhak 
Rabin and Foreign Minister 
Shimon Peres yesterday flew 
to Jordan to meet King Hus- 
sein, a foreign ministry 
spokesman said, Reuter 
reports. He said the three 
would try to iron out issues 
blocking a peace treaty. Israel 
and Jordan agreed in July to 
end 46 years of war. 


fat’s moves against the under - 
ground movement has divided 
Palestinian society. Hundreds 
of Hamas supporters, angry at 
the continuing crackdown, 
rioted near a Jewish settle- 
ment in Gaza yesterday and 
threw stones at Israeli police. 

On Saturday, up to 1,500 
Hamas supporters demon- 
strated outside the Gaza cen- 
tral prison demanding the 
release of their activists. Pales- 
tinian police, anticipating fur- 
ther protests, yesterday 


increased security across the 
Strip. Weekend statements by 
Qassam. the military wing of 
Hamas, threatened Israel with 
more kidnappings and Mr Ara- 
fat with bloodshed if he contin- 
ued his crackdown. 

Hamas officials accused Mr 
Arafat of being the "poodle" of 
Israel, of carrying out "Zionist” 
policy by proxy, and of passing 
information to Israel about the 
location of the kidnappers. 
Hamas also blamed Mr Arafat 
for the death of three of its 
gunmen in the r aid on Friday. 
"If these arrests continue. Qas- 
sam brigades will reply by set- 
ting the Gaza Strip ablaze on 
the heads of the Zionists and 
their lackeys." one statement 
warned. 

Despite Hamas threats of vio- 
lence, both groups know they 
have more to lose than gain 
from confrontation. Mr Ara- 
fat's aides have repeatedly 
warned that the benefits of the 
peace process are still too few 
and limited to ensure success 
of the pro-peace forces. 

Furthermore, Hamas is 
believed to have at least 15-20 
per cent bedrock support In 
Gaza as well as a motivated 
and disciplined underground 
military wing. 

Hamas has built up an 
impressive social welfare net- 
work across the Gaza Strip and 


Nachshon Waxman yesterday 

West Bank, of schools, health 
clinics, the Islamic University 
in Gaza and benevolent societ- 
ies that continue to spread the 
doctrine of Islamic values and 
build the organisation. 

Hamas will be cautious to 
risk a conflict which could see 
Its institutions destroyed and 
leave it blamed by Palestinians 
for civil war. "Hamas and the 
PLO have to live together in 
Gaza.” said Mr Roni Staked, a 
Hamas expert at the Yediot 
Ahronot newspaper. "Both of 
them know if they cross the 
red lines they are going to 
destroy what they have 
achieved, because civil war 
inside Gaza Strip means the 
end of everything, and proba- 
bly the return of Israeli occu- 
pation." 

But Mr Arafat must meet 


Israeli and western demands 
and strike a blow at Hamas to 
keep the peace process going. 
He is clearly hoping to sepa- 
rate the political wing of 
Hamas from the military wing, 
and has indicated he will not 
release detainees associated 
with the Qassam brigades. 

If his strategy pays off, and 
Hamas, concerned about the 
potential threat to its institu- 
tions and convinced that even- 
tually the tide of Islam will be 
triumphant allows him to curb 
Qassam, then the threat of 
widescale violence could be 
avoided. In the long term, Mr 
Arafat knows the battle 
against Hamas must be fought 
economically and culturally, 
alleviating the poverty and 
sense of alienation which breed 
extremism. 


•‘.INTKRNATTONAL PRESS REVIEW } 

Tabloids find room 
to praise heroism 



By Mark Nicholson 


Tabloid journalism is 
increasingly a necessity in 
Iraq. Two of the country’s lead- 
ing dailies, al-Jumhuriya and 
ol-Qaddissiya, have both in the 
past few months shrunk from 
broadsheet to tabloid format 
for want of newsprint in sanc- 
tions-hit Baghdad. Gone are 
the sports pages and much of 
the local news - there is not a 
lot of advertising either. 

But ea ch of Iraq’s main dai- 
lies yesterday, as all days, 
found plenty of room to bash 
away at their favourite topics: 
the heroic wisdom of President 
Saddam Hussein and the per- 
fidious treachery of the vest 
and above all, of course, the US 
administration. 

With extraordinary syn- 
chronisation, all the Twain dai- 
lies’ photo editors chose for the 
front pages a low-action shot of 
Mr Saddam sitting at the head 
of a meeting of the Revolution- 
ary Command Council Iraq's 
highest r uling body. 

“Arab and world resentment 
at heinous American campaign 
a gainst Iraq,” blazed al-Jtunhu- 
riya. “Russians threaten to use 
veto at Security Council." 
"Washington prolongs the 


embargo to justify petroleum 
and financial interests in the 
region,” roared al-Qaddissiya. 
"President presides over meet- 
ing of RCC,” said Babel, Iraq’s 
newest tabloid, edited by Mr 
Saddam ’s son, Uday, less biaz- 
i ugly. 

Inside Iraq’s dailies, the tone 
is as consistent as the photo- 
graphs - one of indignant self- 
righteousness laced with mock- 
ery. “Any military officer or 
analyst with a reasonable 
degree of insight,” intoned al- 
Thawra, the ruling Baath 
Party newspaper, "would be 
astonished at the biased Amer- 
ican claim that two divisions 
(of Iraqi troops} could attack 
Kuwait and occupy it. since it 
is logistically impossible.” 

In unison, all the papers hail 
Russia and Mr Andrei Kozyrev, 
the Russian foreign minister, 
who takes to the UN this week 
proposals that Iraq recognise 
Kuwait in exchange for some 
movement on the embargo - 
although Iraq’s papers fail any- 
where to specify directly that 
Mr Saddam might recognise 
Kuwait. Al-Jumhuriya speaks 
only, and typically, of ‘‘protect- 
ing the sovereignties and terri- 
tories of the region's countries, 
whether Iraq or Kuwait”. 

So, "Has a world coup taken 
place? Is the Iraqi victory near- 


iiig” asked the editor of al- 
Jumhuriya. Of course, yes: 
"With the failure of the Ameri- 
can “TV game* in Iraq, the TV 
success which Clinton wanted 
to holster his very weak inter- 
nal position has also fallen.” 
Mr Clinton, the successor of 
“Bush the famous criminal", 
and his regime are reported 
variously as ‘ , 5ick\ "unstable" 
and even “conniving with little 

pygmies”- _ , 

Sanction-weary Iraqis will 
remain sceptical. For most, it 
is the small stories tucked 
away inside the papers which 
actually mean things. 

Such as the story telling 
motorists who have lost their 
oil ration coupons that they 
can now re-register. Or, on the 
back page of Babel, which has 
made Itself Iraq’s campaigning 
paper, the list of the day’s 
donors to the newspaper’s fond 
for the poor. Yesterday this 
included Ahmed Rathi and 
Laith Hussein, two Iraqi soccer 
stars playing in Qatar, who 
each donated ID40,000. 

Or. the despatch from Basra 
telling how prices of basic com- 
modities fell during the past 
few days as tensions lessened. 
A 50kg bag of sugar fell to 
ID 18,000 from 1025,000, while 
50kg of flour fell from 108,000 
to 107,000. 


Ceasefire in verbal war 


KUWAIT 


By Robin Allen 


For the past 10 days, a 
ceasefire has broken out in the 
traditional rivalry between 
Kuwait’s three main Arabic 
dailies. The reason: for the sec- 
ond time in four years, Iraq 
seemed to be threatening 
Kuwait's very existence. 

The satirical wit of Kuwait’s 
celebrated cartoonists was 
aimed at Saddam Hussein 
rather than members of the 
government or rival factions of 
the opposition: and tbe subtle 
barbs of laborious editorials, 
composed by editors-in-chief 


who are often newspaper own- 
ers, were kept for those who 
seemed to be slow in showing 
support for Kuwait 
All the dailies have run extra 
pages devoted to the crisis; the 
English-language daily Arab 
Times broke ail tradition by 
publishing on the Friday week- 
end; while the owner of Al 
Qabas, which many regard as 
the leading daily in both circu- 
lation and quality, outdid him- 
self in devotion to the cause. 
by voluntarily giving up the 
Crime Watch column. This is 
an episodic discussion among 
Kuwaitis about the rising 
crime rate; hardly a suitable 
talking point when attention 


needed to be focused on the 
chief enemy in Baghdad. 

However, Arabic newspaper 
editorials and opinion columns 
kept their place on page one; a 
r emind er that in Kuwait, as in 
many other Arab countries, 
those in authority imagine 
their views on current affairs 
to be more important for the 
reader than straight news. 

Extraordinarily, in a country 
of just over lm Arabic-speak- 
ers, Kuwait has five daily Ara- 
bic papers, plus two Arabic 
weeklies and two English-lan- 
guage dailies for the small 
minority of non-Arablc-speak- 
Ing expatriates who would 
want to read an English paper. 


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FINANCIAL TIMES MONDAY OCTOBER 17 1994 


7 




NEWS: ASIA 







> 


! 


China cadres lose touch of luxury 


By Tony Walker in Boding 

Chinese Communist party cadres 
learned at the weekend that life to the 
fast lane would lose some of its allure 
as new regulations outlawed official 
use of imparled luxury care such as 
Mercedes and Cadillacs. 

Acco rding to a directive from the 
party's central committee, high- rank. 
rag officials.' - including ministers and 
provincial governors, must ride in cars 
made in China. The regulations stipu- 
late that imported vehicles be replaced 
by locally made models. 

If the regulations are enforced, Chi- 
nese officials will be deprived of one of 
their more cherished privileges. T.nr? 
gold wrist-watches and expensive foun- 
tain pens, an imported luxury ttmoo- 


sine had become a coveted symbol of 
advancement for statns-consdons rep- 
resentatives of the proletariat. 

No mention was made of any effect 
on top leadership figures, such as pofit- 
buro members, who travel in fleets of 
Wank Mtwwifi. 

Apart from Mercedes, CadiBacs, and 
Lincoln Continentals, other favoured 
foreign brands include BMW and 
Lexus. None of these marques is assem- 
bled to China. 

The central committee directive 
seems certain to hasten the scramble 
a m ong foreign automotive companies 
for the right to mauufactere a luxury 
car in China. 

Fro ntrunn ers to negotiations now 
under way are thought to include Gen- 
eral Motors, which is offering a version 


of the Snick, Ford with its Lfacnin, and 
Toyota. 

In the shortterm, the new rules will 
benefit Volkswagen’s Audi and San- 
tana models under manufacture to 
China. The Audi is widely used by mid- 
(De-ranMng officials, but has not been 
regarded as en ti re ly suitable far minis- 
ter and above. 

China has been without a locally 
made luxury car since production 
stopped in the 1980s of ihe Bed Rag 
Hm ousme, whose generous dimensions 
were such that a meeting of the Polit- 
buro could be conducted to its capa- 
cious rear compartment Chinese offi- 
cials these days would not be seen dead 
to a Bed Flag, which they regard as a 
bad a dverti sement for the modernising 
state- 


Among those who might welcome the 
weekend edict are owners of luxury 
cars in Hong Kong: 

In the past few years there has been 
a lively trade in stolen vehicles across 
the border into Guangdong province, 
where many have ended up in official 
hands, including those of the security 
apparatus. 

The security organs throughout 
China appear to be particularly well 
equipped with luxury vehicles. In Ba- 
ling; black Me rcedes with dark-tinted 
windows are a favourite convey an ce of 
high-ranking officials of the public 
security bureau. 

The new regulations follow last 
month’s meeting of the central commit- 
tee which resolved to clean np the 
Communist party’s inwy 


Suharto to be 
challenged in 
court on decree 


By Manuela Saragosa 

in Jakarta 

Indonesia’s political and 
economic stability belie the 
status and authority of the 
judiciary. It is a generally held 
view that President Suharto 
and senior cabinet ministers 
stand above the law and chal- 
lenging authority at fids level 
is largely taboo. 

The next few weeks, how- 
ever, will see two cases which 
challenge the government’s 
authority at its highest level 
Hearings on the first case start 
today and involve Indonesian 
environmentalists suing Presi- 
dent Suharto for issuing a 
decree which allegedly allowe d 
state money from a reforesta- 
tion project fund to be diverted 
to non-environmental causes. 
While the president h«s said he 
will face the nhaHeng p. officials 
have also made clear that he 
win not testify. 

In the second case, a promi- 
nent journalist, Mr Gunawan 
Mohamad, and fanner employ- 
ees of file banned weekly mag- 
azine Tempo have filed a suit 
against Mr Hannoko, minister 
of information, challenging 
him far banning the ma gaainp 
in June this year. Court hear- 
ings are expected to start 


within the next two weeks. 

Environmentalists and jour- 
nalists admit their changes of 
winning are slim but they 
remain undeterred. “Winning 
or losing is not the target 
here,” said Ms Emmy HafiM, 
project coordinator at WaSd, 
the Indonesian Forum for the 
Environment, w hich js among 
the seven pressure groups 

hrln png Hu» wim ngafnet presi- 
dent Suharto. “This suit is just 
a gesture.” 

Rarlter this month, a Jakarta 
court established at prelimi- 
nary hearings that the pres- 
sure groups mid journalists 
have vaBd cases. Among other 

rtiinp^ Wirl minnwitaHtf^ 310 

anfiBifng f President Suharto of 
“violating the principles of 
good governance”. They have 
criticised him far not seeking 
parliamentary approval before 
allegedly d iv e rtin g the money 
from the r efo re s t a t i on ftmd. 

No fewer than seven envi- 
ronmental and legal pressure 
groups have joined forces to 
file the suit against the 73-year- 
old president They are contest- 
ing a presidential decree, 
issued an June 2, which, they 
say, allowed about $200m 
(£I33m) from a reforestation 
ftmd to be used for developing 
a. national aircraft nwfmd ry. 


Indonesia’s forest fires 
fan fury in Malaysia 


I n mid-summer, Malaysia 
and Singapore noticed 
something strange happen- 
ing to the weather. On most 
days a thick haze, caused 
mainly by forest fores in neigh- 
bouring Tndnmggia, hlanlrpted 
much of the Malay Peninsula. 
The authorities wanted of the 
dangers to health. There were 
also air traffic control prob- 
lems. 

Indonesia has now admitted 
the extent of the damage, 
describing the fires as one of 
the worst ecological disasters 
in the country's history. 
“Based on file latest reports, 
the current fires have covered 
up to 5.1m hectares,” said Mr 
Djamaluddin Suryohadiku- 
stnno, Indonesian forestry min- 
ister. In recent days, rains 
have doused many of the fire s, 
but underground peat deposits 
contimip to h um over an area 
larger than the Netherlands. 

Within Indonesia, arguments 
over the cause of the fires con- 
tinue, while Malaysia and Sing- 
apore worry about the effects 
of the hagp. There have been 
worries about health; there are 
concerns that recent events 
could do serious damage to tile 
multi-bUlion-doUar tourist 
industries of both countries, 
and in Malaysia there have 
been warnings of a dip in agri- 
cultural production. 

The fires are believed to 
have initially broken out in 


early August, during a pro- 
longed drought At first, the 
Jakarta authorities did not 
seem over-concerned: the 
smo k e did not afftvt the «iflm 
Indonesian island of Java but 
blew north-west towards Singa- 
pore and Malaysia. 

Mr Djamaluddin is adamant 
that about 90 per cent of the 
fires were started by local com- 
munities who practise a slash- 
and-bum form of forming to 
clear land for agricultural uses. 

Kieran Cooke 
and Manuela 
Saragosa on 
an ecological 
disaster 


But environmental groups in 
Indonesia blame the fires cm 
pianhiHnn companies who took 
advantage of a prolonged dry 
gpflsp p to burn land and plant 
palm caL They also point the 
finger at logging companies 
who, they say, are recklessly 
degrading forests and leaving 
large amounts of combustible 
dgbris behind. 

Critics say the Indonesian 
government not only lacks the 
necessary equipment to try to 
control such fires; they con- 
tend it has shown little willing- 
ness to intervene and settle 


land disputes between settlers 
and logging companies, 
thought to be one of the other 
causes of the fires. 

A fire On RalTmar^faw hi 1982 
destroyed a similar area of rain 
forest “This present fire ranks 
as the worst," said Ms Bmmy 
Ha Rid of the Indonesian forum 
for the environment, a leading 
non-governmental organisa- 
tion. “This will happen every 
time we have a long drought, 
because most of our forests 
have been degraded.” 

Environmentalists are con- 
cerned about the increasing 
frequency of large forest fires 
in fwdnnegfa Apart from the 
big fire in 1982, serious blazes 
also occurred in 1987 and 190L 
Neither Malaysia or Singapore 
have publicly criticised Indon- 
esia over the fires. Malaysia 
haw its o wn pollution problems, 
the result of eight years of 
more than 8 per cent prrm n niir 
growth, and is reluctant to lay 
all the blame on Indonesia. But 
there is also a wider issue. 

Tmtmmria is Seen mwflh as 
the Trig brother” of the Associ- 
ation of South-East Asian 

natinna ( Awwn) Asean p rides 

itself on solving its problems 
through consensus. This can 
mean potentially tough issues 
are often ignored. So for. the 
only outside help accepted by 
Jakarta has been an offer from 
Singapore to give more 
weather tnfapnatio D. 


Ford and 
Mazda 
may link 
in Europe 

By Kevta Dora, Motor 
Industry correspondent 

Mr Alex Trotman, chairman 
and chief executive of Ford, 
the US vehicle maker, said the 
group would decide “within 
the next month" whether to 
produce cars in Europe for sale 
under the Mazda badge. 

Such a project has previ- 
ously been rejected but it has 
been revived this year follow- 
ing moves by Ford to establish 
a stronger influence over 
M??d a management. 

“We are studying again 
whether it is in our interests to 
give Mazda a Ford-based 
vehicle in Europe,” said Mr 
Trotman. It would be “a small 
passenger car" and lead to 
higher levels of capacity utilis- 
ation at Ford plants in Europe. 

Mazda, which is 24J5 per cent 
owned by Ford, is the only one 
of the leading Japanese car- 
makers without a car produc- 
tion base in Europe. Its sales in 
west Europe have fallen by 10 
per cpn* to the first 9 montha 
this year compared with a 
growth of 5 per cent in the 
overall market 

It is expected that a Mazda- 
badged Ford would be based on 
either the Ford Fiesta or Ford 
Escort and built at one of 
Ford’s European assembly 
plants in Germany, the UK or 
Spain. Under a long estab- 
lished arrangement some 
Mania vehicles are sold under 
Ford hedges in Asia. In Japan 
the Mania 628 and the Mazda 
323/FamDia are sold respec- 
tively as the Ford Telstar and 
the Ford Laser. 

Mr Trotman that Mard» 
was unlikely to be used again 

to en gineer a mains tream car 

to be produced and sold by 
Ford in North America or 
Europe, as was the case with 
the North American Ford 
Escort developed by Mazda. 

"If we can design at the low- 
est cost and we have the 
human resources we will do 
it.” he said. It was “very 
likely” that the next genera- 
tion Escort for the European 
end North Amerin^n markets 
would be developed by Ford to 
Europe, he said. 


Korean group 
in engines deal 
with Rover 


By Kmrin Done 

Rover, the UK subsidiary of 
BMW of Germany, has signed 
an agreement with Kia, the 
second largest South Korean 
carmaker, to jointly develop a 
new range of engines to be 
built in the UK and Korea. 

Rover said that the joint 
engine development pro- 
gramme, t he first it h as under- 
taken with a rival carmaker, 
would involve an investment 
of around £30m (947.4m). 

It is understood that the 
agreement with Kia is for the 
development of a range of V6 
engines that will be developed 
from Rover’s existing K-Series 
email car engines. 

The 2.5 litre Rover V6 is 
expected to be fitted first to the 
UK carmaker’s flagship Rover 
800 executive car late next year 
replacing the Honda V6 engine 
currently imported from 
Japan. It will be produced at 
Rover’s Longbridge. Birming- 
ham plant. 

The Kia version of the V6 
engine will be produced iu 
Korea for use toa new range of 
Kia executive cars under devel- 
opment. 

Rover is to the midst of an 
ambitious programme to 
develop the highly successful 
K-Series engine to order to give 
it far greater independence 
from Honda, its Japanese part- 
ner, to engine production. 

The K-Series, which was 
launched in LI and L4 hire 
versions to 1969 after a £200m 
investment programme, is also 
bring developed to larger L6 
and L8 hire versions for use 
respectively to the new Rover 
400 family car and MG sports 
car ranges to be laimrfmi next 
year. 

Separately Rover expects to 
begin its first car assembly to 
East Europe in spring next 
year with the startup to Bul- 
garia of joint venture produo 
tion off its Maestro small family 
car range. 

In Bulgaria, where Rover has 
formeda joint venture with the 
Sofia-based Daru group, the 
UK carmaker expects to begin 
assembly of the ageing Maestro 


at a plant at Varna on the 
Black Sea coast in the spring 
next year. 

Output is expected to total 
SfiOO to X996 and could rise to 
later years to 10,000 annually 
including exports to other east 
European markets. 

Assembly to Bulgaria will be 
on the basis of SKD (semi- 
knocked down) kits supplied 
from Rover's Cowley. Oxford 
plank Painted bodies will be 
shipped from Cowley to Varna 
for local final assembly, but 
Rover is aiming to increase 
gradually the purchase of com- 
ponents to Bulgaria. 

Production of the Maestro - 
launched to 1983 - for the UK 
market is expected to cease by 
the end of the year. Rover 
investment in the project is 
expected to total £2m-£3m. 

Rover has taken a 51 per 
cent stake and management 
control to the joint venture. 
Darn, which wOl hold 49 per 
cent and is already the local 
BMW distributor, has also been 
appointed the distributor for 
Rover and Land Rover vehicles 
to Bulgaria. 

The two groups have put out 
to local tender contracts for 
the conversion and refurbish- 
ment of a factory in Varna, 
which win be used for the Mae- 
stro assembly. 

The Rover group has taken 
several moves to international- 
ise it operations this year. 
These include: 

• An agreement earlier this 
month to Invest £lOm in a new 
assembly facility and sales and 
marketing organisation for 
Land Rover Discovery and 
Defender models in South 
Africa with assembly taking 
place at an existing BMW plant 
at Rosslyn, near Pretoria. 

• The production under 
licence in Brazil by lochpe- 
Maxion of the Land Rover 
aOQTdi diesel engine. 

Rover is also seeking to 
develop further a memoran- 
dum of understanding it fam 
signed with the Sipani group 
in India for the local assembly 
of the Monfogo large family car 
and Rover’s two-litre turbo-die- 
sel gn gina- 



It hadn't been the easiest of 
assignments. But now I had the 
data and samples I wanted, 
and the weather was worsening. 
It was time to make a move. 

Take me to the Hilton! 
Wherever my fob took me, the 
Hilton was always my first choice: 
no-one looked after me better 
The prospect of a warm 
welcome and a hot bath was 
distinctly inviting. 

Now the only ice I wanted to see 
would be in a tall glass. 

I could feel myself relaxing 
already 



HILTON 

Where you can be 
your/^^again. 


H I LTO N 


international OPERATES OVER 


160 HOTELS AROUND THE WORLD. FOR RESERVATIONS CONTACT YOUR TRAVEL AGENT. ANY HILTON HOTEL OR HILTON RESERVATIONS WORLDWIDE. 






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MONDAY OCTOBER 17 l»* 


NEWS: UK 



Accounts show 514% rise for Octav Botnar as company records loss of £1 lm 


UK chairman is paid £1 .94m 


Nissan 


By Kevin Done, 

Motor industry Correspondent 

Mr Octav Botnar, the chairman 
of Nissan UK. for whom an 
arrest warrant has been 
outstanding for more than 2Vi 
years, was paid £l.9Am (S3.0tim) 
last year in his role as 
chairman of Nissan UK 
Holdings (NUKH) and its 
subsidiary Nissan UK <NUK). 

His emoluments, excluding 
any pension contributions, 
increased by 514 per cent from 
£3i6.(ino in the previous year 
according to Hie latest annual 
reports filed by NUKH and 


NUK for the year ended July 
1993. 

Mr Botnar is also chairman 
of Automotive Financial Group 
Holdings, which owns AFG. 
one of the biggest UK motor 
dealer groups and a sister 
company of Nissan UK 
Holdings. 

According to annual reports 
now Hied for both holding 
companies. Mr Botnar 
increased his total pay from 
the two groups to £5.?5m in the 
year to the end of July 1993, a 
1,189 per cent increase from 
6.000 in the previous year. 

NUKH. which had a turnover 


of £15.55m in the year to the 
end of July 1993. made a 
pre-tax loss of £1 1.34m and paid 
its directors £5.Sm in total 
emoluments. 

The company, whose 
ultimate parent undertaking, 
according to the annual report, 
is the Panama-incorporated 
European Motor Vehicles 
Corporation, now has only two 
directors, Mr Botnar and Mr 
Manfred Weder, a Swiss 
national and company director, 
according to NUKH filings at 
Companies House. 

Payments were made to a 
total of seven directors during 


the financial year, but five of 
the seven are no longer 
directors. The annual report 
says that £LC28m was paid in 
“compensation for loss of office 
to former directors" as part of 
the £5.6m in total emoluments. 

The second-highest-paid 
director after Mr Botnar 
received between £l.86m and 
KUKGm. 

The report says that Mr 
Michael Hunt resigned as a 
director on June 28 1993. 

Mr Hunt was sentenced on 
June 30 last year to eight years 
in prison for his part in 
Britain's largest-ever tax fraud. 


in which he was convicted for 
conspiring to defraud the 
Inland Revenue of £55m in 
corporation tax 

Mr Hunt's appeal against 
conviction and sentence were 
rejected on ail counts by the 
Appeal Court in May. 

In July he was given leave to 
appeal to the House of Lords, 
when the Court of Appeal 
certified that the case raised a 
point of law of general public 
importance. 

An arrest warrant was 
issued in January 1992 for Mr 
Botnar, aged 80, who is living 
in Switzerland. 


Feudal claim 
alarms island 


By Bill Brown in Jersey 

A private Jersey-based 
development company is using 
a feudal title to lay claim to 
the industrial foreshore of St 
Helier. the island's capital, esti- 
mated to be worth at least 
£lbn iSLSSbn). 

Les Pas Holdings claims it 
omis the most developed sec- 
tion of the Foreshore, Including 
most or the island's busy har- 
bour. the main power station, 
the fuel farm, a new underpass 
and most of a big area of 
reclaimed land. 

The claim is being vigor- 
ously contested by crown offi- 
cers in Jersey , largest of the 
Channel Islands. The figure at 
the centre of the bizarre wran- 


gle is Advocate Richard Falle, 
one of the island's leading law- 
yers and a director of Les Pas. 

Eight years ago he and a 
group of businessmen submit- 
ted plans for a commercial 
marina which they said would 
help alleviate the island's 
housing problem and boast 
tourism. The plan has been 
strongly opposed by conserva- 
tionists. 

At about the same time Les 
Pas also acquired the 
seigneur’s feudal rights, known 
as Le Fief de la Fosse. This 
includes rights over the fore- 
shore that traditionally 
extended as far as the seigneur 
could ride his horse Into the 
sea at low tide. 

Mr Falle said he has become 



The area of Jersey’s capital which is in dispute includes its harbour and power station 


so frustrated by delays over 
the marina plan that he is 
invoking the ancient title. “I 
am bitterly disappointed with 
what 1 believe to be politicking 
at every level," he said. 

Miss Stephanie Nicolle, the 


Island's solicitor-general, has 
confirmed that if Les Pas won, 
it would own everything built 
on the disputed territory in 
perpetuity. In a letter to a 
senior civil servant, she 
warned: “The consequences of 


failure [by the authorities to 
win] do not bear contempla- 
tion.'' Mr Falle said he is pre- 
pared to fight all the way to 
the European Court to secure 
what he believes is Les Pas's 
rightful title. 


200 managers are told to apply for 100 jobs 


By Peter Marsh 

Legal & General, one of 
Britain's biggest insurance 
companies, is in effect sacking 
half its top life-products 
managers by asking all 200 of 
them to re-apply for only 100 
jobs. 

The managers who survive 
the cull will be hired on new 
contracts. These will tie remu- 


neration to factors such as 
ability to cope with customer 
demands and compliance with 
new insurance industry regula- 
tions, and not to sales volumes. 
. The aim of the reorganisa- 
tion, to take effect next month, 
is to emphasise L&G's com- 
mitment to a highly ethical 
method of selling pensions and 
other life products after recent 
public criticism of Ufe-industry 


sales practices. The changes 
come as the Securities and 
Investments Board, the chief 
regulator of financial institu- 
tions, finishes drawing up a 
report which sets out mecha- 
nisms for dealing with compen- 
sation Haims from people who 
believe they were mis-sold pen- 
sions in the late 1980s and 
early 1990s. 

L&G said its management 


changes were linked to the 
need to improve standards 
among its managers and 
agents selling life products. It 
aimed to keep “the best peo- 
ple”. 

As part of the reorganisation. 
L&G is greatly reducing 
opportunities for managers to 
earn big sums from agents’ 
sales. 

Instead of L&G managers' 


earnings being based partly on 
an “override” of agents' own 
sales commissions, these 
executives will have a 
basic salary of about £15,000 
($23,700). Relatively small com- 
missions will be paid on top of 
the bade salary. 

L&G is instituting its new 
arrangements for managers as 
part of a plan to reduce the 
number of its sales agents. 


CONTRACTS & TENDERS 



GOVERNO 
DA BAHIA 

EOTTML DE CONCORREnOA INTERNACtONAL N" 05/94 
REPUBUGA FEDERATJVA DO BRASH. 

GOVERNO DO ESTAOO DA BAHIA 

SECRETARY OE ENERG1A, TRANSPORTES E COMUMCAC0ES - SETC 
DEPAHTAMENTO DE ESTRADAS DE RODAGEM DA BAHIA - DEHSA 
PROGRAM* CORRHX3RES ROOOVlARIOS DO ESTADO DA BAHIA 

AVISO deuctta^Ao 

O DEPARTAMENTO 06 ESTRADAS DE ROOAGEM DA BAM A. Jttravfcj da Comtesfto Pomwcnlt de Lxam^Aes. 
dovdameme autortzada peto Diretor Geral, conforms Porarfa N* 59991, fez saber aos fntoresudoa quo farti reaUzar 
'CONCORR&NCIA INTERNACIONAL" para aqutsipda de Equlpamentw Rodovttrios. desUnados A suptamentac&o 
dos tanas de ManutenpSo de Rodovus do Esfado da BaNa. O mcebknento das proposms dar-se-A As I5c00 h do 
dia 0? do dezentbro de 1994. na sola de nounidea da Diretoria GeraJ do DERBA. no V andar ds sua sede. sfiuadB no 
Contra Adnsmsuaiivo da Bahia - CAB. mwudpio Salvador - BA. Os serrieosatyato dmte EdRal, se*2o parctahnente 
fmanciacJos com nocureos do Banco fnteramericana de OesenvoNimanto - BIO para o PROGRAM* DE 
CORREDORES RODOVlARlOS DO ESTAOO DA BAHIA. PoderAo partidpai desta lidtagfto ampresas brastakas Qu 
estrjngnras que sejam onginArias dos paisas membros do Banco Intaranwricano de DesertvoMmento - BID. Os 
mlctoswdos podenio ot*er o Eddai, opOa a ofeUvapto do racoCVmento da quanta de R$ 200,00 (duzaraos rears) e 
M>:«aur eedaroclinontos Junto a Comtesio de Udta^to. na sede do DERBA. nos tfas diets e no horWio das 13 As 19 
myjs. apmsonrondo provn de suj habAtafdo togor para raproserKar a empraaa oanoorranto. 

DBMS MEMBROS: 

GIRuyLematCout] 

Pauta Potto Made! QuBhenm Joa* Berenguor 

Pfoodunui da Corrassto Roberto Banefo Pereira 


DEPAHTAMEMTO 0€ ESTHADAS Q£ ROOAQEM DA BAHIA - DERBA 
COMISSAO PEPMANEN1E DE UCHAQAO 
CENTRO AOMWOSTRAnvO Q* BAHIA - SAUMOOfl ■ BAMA . BRASIL 
CEP «1 7*6-100 ■ FAX (071) anKS3« 



()prw 

SECRETARY DE ENERGiA, TRANSPORTES E COMUNI CA£06S 

□ 



The Financial Times 
plans to publish a Survey on 

European Regional Financial Centres: 

Manchester 

on Thursday, November 24. 


• The FT Is circulated In 3.60 countries worldwide, with a readership in excess 
of one million people 

• The weekday FT Is read by 139,000 senior business people in Great Britain 

• More UK business people read the FT than any other national daily 
newspaper 

• More than half of Europe's top Chief Executives read the FT 

• The FT reaches more Captains of industry In Great Britain than any other 
national dally newspaper. 

For a full editorial synopsis and details of available advertisement positions, 

please contact: 


Pat Looker or Brian Heron on 

Tel: 061834 93S1 Fax: 061 832 9248 

Alexandra BuMngs 
Queen Street 
Manchester M2 slf 

Dra source*; BMRC 1553, EPRS 1993. Cffl 1PJ2 


FT Surveys 


UPfR 


ESTADO DO PARANA 

SECRETARY DA AGTOCULTURA E DO ABASTEaMBtTO 
institute) Agronomfco do Parma 

LIGHTING DETECTION AND LOCATION SYSTEM 
SIMEPAR TENDER N* 003/94 
CALL FOR BIDS 
The AGRONOMIC INSTITUTE OF PARANA - IAPAR will 
receive until 2:00 p.m. on the 25 November 1 994. at the Parana Slate 
Meteorological System - SIMEPAR at the Polytechnic Center of the 
Federal University of Parana. Jardim das Americas, Curitiba -Parani 
- Brazil, the Documentation far Eligibility and Technical and 
Commercial Proposals to manufacture the equipment for the 
Lightning Detection and Location System, the complete description 
of which is contained in the Technical Specification, the opportunity 
for which will begin in public session by the opening of the envelopes 
containing the Documents of Eligibility. 

The bidding will be of a type, for Technical Quality and Price as 
Governed by the Brazilian Federal Statute 8.666/93 and the specific 
conditions contained in this edict. 

It is projected that the system for tender shall be an integral part of the 
Parana State Meteorological Sysiem - SIMEPAR and is to be a 
priority for the work in Scientific and Technological Research, and by 
complimentary to the operational acti vilies. 

Interested parties may obtain more information, analyze, or receive a 
copy of the complete Edict at the uddress below: 

Sistema Meieoroldgico do Parana- SIMEPAR 
Centro Politecnico da Universidade Federal do Parana 
/ardim das Americas - Caixa Postal 3 1 8 
8000 1-970. Curitiba - ParanS - Brazil 
Tel/Fax: +55M 1 ) 366-2 122 

A complete copy of the document far bidding, in Portuguese and in 
English may be obtained by interested parties on payment of a non 
returnable fee of RS 300.00 (three hundred Rcais) up until 10 (ten) 
days before the above established deadline for receiving proposals. 
The financial resources for payments, resulting from this current 
bidding, are available as part of the Panui i Stale budget. 

Ai the time the document for bidding is purchased, all Bidders shall 
pnssema letter containing their complete mailing address (Bidder's 
Name, Street. Number. Zip code. City, State. Country. Tei and Fax 
numbers). 

GONQALO SIGNORELLI DE FARIAS 
Director President 


GOVERNO DO ESTADO DO PARANA 




Wo ts Class 

•j 13 


:sss 


The 


i an 


caster 


Scheme 








Britain in brief 



court fight 
to start 


tomorrow 

More than L 600 members of 
the Lloyd's of London insur- 
ance market will begin a fresh 
battle in the High Coart this 
week to win compensation for 
losses In the 1980s. 

The F el trim Names’ Associa- 
tion hopes to repeat the suc- 
cess of the Gooda Walker 
Action Group earlier this 
month in winning millions of 
pounds of damages for losses 
inenred by underwriters 
involved in ‘‘spiral” Insurance 
- by which underwriters 
agreed to cover others for 
excessive losses from catastro- 
phes. 

The F el trim association is 
claiming a total of £600m 
(3948m) in three cases brought 
on behalf of Names, or individ- 
uals whose capital is made 
available to Lloyd's. The first, 
expected to start tomorrow, 
covers losses dating from 
between 1987 and 1989. 

The case Is the latest in a 
series of legal actions mounted 
by Lloyd’s Names which may 
stretch into the next century. 

The Feltrim case centres on 
allegations that insurers who 
underwrote the catastrophe 
“spiral" were negligent. 
Names on Feltrim syndicates 
were badly hit by a succession 
of disasters including freak 
UK wind-storms in 1987 and 
the 1988 Piper Alpha North 
Sea oil platform accident. 

Non-executives 
working harder 

The productivity of non-exec- 
utive directors has increased 
by half in the past three years, 
says research by 3i, the com- 
pany formerly known as Inves- 
tors in Industry. 

Non-executives are putting 
more time into helping compa- 
nies while not asking for more 
pay. says the 31 survey. In 1991 
non-executive directors 
devoted 15 days a year to work- 
ing on the affairs of each com- 
pany on whose boards they sat 
This figure has risen to 22 days 
a year, while the average fee 
per directorship has stayed at 
about £15,000 (823,700) a year. 


ductivity increase reflects that 
most non-executives are “less 
concerned with the size ° E 
their fees th an with being use* 
fully involved". The report was 
based on a survey of 272 non- 
executives with a total of 767 
appointments. 

Investigation into 
fatal rail crash 

An Investigation has begun 
into a head-on collision 
between two trains in which 
five people were killed and 11 
injured on Saturday morning. 
The accident occurred in dense 
fog on an embankment near 

Cowden in Kent, about SO 
miles south-east of London. 

Hie trains collided on a sin- 
gle-track stretch of rail con- 
verted from double-track five 
years ago. People living near 
the tine, used mainly by com- 
muters to London from small 
towns in west Kent and East 
Sussex, predicted at the time 
that a crash was Inevitable. 

Fleet discards 
diesel submarines 

The Royal Navy’s last diesel- 
powered submarine, HMS Uni- 
com, sailed into Devonport 
naval base yesterday flying her 
paying-off pennant. The navy 
acquired its first diesel-pow- 
ered submarine hi 1901. 

The cur tailment of Unicorn's 
service only 15 months after 
she was accepted into the navy 
was because of the end of the 
Cold War. 

“We have to use the exper- 
tise and experience learned 
from these wonderful subma- 
rines end move into the all-nu- 
clear era," said Rear Admiral 
Roger Lane-Nott. the Royal 
Navy’s Flag Officer, Subma- 
rines. 

OK whack, here’s 
your Big Mac 

McDonald’s, the fast-food 
chain, has found that its ser- 
vice with a smile is proving 
too mnch to chew on for the 
British stiff upper lip- 

Ms Carmel! Flatley, the com- 
pany’s assistant vice-president 
of human resources, said a 
survey of staff and customers 
found that people had become 
unhappy with the "robotic” 
service in McDonald’s restau- 
rants. 

McDonald’s is now training 
its 550 restaurant managers to 
be more flexible and respon- 
sive to local needs. Tins would 
allow the use of colloquialisms 
and local dialect, it said. 

If deemed fit by managers, 
McDonald’s customers may be 
greeted by phrases such as 
“Eh-up, chuck," or "'Here’s 
your Big Mac, whack". The 
company said it had never con- 
sidered using' the expression 
“Have a nice day” in Britain. 


Plenary 
meetings 
nearer on 
N Ireland 

By James Blitz In Londofl fnd 
John Murray Brown in Belfast 

Mr James Molyneaux. leader of 
the Ulster Unionist party, has 
opened the way to peace tolks 
between the nationalist Sinn 
Fein party and the British gov- 
ernment by endorsing the pros- 
pect of negotiations between 

both sides. . 

Amid clear indications that 
the British government will 
drop its insistence that an IRA 
ceasefire should be declared 
"permanent," Mr Molyneaux 
said yesterday that negotia- 
tions between London ana the 
Irish nationalists would be a 
“very, very important develop- 
ment." 

Speaking for the first tune 
since the declaration of last 
week's reciprocal ceasefire by 
loyalist organisations, Mr 
Molyneaux said he did not see 
the word ‘•permanent’' as an 
essential obstacle. 

His comments come amid 
strong expectations that Mr 
John Major will announce his 
government's readiness to ini- 
tiate talks on the constitu- 
tional future of Northern 
Ireland in the next two weeks. 

Mr Molyneaux made clear 
yesterday that he did not antic- 
ipate the UUP holding talks 
with Mr Gerry Adams, the 
Sinn F6in leader. 

Asked whether he would 
shake Mr Adams' hand, he 
replied: “I don't quite see that 
happening for a Long time 
because 1 don't see that we're 
going to be in the same com- 
pany." 

Speaking to his party s 
annual conference in Carrick- 
fergus. Northern Ireland, on 
Saturday, Mr Molyneaux 
restated its misgivings about 
the peace process. He reiter- 
ated its opposition to the idea 
of cross-border institutions, 
which is expected to be one of 
the main innovations in the 
framework document which 
the governments of the UK and 
Republic of Ireland are due to 
agree in the next few weeks. 

Representatives from Sinn 
F6in, together with the nation- 
alist SDLP and parties in the 
Republic of Ireland, are due to 
hold meetings soon with Mr 
Albert Reynolds, prime minis- 
ter of the republic, in a move 
to prepare for an early conven- 
ing of Dublin's Forum for 
Peace and Reconciliation. 

"Things are changing and 
they're changing pretty fast - 
a lot faster than people 
thought," Mr Reynolds said 
yesterday. 


3i says this “spectacular^ pro- 

Behaviour of consumers 
a challenge for analysts 


Easy profits are out and the 
canny consumer is king. That 
is the main message from the 
retail sector as it prepares to 
enter the crucial Christmas 
trading season. 

But the question that will be 
raised this week, as a new set 
of retail data is published, is 
how far this cautious con- 
sumer mentality is affecting 
sales - and the instruments 
that are used to measure retail 
behaviour. 

Consumers are adjusting to a 
new low-inflation environment, 
and the nature of the retail sec- 
tor is itself changing. Making 
sense of the various sets of 
consumer data on offer is 
therefore becoming increas- 
ingly complex. For example, 
the official retail sales data, to 
be published on Thursday, sug- 
gest that retail sales grew 
steadily this year on the back 
of the recovery amid heavy 
price competition, but fell back 
in August 

Some analysts suspect this 
dip was due to the summer hol- 
iday. But others argue it points 
to a broader slowdown, not 
least because the Confedera- 
tion of British Industry's own 


survey of distributive traders, 
published tomorrow, has 
recently been adopting a more 
sober tone. 

The government’s consumer 
spending data, published every 
three months, are even more 
downbeat. They suggest that 
sales of non-durable goods 
started to drop as early as the 
spring. 

But this appears to be at 
odds with the Bank of 
England's data on the level of 
notes and coins in circulation, 
previously a good guide to con- 
sumer spending. These have 
been showing strong growth 
this year. Meanwhile consumer 
credit data, published last 
week, put borrowing at a 
record high. 

For some economists this 
implies there might be defects 
in the official statistics, not 
least because many retailers 
say their experiences differ 
from the findings in the official 
data. 

Mr Harry Moore, chief execu- 
tive of Cooperative Retail Ser- 
vices, which has a variety of 
retail outlets including super- 
markets and department 
stores, had little confidence in 


the figures. “1 often ask myself, 
where the devil do they get 
these figures from.” he said. 

The main problem that may 
be confronting economists is 
that tracking consumer behav- 
iour is particularly difficult 
because of broader changes 
occurring in this recovery. On 
the one hand, the nature of the 
retail sector is changing as 
large retailers gain market 
share at the expense of gmaiiw 
ones and more retailers 
become multi-sector outlets. 
Meanwhile, as last week’s 
inflation data showed, underly- 
ing inflation is at a record low, 
affecting retailers’ perceptions 
and consumer behaviour. 

The Central Statistical Office 
collects retail sales figures 
from about 5.000 rettulers. and 
Mr Philip Gooding, GSG statis- 
tician. insists that the survey 
is representative. But Mr Rich- 
ard Brown, deputy director- 
general of the British Cham- 
bers of Commerce, said: “The 
official data does seem to hide 
the situation of smaller retail- 


ers. 


Gillian Tett 
and Neil Buckley 


Search for electrical harmony nears end after 18 years 

Draft plug standards issued 


By Andrew Baxter 

Proposals for Europe-wide 
standards on electrical plugs 
and sockets have been devised 
by a technical committee of 
Cenelec. the Brussels-based 
electrical standards body for 
Europe and published by the 
British Standards Institution. 

Their appearance in the UK 
has moved controversy about 
the future of the UK's system 
of 13-amp plugs with three 
square pins into its final 
stages. The standards are for a 
system using a plug with two 
round pins and an adapter to 
facilitate changing to the 
Europe-wide system. ■ 

The standards are the culmi- 
nation of years of lobbying 
among the is member coun- 


tries of Cenelec, which run 
about 20 conflicting plug and 
socket systems. The Cenelec 
members will vote by March 
on the new system. If 
approved, conflicting standards 
such as the UK’s BS1363, on 
which the 13-amp rectangular- 
pin plug is based; would have 
to he dropped unless opposing 
countries sought an exemption 
or derogation. 

A technical committee of the 
British Standards Institution 
will cast the UK's vote, and the 
institution said tt was estab- 
lishing a deadline of December 
31 for public comments, in 
order to give the committee a 
dear two months In which to 
assess opinion. 

Mr Ian Campbell head of the 
standards institution’s electri- 


cal standards development 
department, said: "We want to 
make absolutely sure that we 
have reached a consensus in 
this country before entering 
the wider arena." 

Some British safety experts 
have argued that the proposed 
plugs could be inserted danger- 
ously into existing UK sockets 
and that the unfused European 
plugs would not be safe with 
British ring networks. Euro- 
pean electrical supplies work 
on a radial network. 

But supporters of the pro- 
posal reject these arguments, 
and say a standardised Euro- 
pean system would benefit con- 
sumers and appliance manu- 
facturers because of reduced 
costs and product compatibil- 
ity across Europe. 


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FINANCIAL TIMES MONDAY OCTOBER 1 7 WW 


THE WEEK AHEAD 


The Financial Times 
plans to publish a Survey on 

Latvia 

on Friday, November 18. 


The survey win be seen by leading international business people in 160 
countries worldwide. If you would like to promote your organisation to 
this important audience please contact: 

Patricia Surridge 
In London 

Tel: (071) 873-3426. Fax: (071) 873-3428 

FT Surveys 


DIVIDEND & INTEREST PAYMENTS 


■ TODAY 
Abbey National 5-7p 
Aegon 714% Bd. Oct ‘95 
Ecu72.50 

Commonwealth Bk Australia 
11% 8d.‘01 A5110.0 
Forte FRN 1998E1529.il 
1MI 4.4p 

JDC Gtd. FRN 1996 $242.81 
Jasmine B FRN ‘03 
Y1 554583.0 

Kawasaki H. 6% Nts.‘97 
Y6GOOOO.O 

Do. 6.15% Nts.'99 Y61 5000.0 
Weinwort Benson 6.75p 
Kyushu Beet 1014% Bd. *01 
C$102.50 

Met. Water Southwark & Vaux. 

3% Db. £1.50 

Mori Seikl 5.65% Nts.'96 

Y565000.Q 

Motorola $0.07 

Nat West Bank 9% Non-Cm. 

Pf. SerJK AJBp 

Do. Non-Cm. $ Pf. SerA 

$0,532 

Do. Ser.B $0.4375 

Do. Exch Cap. Sec. SerA 

$0.492188 

Sanwa Fin. Aruba Gtd. FRN 

July ‘04 $1419.79 

Do. Gtd. Step-up FRN Oct ‘02 


£709.90 

SmrthKiine Beecham A 3p 
SmithKIine Beech/SmithKUne 
Beck. Eq. Units 50.05854 
State Bank NSW 11% Nts.*95 
AS110.0 

Transatlantic Hldgs. 6p 

■ TOMORROW 

Albrlghton 0.4p 

Allied ton. Praps 5%% Cv. Pf. 

2.875p 

Bradford & Bing. Bldg. Scty. 
FRN '99 £133.38 
Conv. 9%% 2005 £4.75 
Echlln $0.19 

Eng. & Scottish Investors 
0.55p 

Finsbury Underwriting lnv. Tst 
1.35p 

Halifax Bldg. Scty. FRN *95 

£133.51 

Kuala Lumpur Kepong MSG. 05 
News Corp. AS0.015 
News Int 0.72p 
Nova Scotia 11%% Ln.'19 
£5.875 

VHE Hldgs. 2.7p 
WSPIp 

■ WEDNESDAY 
OCTOBER 19 


Lonrtio Fin. FRN ‘97 $154.93 
Vickers 1.7Sp 
Wells Fargo FRN Jul/97 
$129.38 


■ THURSDAY 
OCTOBER 20 
Adscene 4p 

Bailey (Ben) Const 0.3p 
Budgens 5% Cv. Un, Ln.‘03 
£2.50 

Dixons Rn. Gtd. FRN *97 
$2636.98 

Edinburgh inc. Tst Ip 
First Spanish lnv. Tst 0JZ5p 
Isle of Man Steam Packet 
1.75p 

Islington 11.9% Rd. ‘17 £5.95 
Jupiter Euro. lnv. Tst 1.25p 
Lon. & O' seas Freighters 
an njTJc 

M & G Inc. lnv. Tst Ip 
Do. Geared Units Ip 
Do. Package Units Ip 
National Express 2.7p 
Northern Rock Bldg. Scty. FRN 
'96 £135.48 
Parkdean leisure 1.9p 
Pendragon 2.7p 
Pokphand (Bermuda) $0.00384 
Do. (Hong Kong) HKS0.03 


Do. (UK) $0.00384 
RJB Mining 52p 
Schraders 6p 
Do. N/Vtg. 6p 
Serco 1.25p 

Throgmorton 1000 Small. Co s 

Tst. 2.5p 

Utd Friendly 6.1p 

Do. B (ResWtg) 6.1p 

Wholesale Rttings 8.47p 


■ FRIDAY 
OCTOBER 21 
Appleyard 2.9p 
Avonmore Foods IR1 .65p 
BBL Int Gtd. FRN ‘99 $127.08 

Boddington 3.15p 
Brandon Hlra 1.5p 
Bumfield Ip 

Common. Bk Australia Gtd. 

Un. Cap. Nts, $238.28 

Crockfords 2p 
Fosters AS0.0325 
Govett High Inc. lnv. 

Tst. 1.G4p 

Home Counties News. 2.5p 

Invesco 1J25p 

Latin Am. Extra Yield Fd. 

50J275 

Mid Wynd Int lnv. Tst 3.7p 
Nat West Bank Und. Var. Rate 


primadona 2.5p 
Royal Insurance 4p 
Smith (WH) 10-^ a 
TSB 10%% Sb. Ln.‘08 
5.31 25p 

Treasury 4%% I.L.'Q4 £22923 
USDC lnv. Tst. 1.25p 
Ulster Television 7-5p 
Utd Carriers 1.6p 
Welsh Indl. lnv. Tst. 4p 
Wilson (Connolly) 1 -36p 
World of Leather 0.75p 


■ SATURDAY 
OCTOBER 22 . 

Cyanamid (UK) 9.61 % 

2007 £240.25 

Eng. & Caledonian lnv. 2.75p 


■ SUNDAY 
OCTOBER 23 

Costain Fin. 7’/a% Gtd. Pf. 
2003 £61.46 



You cannot afford to miss Raster '94 

A unique ovam apvcHJeatiy aimed to dwnontntt the Mast 
software pgdugn and hardware solutions In Engineering 
Document Management «nd CIS. 

Hasier‘94 is brought to vcu bv OcO-Engineenng Systems, in 
conjunction with leafeng UK software suppliers The event will give 
you rho opporirxmy to meet and talk to unemotional product 
specialists. plus the chance to pemopate m demonstrations A senes 
oi presentations are amed to give both newcomers eng established 
users, a dear and concise understanOng Of rhe concepts and 
benefits of the latest raster products Rosier '3d represents an 
e* co Cent opportunity and profitable mvestmant of your time: 

Loughton, Essex • Wednesday 2nd & Thursday 3rd November &* 
Manchester - Wednesday 9 th 8. Thursday 10th November '94 
Glagow ■ Wednesday 16th & Thursday l?tn November '94 

If you would l*e io attend one ol the above events, or require more 
information please contact Susonne Hayward on 0454 617777. 


UK COMPANIES 

■ TODAY 

COMPANY MEETINGS: 
Headway, Cedar Court Hotel. 
Den by Dale Road, Wakefield, 
10.30 

Mid Wynd Int. lnv. Tst, 1. 
Rutland Court, Edinburgh. 
11.00 

BOARD MEETINGS: 

Finals: 

Gartmore British Inc. & 
Grwtji Fd. 

Highland Distilleries 
London & Strathclyde Tst 
MY Hldgs. 


Connaught Rooms, Great 
Queen Street, W.C., 10.30 
Merivale Moore, Grosvenor 
House, Park Lane. W„ 12.00 
Primadona, Knightsbridge 
House, 197, Knightsbridge, 
S.W.. 12.00 

BOARD MEETINGS: 

Finale: 

Hong Kong lnv. Tst 
Paterson Zochonis 
Town Centre Securities 
Interims: 

Bedford (Wm) 

Templeton Latin America Fd. 


Smith (WH), Millbank Tower, 
S.W.. 11.30 

Throgmorton 1000 Smallest 
Co's Tst, 155, Bishopsgate. 
E.C., 12.30 

BOARD MEETINGS: 

Finals: 

DFS Fianiture 
Exmoor Dual Tst 
Smiths (nds. 

Interims: 

English & National lnv. 
Glenchewton 
Harrington KDbride 
Havelock Europa 


House, 7-12. Noel Street W.. 
11.30 

BOARD MEETINGS: 

Finals: 

Albert Fisher 
Amstrad 
Cradiey Grp. 

Ecu Tst 
Gleeson 

Govett Strategic lnv. Tst 
Kleinwort Second 
Endowment Policy 
Superscape VR 
Interims: 

Airflow Streamlines 


Street. E.C., 11.00 
Black (Peter), The Brewery, 
Chlswell Street. London E.C., 
11.00 

Wills Grp., New Change 
Buildings, New Change, E.C., 
10.00 

BOARD MEETINGS: 

Finals: 

Air London Int 
Interims: 

AAF I nds. 

Hunting 


7/8 November '94 
Hosted by on. London 

User Experience and Expectations 

Leant how to survive and gain the competitive edge! 

A two day conference on Group wore. Computer Supported Co- 
operative Work and Business Process Re-engineering - packed with 
the most recent case studies - presentations by users including 
NatWest. Rover, BICC, BAeSEMA and a local HA. 



APPOINTMENTS ADVERTISING 
tppcaa to fee UK edition 
every Wedaodiv 3t Thmsdij 
Md io Bn (menatfmaf citttian nay Fritter 
ft* briber lafonmuoa 
ptuaeaD: 

Gantt Janeiro 
071 873 3779 
Andrew Sfanrottfu 
071 8734054 


Interims: 

Acorn Computer 
BMSS 

Berry Birch & Noble 
Bristol Scotts 
Castle Mid 
Famell Elect. 

Forward Technology 
Kelt Energy 
Richards 
Rrva 

■ TOMORROW 

COMPANY MEETINGS: 
Eaglet lnv. Tst, New 


■ WEDNESDAY 
OCTOBER 19 
COMPANY MEETINGS: 
Afumasc, Farmers & Fletchers 
Livery Hall, 3, Cloth Street, 
E.C., 10.30 

Rrst Spanish lnv. Tst, 48, 
Chlswell Street, E.C., 12.00 
Foreign & Colonial High Inc. 
TsL, Exchange House, 
Primrose Street E.C., 12.15 
Moiyneux Estates, Thames 
Exchange, 10, Queen Street 
Place. EC.. 10.30 


London American Growth 
TsL 

Seafield 
Warrrford Invs. 

■ THURSDAY 
OCTOBER 20 
COMPANY MEETINGS: 
Conrad RJtbJat Sinclair 
Goldsmith, SAS Portman 
Hotel, 22, Portman Square, W.. 
11.00 

Elbief, Prince of Wales Lane, 
Warstock, Birmingham, 11.00 
Usher (Frank), Waveriey 


Ana gen 

Chesterfield Properties 
Davenport Knitwear 
Ferguson Int 
Ferrum Hldgs. 

Hoare Govett Smaller Co's 
Index lnv. Tst 
Lionheart 

New Throgmorton TsL (1983) 
Yorklyde 

■ FRIDAY 
OCTOBER 21 
COMPANY MEETINGS: 
Armour Tst, 100, Liverpool 


Company meetings are annual 
general meetings unless 
otherwise slated. 


Please note: Reports and 
accounts are not normally 
available until approximately 
six weeks after the board 
meeting to approve the 
preliminary results. 




CONFERENCES & EXHIBITIONS 


OCTOBER 18-19 
INPOWER 94 

The Independent power Generation 
Conference and Exhibition. Keropum Pork 
Exhibition Centre, Sutibury-on-Thames. 
Suncv. England For fire admission tickets 
Contact: 

Lorraine Rogers. 

FMJ Interna tutu! Publications Ltd. 

Tel: («737) 7tyXft 1 1 Fas: 1 0737) 7ft 

KEMPTON PARK 

OCTOBER 19 
Practical BPR - 
Implementation Issues 

2nd .Annual Conference of the BPR Studj 
Group l2»0+ members). New (never 
tlftcliiwd before). recently Miccemfo] Case 
Judies presented with inluiaalve sessions 
from senior management and practitioners. 
Li veil divrussions and dcrni>ns(rari»ns 
including speakers (rum Citibank 
International. Nationwide Building 
Soviet*. Alliance and Leicester. Capital 
Hoflie Loans, PicVfiuds, and more 
Cnnu<.i Side Timers, IIjos <> n Avpicuict 
Tel +44il»>«lt 1201 IS 
Fax. *44 ini tats I4 .W;-i 

LONDON 

OCTOBER 24 

Soda! Justice Commi ssi on Report 

Ttt; final repint •'( die CwiHmim on S>cuf 
luslikO. Ilousinr.. cm plot mem. pvra-nul 
finanvv and Government p>du> examined. 
Sir ftoidon ilorne. Tons Bl.nr Ml*. Ilea 
Campbell. Christopher Haskins, Vaitiein 
H.wrn. Mrctim hkrkxuM. Ji'lm M-nds 
Contact. N» il S:,u ait Associate* 
il'l *a"h moxj 

LONDON 

OCTOBERS* 

The Information Suporhlghway 

\ xi-ntcreDirc w <■*. inline and highli^il the 
ihalh nee - and ap)'lh.alii>iis in commerce 
and the public teilm of the new 
irJccoromijDia Jtii-n, in htw'Jogi, j m) i„ 
cxamuic (n<x cnmicnt p*4rvic* to Ijce ilunc 
xbalfenjics Government Minister and 
Lans tfxiiK.l’SXSxeicijrx «<t i ■■mmcrcc 
Out Ai Neil Stew an Ashstuics 

ii- 1 n^ntA: 

LONDON 

OCTOBER^ 25 

International Polypropylene 
Conference 

The Institute ol Materials has organised 
I lux imjs’n.'irrt omC-rent c Jo briny rfic U-.-4 
speakers in ihc pnl> props tenc tndu.irs 
tisfcrhcr to help Calais v the reivvctx' in 
the busire-.x 

C.’Olaci Tbr lllslitutk of Maren-iN 
Tel: tC I JI.1MJII-I Fa! 'Cl -SM Ift.ks 

LONDON 

OCTOBER 25-26 
Survive! 

Nil .Altntiat Business Conlinuifs an d 
Disaster Kccoscrs Conference k 
Exhibilteit. 

}f.m uii! i«w business Sor*i»e! a 
crisis such os fire, IJ.'od. tirrnri.t .ilr.x'L. 
scCuriiv breach etc Lome to the Surslsrt 
iirnfcretKc and secure xml iuiure rtmtunh 
ctlcvfivc ct'oiingcncy sttaicgx 
For lull derails of the conference and 
membership of Survlsw' cnniaci 
Arei'l) Hunt. Ixl I W-S74 hjifr 

LONDON 

OCTOBER 27 

The Infrastructure Funding 

Revolution 

A iinx‘ dax Conferencx- exatnininf how 
put feel hnjncL schemes an- funded. 
Divided into two sxetions on intx-maiioiul 
anJ UK funding rcduircmcnis. Speakers 
troni Peiliin> Cole. Hambros. Tarmac. 
SIGHN. IFC. Chx-tmcil Bank. EIB. 
Cxutuct Carru* Race. IP? PuMrsftipp. 

Tel D7I-* I? .VS7d (ax 07l.il? .Wit 

LONDON 


OCTOBER 27 

International Tax Conference - 
Managing Global Expansion 

Conference on the lax issues facing 
multinationals in the changing global 
scene 

Price: £200.00 plus VAT 

Contact: Michelle Beard, Ernst & Young 

Tel: U7J <#J 22S7 Far 071 242 Xb2 

LONDON 

oCTSSSmTS 

international Bond Congress 

A unique opportunity for all professionals 
involved in the bond markets to increase 
their knowledge with 98 specialist 
presentations. With increasing 
glnhalisirion and deregulation resulting in 
a dramatic surge in investment flows 
between countries, this event is on essential 
inf'.vmjiicin source for Che international 
bond markets. 

Contact IBC Event Office 
Tel: *44(01 lt.3 776306 
Fax: +44 HI) 1628 J2333 

BARBICAN. LONDON 

OCTOBER 28 

Investor Relations Executive 
Education Programme 

Fundamentals Seminar. Frrst ra a senes «rf 
■mttiiurv x-oxx-nnj: the technical disciplines 
and areas >>f expertise e>jmidered essential 
t>tr sermus practitioners in the investor 
rx'lalions prof. Includes regulatory 
hnx'kground, inlvrprciation of financial 
accounts and how rn manage media 
irlatK'ii.s. 

Contact LVhhic HctUcnngion. 

Kjss .AstiVtaies 

lei. Il'l 4*17 as Fax: OTI 4V7 *t2>i5 

LONDON 

OCTOBER 31 
Manufacturing Matters 

Tire National Prc Budget Conference on 
matittlJcturing. A working cnnferciHx- «n 
nunulactuiing industrval strategy and fiscal 
policy Prc Budget outlook from leading 
ct<nin>unis 3 i»rs. 

Contact Neil Stewart Associates 
H7| *ThlMC 

QEII CENTRE. LONDON 
NOVEMBER 1 

Outsourcing: How to assess 
the option 

rVitsourcntc non -cun: activities tv likely in 
Pc among the most important business 
dcvx-inpmcniH of the I •Wits. Director 
Conferences presents a one-d-iy conlcreqce 
on the benefit* am) risks pf buy mg- in 
profession*! services ineudtng 
.-hoainr.uicy. pctvonncl ami legal sets ico 
Director Cuntx-irnccn 
Tel- 0?l 73HM22 

LONDON 

NOVEMBER 1 

Full Circle Into The Future? 

The commercial imperatives facing 
i.»rgar.isjimns into the 2Jsr Century . 

The livnlcy Centre is celebtatine Us 
Twentieth Anniversary with this 
Confcrenitf that Junks forwand j t > ihr ne« 
20 yean and what tl will bring not only m 
terms of (he big picture but also the 
commetciii Lmpiicaitnns. 

C.«t C.VU ♦ VAT 

Contact ■ Ajtna Harman at 

Tire Iknlci Centre Tel ti7i 353 on,ii 

LONDON 

NOVEMBER 3 ““ 

/nvestment in Latin America 

A oniquu uppoit unity for inscstmcai 
ppdC'jsiintals to hear from the International 
Finance Corporation 1 IFC 1 and Nat West 
Ins c-, intent Management on an exciting 
new appioacti to invcsimenr in thx- 
dynamic watkets of Latin America. 
Contact- ManJy Adamnu. NatWc« 
IntcsMcnr Managvmeor 
Tel: U7I 174 3UM Fax: 071 .l?a J277 

LONDON 


NOVEMBER 7 
Global Convention on 
Consumer Financial Services 
Day i 13th Inrenuuiona] Retail Bonking 
Conference. Theme: ’Strategies for 2001’ 
Subjects: Banking, insurance, investment 
management and consumer financial 
services. Morning session: 'Global, 
Regional or National Markets?* Afternoon 
session: ’Bonk Positioning Strategies for 
yxr 

Contact: Diane Crannagc, 

LafTcny Conferences 

Tel: 1+353-1} 671 8022 
Fax; (+353-1)671 3S*W 

LONDON 

NOVEMBER f-B 
llsor Experience and 
Expectations 

DTI. A two day conference on Groupware 
Computer Supported Co-opera rive Work 
and Business Process Re-engineering. 
Presentations by users including NntWcm. 
Rover. BICC, BAeSEMA and a Health 
Authority. 

£250* VaT 

Contact Envisage. 0438 717155 

Free Envisage report with each 

rcgiwnukni. 

LONDON 

NOVEMBERS 
Global Convention on 
Consumer Financial Services - 
Day 2 

a Parallel Conferences: 

- Cards 2U00 

• Branch Banking 

- Affluent Financial Sen ices 

■ Retail Financial Services for Lm Income 
& Emerging Markeu 
Cota act: Diane Crannagc. 

Laf ferry Conferences 
Tx-I'i*3$3.|)ft7l mC2 
Fax: 1 +353- i 1071 35W 

LONDON 

NOVEMBERS 
Know Your Performance 

EsH-naoh ■</ Bettchmarhnc. A practical one 
day seniinar.’wxirkshop. Practical case 
exercises, successful vase studies. 

Contact; PatriciJ Doonard. EMP 

Intelliccncc Service 

Tel: iT) JS7 5065 Fa* 071 955 1640 

HEATHROW 

NOVEMBER 9 

Presentations for Professionals 
by Professionals 

At the Mermaid Theatre, a seminar on 
creating effective presentations From 
presentation techniques and use of 
language, to AV design, slide production. 
cK. Businessmen, scmtKip comedians and 
actors dertwnstrare how to nuke lasting 
impressions. Insintctional. tuierly 
enjoy able - a must for ail presenters, 
keynote speaker. .Man DiNto. Choncrcd 
Ipstiruteol Marketing. 

0.<titad. E Wifliims. Executive Prescuunoas 
Tel: 1)71 R37 SIW Fax: U71 837 SI»0 

LONDON 


NOVEMBER 9 
Visions of Goto' 

Conference celebrating the Modern 
Apprenticeship programme and the parr 
NVQx and skill competitions have to pay in 
them. Speakers include Duncan CcodhSew, 
Mike Heron. Bill Jordan. Prac Leith. 
Sponsored bv Employment Department. 
Contact: Ifilorv Jeaamgft UK Skills 
Tel: 07 J -753 £22 Fm:W7I 436 763 0 
or Claire Armstrong. National Council of 
Indium Tmniac Organisations 
Tel. 0763 147285 Fix: 0763 247302 

ALDGATE. LONDON 

NOVEMBER 9 

Future of Executive and All- 

Employee Share Schemes 

Labour's City Spokesman. Absent Darling 
MP and leading company Directors discuss 
best practice in employee share schemes. 
Case studies from British Cos, BT. FI 
Croup. NFC. Northern Foods and Unipart. 
Organised by ProSbare, j non-profit 
Mganixanon promoting share ownership. 
Contact: Andy Feist m< 1. Prosfuuc 
Tel- OH *10 <NS4 fee 071 0W 0047 

LONDON 


NOVEMBER 9 
Global Convention on 
Consumer Financial Services - 
Day3 

5 Parallel Conferences: 

- Delivery Systems 
-Marketing 

- Insurance 
-Non-Bank Banks 

- Retail Financial Services in the Middle 
Ean A Islamic Banking 

Contact: Diane Crannagc, 

Latierrv Conferences 
Tel: 1+353-1)071 8022 
Fax: (+353-I)b7| 3594 

LONDON 

NOVEMBER 10 
Global Convention on 
Consumer Financial Services - 
Day 4 

2 Parallel Conferences: 

- Direct financial Services 

- UK Financial Services 
Concoct: Diane Crannagc, 

Uffcny Conferences 
Tel: 14353-1) 6718073 
Fax: (+353-1) 67l 3504 

LONDON 

NOVEMBER iT ^ 

Global Convention on 
Consumer Financial Services - 
Days 

2 Parallel Conferences; 

- Cross-Border Opport u nities in Earvpean 
Financial Services; Showcase Nordic 
Europe 

- Human Resource. 

Contact: Done Crannagc. 

LafTcny Conferences 
Tel: (+353-1)671 8022 
Fas: I +353- 1)67 1 3594 

LONDON 

NOVEMBER 73-15 
Selection & Interviewing 
Can you pick a winner every lime? 

A practical 2 -day course giving 
participants confidence in their ability 10 
effectively select staff and (annulate a 
professional, company -wide selection 
strategy. £b95 + VAT (fully INCLUSIVE 
of all accommodation and meals). 

Contact: STRUCTURED 7714JN1NC 
01926 337621 

WARWICKSHIRE 

NOVEMBER 15 
in te rnational Mobility 

CBi conference addresses findings from 
survey on current practices and new 
developments in inoenia timed remuneration 
policies, particularly in newly emerging 
economies of Central tad Eastern Europe 
and the Pacific Rim. Conference examines 
practical approaches to remuneration 
package, cost control and provides company 
ctipc study examples. 

Contact: Sandra Aldrcd. CBI Conferences 
Td: 071 370 7m 2Jhr Fax-on-detiund 
071 240 1248 

LONDON 

NOVEMBER IS 
University erf London: 

The Stamp Memorial Lecture 

"How 10 contain Health Core Costs: An 
Inienaiiotul Dilemma' will be given by 
Professor Brian Ablc-Saitfb. Phd. MD 
(Hon Causal Emeritus Professor of Social 
Administration) at the University Of 
London. Senate [loose. Malet Street. 
Loudon WCfE THU at 6.00 pm an 
Tuesday IS November I9W. 

ADMISSION FRfcE. WITHOUTTICKET 

LONDON 

NOVEMBER 15-16 
The Business Continuity 
Planning Summit 

New style participatory event for finaDcLi] 
instimiimu ran in a&sodatiati with KPMG. 
£*amrtre vtral new developments with 
speakers [nun British Telecam. Guard urn. 
Rail* Royce. Tckbausc, Demon Kali. 
SafteyncL Midland Bank. 

Attend on 15th or I Mb. 

Contact: JANET WCVTECKL PEI 
Tel: Q5h4 71)3995 Fax 0564 703003 

LONDON 


NOVEMBER 15-16 
Business Performance 
Measurement: 

Transforming corporate performance by 
measuring and managing 1 he drivers of 
future profitability. This two-day 
conference explores the relevance and 
practicability of developing new "corporate 
dashboards", which include uoa-fiuandal 
Indicators, such as customer satisfaction, 
quality nod benchmarking. 

Conrad: Business Intelligence 

Tel: 031-543 6565 Fax: 081-544903) 

LONDON 

NOVEMBER 16, 17 , 18 
European Technology in 
Learning 

94 Conference, exploring the challenges & 
opportunities that the 'Communications 
Revolution 1 bolds for naming St cdocation. 
Leading edge speakers from and live finks 
with Holland 4k Finland examine: 7>ainiag 
via Sal rililefC able TV, Videoconferencing, 
Molionedia. Virtual Reality and lotetner. 
Contact: The Business & Industrial 
Consultancy - BIC 

Tel: 0254 663 922 Fax: 0254 682 039 

LONDON 

NOVEMBER17^" m 

Kenya 

CBI conference plus workshops, in 
association with Standard Chartered Bank, 
considers current developments, 
opportunities and future prospects for 
investors and exporters. Keynote address by 
President Daniel T orap Moi and speakers 
from the high powered delegation of 
Ministers and senior officials. Contact: 
Nicola Martin. CBI Conferences 
Tel: 071 379 7000 24 br Fax-ao-danund 
07] 240 1248 

LONDON 

NOVEMBER 17 

EMU in a Multi-tier Europe 

EMU is hack on the agenda for tbe 1996 
ICC. Can Britain opt oat? This conference, 
boned by Salomon Brothers Iol. considers 
the issues and the considerable technical 
problems of conversion 10 a single 
currency. Speakers include: Karl Lamer* 
MdB, Giovanni Ravasio. DC. Giles Rodicc 
MP. 

Contact Federal Trust 

Tel: 071 2S9 99W Fax: 071 2S9 9505 

LONDON 

NOVEMBER 21 & 22 

Third Central Banking Conference 

Features leading speakers from the central 
banks of China, India. France, Hungary, 
Finlan d . Austria. Poland, Venezuela and Tbe 
Bank of England. EMI and IMF. Sponsors 
The Week] Gold Council, Barclays Preens 
Menb and QiflbrtJ CbaflCC. 

Details: Gryforum Ltd 

Tel: 0225 466744 fac 0225 442903 

LONDON 

NOVEMBER 21-22 _ 

Business Process 

Re-engineering (BPR) 

Cootinuinc series of seminar, for manages 
charged with designing and implementing 
BPR initiative*:. Presented by leading US 
practitioner ark) BPR suitor. Proven 7ww-*> 
do'll* imptemcnuiiofi guide illustrated with 
case strafes nml wwfcstaps. Course book afao 
avaitaWc. Over 50 ctgansarions in the private 
£ puttie seems hive already atisoded- 
Confect: Richard Parris, Vertical Systems 
Intercede Ltd 

Tel: *4d-j55-2Sm (24 tottral 
24 hr Fax-oo-demand 071 240 124S 

UNIVERSITY OF WARWICK 

NOVEMBER 24/25 
Differentiating Customer 
Proposition 

CBtDeveiin & Partner. conTercncc. chaired 
by John Humphry s. shov-n bw W transfoim 
Key business processes to deliver c«t 
efficiencies and market differentiation, 
(Optional workshop on second day). 

Ccnocc Belinda Rt^nM. CBJ Conferences 
Tel: 07 1 379 7400 Fax: D7i 497 3M6 
Julia Ro6it&. Ctoveiin <£ Farmers 
Td 071 9l79agg 

LONDON 


NOVEMBER 24/25 
FT Manchester Postgraduate Fair 

this is the first postgraduate fair to be held 
in Manchester. This fair will provide 
exhibitors with a unique opportunity to 
anna tbe highest calibre or slatterns tor 
postgraduate onuses. Booking deadline for 
exhibitors - October 21. 

Contact: Kay Day at Mancbcser 
Tel: 061 275 3952 

MANCHESTER 

NOVEMBER 28-29 
Global Emerging Markets 
Investment Management 

Major International conference on global 
emerging debt and equity markets looking ai 
CIS, Eastern Europe. Africa, tire 
Mediterranean Rim: Asian and Indian 
Subcontinent, Latin America and the 
Carribean. Programme designed for 
international portfolio investors and asset 
. atiocaice and emogins markets specials**. 
Contact: Alison Elgar. 

Dow Jcxres Teferare Ltd 

Tel: 071 332 9532 Fax. 071 353 2791 

LONDON 

NOVEMBER29-30 
Managing Corporate 
Transformation: 

The UK's premier event on planning, 
implementing and ms ninmg nrg^| i im y> iia i 
and cultural change. This trvo-day 
conference includes Frank discussion of 
why so many initiatives fed nod explores 
proven methods for achieving critical boy- 
in and suppon for new organisation 
structures and working practices. 

Contact: Business Intelligence 
Tel: 081-543 6565 FbkOSI-S 44 9 02H 

LONDON 

CIECEMBER1 

OtyRegidation-ALegaiEvaktOon 

This conference will debate the 
development and future of financial 
regulation in the UK. The growing use of 
civil law procedures, regulatory 
intervention, and redact ion in criminal 
sanctions - define a legal evolution ar the 
interface of the criminal, civil and 
regulatory disciplines. Sponsors: 
Banerwortbx Publishers. Contact: Caroline 
Sumner, Meetings Management 
Td: 01252 795414 Fax: 0L232 792101 

LONDON 

DECEMBER 6-7 
Adding Value with Index 
Products 

BARRA'S 1094 London seminar focuses 
on key areas of indexation research, 
including new techniques for index 
tracking index enhancement using 
derivatives, and asset allocation over 
multiple indices. Topics include dynamic 
index tracking under transoctiOD oasts and 
hedge fund strategics. 

Contact Christine Smith, 

BARRA tiuernatioiul. Ltd 

Tel: 07J 283 2255 fen 071 220 7555 

LONDON 

DECEMBER 7-8 

Succeeding with Teams: 


DECEMBER 14-15 
Occupational Pensions 
Be brought op id date on all the practical 
implications of UK government and EC 
regulations. Each presentation wiJ) deal 
wife what pension foods actually need 10 
do, when they need to do it sod boor much 
it will cost. For pensions fond manager, 
trustee or professional adviser it is on 
important opportunity to bring yonr 
knowledge up to due. 

Contact: Simon Wills, Tet 071 242 1548 
AIC Conferences 

LONDON 


ajai driving the team-based orgarrisaam. An 
UHcntaiHJtta Twmlay conference specifically 
designed m betp senior executives laleistartl 
fee fondanxntal tsnes involved in designing 
and Bnpianmtuig a sam-tased oqparapon 
Contact Business InrelUpraa 
Tel: OS! -543 65o5 Fax: 081-544 9020 

LONDON 


EXHIBITION 


DECEMBER 8 
The UK Economy 

Prospects up 10 and beyond the next 
GwoaJ Ejection, 

This Healey Centre Conference is oor 
annual look « fee UK Economy and its 
prospects for the medium term 
Cost £550 + VAT 

Contact: Anna Harman if The Henley 
Centre Tel: C71 353 9961 

LONDON 


OCTOBER 28-27 
BPR 84: BxopCa Leadng Show on 
RaEngkKertiQ, ftooan Itaugemert 
said Per fo rm an ce hnprovanant 

Whether you are evaluating re-engineering 
tools and consultancy for tbe first time, 
looking for new htsjghB. or simply wish to 
compote fee leading vendors' product* and 
services. BPR. 94 is a unique Opportunity. 
Far your FREE exhibition ticket 

Coana: Business i n teH i g en ce 

Tel: O&t 5436565 Fax: 081 544 9020 

LONDON 

MARCH1-3 

Asian Companies EXPO 
This entirely new concept far the financial 
markets brings together in one location an 
extensive and diverse array of leading 
Asian Companies, and provides 
institutional investors wife a unique 
opportunity to evaluate potential growth 
and return first hand across all sectors pa a 
ooo-cm-ooe basts. 

Contact: Euro money EXPO'S | -in fee d 
Tel: +44 i01 1895 625194 
Fax: +44 10) 1895 634447 

EARLS COURT, LONDON 


INTERNATIONAL 


OCTOBER 20-21 

Windows In Finance Conference 

& Exhibition 

BUI Gates, Chairman of Microsoft 
Corporation will give fee keynote address 
at this major event designed to update yon 
on fee latest developments in Windows 
based solutions for retail and wholesale 
banking and capital markets. 

Leading vendors will be demonstrating fee 
most up to dale products and services. 
Contact: Sabine Untzcli GmbH - 
Td: +40(0)69 17 25 25 

FRANKFU RT 

OCTOBER 24-26 

CoaFTrans 94 

The norths largest coal trading conference. 
Producers, buyers, traders, shippers meet to 
do business and analyse the International 
coal market It provides fee bedrock for fee 
coming year's contractual negotiations. 
Keynote: Pit Botha. Delegates to dale 
exceed 1.000. 

Susie Coostabir 

Tel: 071 779S945 Fax: 071 779 8946 

HAMBURC 


OCTOBER 26 

Advanced Software Appfications in 
Banking, Finance and Insurance 

Seminar for business and iccfankal managers 
stowing use of practical application* of logic 
programming software in finance, hanking, 
insurance. Leading intenmuonai and lialian 
firemen] institutions present state -of- fec-orr 
systems. Includes panel discussion and 
vendor displays. Courser: firsiyi Cristina 
Ruggieri. Tel: 05 1 521 2R5 
(tottoiawnal) AI Roth. Tel: +44 253 358081 

NOVEMBER g!g 

European Union Aid tor 
Development Conference 

Business Opportnnitie!. in EC external aid 
projects to fee value of 5 billion ECU 
annually outlined, including PHARR'JOPP 
TACIS, MED. A.‘LA and ACP 
Networking wife EU and new member sqm 
companies. Procincroem opporrunllies for 
tnanufaourers/supplicrs. 2f)i) DBO r 
GUmioc EU Bid pro graS 

Contact; Soctfte Gdncralc dc 
Dtfvdoppcrnent SA. 

Td: +322 512 4636 Fax: +322 SJ2 ^53 

BRUSSF.I-d 


TO ADVERTISE IN THIS SECTION PLEASE CALL NADINE HOWARTH ON 071-873 3503 


NOVEMBER 17-18 
European Construction: 
Retaining the Competitive Edge 

Speakers • Koch (Shell): Morris fBovivi; 
Zacbmann (EC): Simms (Tarmac); Lc 
Bright (ABB); Zacbmann (EC): Siemens; 
Schraders; European Policy Fornm; 
Chevron; GEC AJsfeom; Thytar Woodrow, 
BAA: Strntorg; BP*. MIT 
European Comnuctioa lustinite 
Tel: +44 (0)1509 222620 
Ffec +44(0)1509260118 

U&BQtt 

H OMBa 'T Hl T " " 

Managing Safety In and Around 
Airports 

Conference on external safety of airports 
and measures for maintaining safety. 
Topics include public views. ATC, 
operations, and regulation. Sponsored by 
the European Commission and Scbipbol 
Airport. No fee. 

Gmcacc Loes Romcijn, EA C/RAND 
TeL- 31-15-78 54 11 Fax: 31-15-78 17 88 

AMSTERDAM 

mj g uimfcHajjtM 

FT Doing Buslnoss with Spain 

This annual conference arranged wife 
Expansion and A rwa l j d a d Eooodmica, wfl] 
take as iu theme 'Spain Compering in 
Europe', focusing on economic recovery, 
competirivity and liberalising markets. 
Enquiries: Ftnanciai Time* 

Tel: 081-673 9000 Fox: 081-673 1335 

MADRID 

NOVEMBER 24 
Advanced Software Solutions 
in Transportation and 
Distribution 

Seiniaar for bnsineu and technical 
managers showing use or practical 
applications of logic programming 
software in the transportation and 
distribution markets. Leading imeroationaJ 
companies present state-of-the-art systems. 
Includes panel discussion and vendor 
fesplays. 

Contact: Philip Kay. tel: +33 1 6019 3738 
A) Ro*. let +44 253 3S«B1 
— - PARIS 

DECE MBER 5-6 
COMPETITIVE: INTELLIGENCE 

Seminar for managers who want to team 
how Competitive Intelligence supports 
bofe operational effectiveness and strategic 
positioning. Topics include aims and role 
of intelligence in firms, collection 
methods. analytical techniques, 
organisation, and counter-intelligence. 
Principal lecturers arc former profeasfcmal 
rnteUrgence officers. 

Contact: Business Research Group 
Tel: 022 929 190U Fax: 022 788 0824 
GENEVA 

DECEMBEflS-9 

Refining. LNG & PetrochemAata94 
(RLPA94) 

The only show in Asia 10 address the 
downstream oil and gas industry. RJLPA94 
returns with 100+ exhibitors and an 
international conference addressing the 
theme "Technological Innovations and 
Enhancements for Sustainable 
Dcvdofraau' 1 . Listen to 30 distinguished 
«pws share their knowledge 00 fee tacsi 
technological innovations Io achieve 
sustainable development 
London -Tet +44(0)17)4861915) 

Fax: +44 (0)171413 8211 
Singapore - Tel: +6S 338 4747 
Fax; + 65 339 5651/339 9507 
_ SINGAPORE 

JANUARY 24-26 
Egypt Gas Seminar 

As an oi] producer. Egypt has bad rather 
less attention paid to io considerable rah! 
m !» gas consumer and seller. This seminar 
will consider the reserve base and Egypt's 
innber international opportunities. 

Contact: Roger Hughes, 

Overview Cbnfcnaees 
Tel; 071-6130087 fee 077-61 J 0094 
MARRIOTT HOTEL. CAIRO 


<5 


I J 






'jfc . t . 



FINANCIAL TIMES MONDAY OCTOBER I 7 1994 




?.a i , . 


The real face of 
Japanese R&D in 

Europe 

Christopher Lorenz examines why so few companies 
are doing integrated product development 

G j*? 4?^^ t ? wn £530m new semiconductor factory Gleneagies were Toshiba at 
^ ln Scotland - announced last Hitachi, both of which have bas 

" KSffifSSrJt ^ "US*'-*- 1= Cndd* 


MANAGEMENT 


G uildfoni a cathedral town 
in southern England, is 
an unlikely birthplace for 
an innovation which may 
revolutionise the world computer 
graphics industry. But Criterion 
Software, a 17-person comp an y 
which was founded there last year, 
has launched a product which 
enables standard personal comput- 
ers to produce three- dimensi onal 
graphics of a quality and speed 
hitherto feasible only on specialised 
and very expensive workstations 
The reaction of the US software 
and multimedia industry, and of 
computer games programmers 
worldwide, has been one of disbelief 
followed by great excitement The 
product, called RenderWare, is 
being bought by a string of leading 
software development houses and 
hardware makers. Unless Criteri- 
on's growth is crippled by the estab- 
lished leaders of the graphics indus- 
try as they rush to clone its 
approach, the company's sales 
should climb rapidly from this 
year’s £I-5m. 

The Guildford company is also 
remarkable for a quite different rea- 
son . It is the second, fully-fledged 
new business to be spawned in just 
three years by the European 
research and development centre 
which Canon, the Japanese copier 
and camera maker, opened on Sur- 
rey University's research park there 
in 1988. 

The first spin-off was Canon 
Audio, whose innovative, hemlet- 
sh aped hi-fi loudspeakers are 
impressing the specialist music 
trade. Sales are expected to grow 
from £3m this year to £5m in 1996. 
Exports to the US have already 
started, with Japan next on the list. 

Most other Japanese R&D estab- 
lishments in Europe, with the nota- 
ble exceptions of Sony’s and Nis- 
san's, are more limited than 
Canon's. They are of two very dif- 
ferent kinds. One "upstream- 
group. also located in or near uni- 
versities, monitors or actually con- 
ducts local research, mainly for 
transfer to Japan. The other, 
housed in or alongside Japanese 
factories in Europe, operates very 
much “downstream”, merely adapt- 
ing product designs from Japan for 
local manufacture and sale. 

In theory, both kinds of operation 
are likely to expand gradually into 
the same central, or “midstream”, 
territory as Canon: the design, 
development and engineering of 
products for global markets. This 
closely linked set of activities cre- 
ates more added value than either 
research or manufacture do on their 
own. Yet it receives far less media 
attention: the headlines are hogged 
by investments such as NEC’s 


£530m new semiconductor factory 
in Scotland - announced last 
month. 

Many academics and government 
officials think the trend towards the 
midstream will occur automatically, 
as a series of pressures forces Japa- 
nese companies to do more 
development and engineering 
abroad. Apart from politics, pres- 
sures include the rising yen. the 
cost and supply of local engineers, 
the need to generate product 
designs direct from European mar- 
kets, and a supposedly “natural” 
cycle of organisational evolution 
among multinationals of any origin. 

Declarations of intent to join this 
trend have been made by Sharp and 
a few other Japanese companies 
which at present do only research 
or production in Europe. But the 
process Is for less automatic than 
many people think. Organisational 
and other factors are hampering 
such an expansion of design, devel- 
opment and engineering away from 
the companies’ home base. 

One long-standing barrier is the 
near-universal tendency to keep 
really key R&D programmes dose 
to head office. Masahisa Fujita, a 
professor at the University of Penn- 
sylvania, says this applies espe- 
cially in fast-moving technologies 
such as electronics - the very sec- 
tor which accounts for most Japa- 
nese manufacturing companies in 
Europe. 

Extra brakes on more Japanese 
heading for Europe include three 
options which did. not exist for the 
Americans: first, locating in south- 
east Asia, or indeed the US; Japa- 
nese spending on RJD&D Is already 
far greater in the US than in 
Europe, and growing foster. Second, 
doing more foreign design and 
development through alliances, 
rather than in-house. Third, subcon- 
tracting more work to the growing 
plethora of development consultan- 
cies in Europe and the US. 

The last two options - port of a 
gathering surge of so-called “virtual 
R&D” around the world - will still 
benefit Europe in various ways. But ' 
the commitment is less for reaching 
than when a Japanese company 
invests in its own European design 
and development facilities. 

The contrast between Canon's 
approach and that of most other 
Japanese companies was underlined 
this summer at the ninth annual 
conference of the UK-Japan High 
Technology Industry Forum, held at 
Gleneagies in Scotland. Of four pre- 
sentations to a session titled “Japa- 
nese R&D to the UK", Canon's was 
the only one to deal with the com- 
plete process of innovation, includ- 
ing commercialisation. 

The other three companies at 


in; i ! 


Gleneagies were Toshiba and 
Hitachi, both of which have basic 
research centres in Cambridge 
working on quantum physics with 
the university's Cavendish labora- 
tory. and Eisai, a drugs company 
which is spending £50m on a neu- 
rosciences lab at University College 
Ixmdon. “Once we prove a project 
to be worth exploiting. It will be 
continued to Japan,” the conference 
was told by Yutaka Tsuchiya, the 
lab’s administration director. 

By coincidence, the one-to-four 
ratio at Gleneagies reflects - 
slightly generously - the proportion 
of Japanese “R&D” units to the UK 
which do more than either just 
basic research or local modification 
of products. In continental Europe, 
the proportion is less favourable 
stOL 

According to the latest official 
government figures from Tokyo, 
Japanese companies claim to have 
no fewer than 284 “R&D facilities" 
to Europe. The UK has the largest 
number. 83, followed by Germany 
with 53. 

Kiyonori Sakakibara, an expert 
on international R&D based at the 
Tjmdnn Business School, confirms 
that the UK figure - and, by impli- 
cation, the German one - “is an 
over-estimate. It includes all sorts 
of preliminary technical activities”. 

A better indication of the amount 
of real Japanese RJD&D to Europe is 
the figure of 65 unito which are clas- 
sified as “independent”, or not fac- 
tory-based; 19 of them are based to 
the UK, IS to Germany. 

But even this classification is con- 
fusing. It mainly covers research 
units, including the three which 
presented at Gleneagies. But it also 
includes Nissan’s European Techni- 
cal (development) Centre north of 
London and NSK's ball-bearing 
facility near Nottin gham, which are 
both linked to the companies’ facto- 
ries in the UK and elsewhere. 

S ome of the reasons for doubt- 
ing whether research 
operations will move down- 
stream into design and development 
as automatically or smoothly as 
theorists suggest are examined by 
Sakakibara and Eleanor Westney of 
MIT in a paper on the evolution of 
cross-border technology manage- 
ment by Japanese companies.* 

One discouragement lies in the 
long success which many compa- 
nies have had in collecting foreign 
technology for use in their laborato- 
ries back home. Even when top 
management makes a strategic 
commitment to push more real 
product development abroad, estab- 
lished relationships and patterns of 
communication lead the home coun- 
try R&D organisation to continue 


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treating the growing local unit as 
just a listening post, say the aca- 
demics. 

As a result, the unit finds It diffi- 
cult to recruit and keep good local 
technical people. “This difficulty 
reinforces the belief of the home 
country organisation that the local 
(unit] can never match the product 
development capacity to Japan,” 
say Sakakibara and Westney. A 
very strong commitment by top 
technical management is needed to 
overcome this problem, they argue. 

That may not be enough. Arnoud 
de Meyer, a professor at Insead in 
France, identifies a similar impedi- 
ment, involving managers and tech- 
nical staff at all levels. Foreign R&D 
centres take an inordinate time to 
establish credibility with staff at 
their home country bases, he says. 
The French R&D unit of Corning, a 
large American multinational took 
from 1969 to 1981 to win its spurs; it 
only did so when one of its research 
projects became a big commercial 
success. 

A further barrier cited by de 
Meyer is communication difficulties 
between foreign units and those at 
home. Electronic communication of 
various kinds is all very well, he 


says, but “the thing companies 
don’t understand is that informa- 
tion only becomes knowledge if it's 
conse usually validated - if you can 
actually see people to the same 
room say yes or no, and feel how 
they say it You don’t get that on an 
electronic network. Even teleconfer- 
encing impairs the informality and 
openness which people need to 
work together in complete trust” 

This is less a problem for stand- 
alone research units working on 
projects separate from those to the 
home country than for product 
development units working to an 
integrated, fashion with the home 
base - and sometimes with each 
other. 

Although no Japanese company 
has yet had the time to develop as 
much research, design or develop- 
ment activity in Europe as US mul- 
tinationals such as Ford or IBM, the 
Japanese are aware of these co-ordi- 
nation problems. 

As David Caimcross, a UK aca- 
demic, points out to a new book on 
Japanese multinationals**, most 
long-established US multinationals 
still do most of their advanced 
design and development work at 
home. So it is not surprising that 


the current level of “real” Japanese 
activity to Europe is limited, how- 
ever great its potential. 

By the same token R&D spending 
abroad by Japanese companies is 
still outranked considerably by 
expenditure by foreign companies 
in Japan. The average size of for- 
eign R&D units in Japan is also 
much larger, Calmer oss reports: 
many have over 100 staff, whereas 
Japanese facilities in Europe and 
the US employ between 10 and 50, 
except in the motor industry. 

Time may change this balance, 
but only gradually. That makes 
Canon’s two spinoffs all the more 
striking. The true test of Canon’s 
internationalisation, as for other 
Japanese companies, will be if it 
manages over the next decade or so 
to grow at least one big worldwide 
business based on prod acts 
designed and developed abroad. It 
has made a better start than most 

* Technology and the Wealth of 
Nations. Edited by Nathan Rosen- 
berg. Stanford University Press 
£1335. 

** Japanese Multinationals: Strat- 
egies and Management m the Global 
Kaisha. Edited by Nigel Campbell 
and Fred Burton. RouUedge £40. 


Robomom to keep the kids in check 


S tirring news from Singa- 
pore: inventor Steven Chan 
has launched a £55 gadget, 
called Robomom, to help 
families control the amount of time 
their children watch TV. Robomom 
is a tamper-proof “electronic telesit- 
ter" that automatically turns your 
set off after a certain time - a “form 
of electronic agreement between 
parent and child" that is said to be 
more sophisticated than existing 
gadgets. . 

Robomom uses a system of “time 
credits" that start to be deducted 
once the set is turned on. After a 
sales push to Singapore, the inven- 
tor and his company. Informatics 
Engineering, hope to export 
Robomom to Japan and America, 
then elsewhere. ’ , 

What a useftil gadget And what a 
huge market robots will become - 
trillions. I shouldn't wonder, by 
SJ25. Wilfred Thesiger, the fcungd 
explorer, curses the arrival of 
machines, even cars and tele- 
phones. But Thesiger is old mid dis- 
illusioned. whereas some, like me. 


have no fear of robots, even though, 
one day they will completely out- 
strip us. In the history of earthly 
intelligence, robots will be our 
heirs. 

Before that happens. I want them 
to be my friends. I want a Robomom 
to control the amount of crap I 
watch on TV. I also want a robof- 
riend to remonstrate with me every 
time I behave arrogantly or self- 
ishly. I need lots of robofriends and 
will pay good money to get them. 


The row over Unilever's Persil 
Power is still boiling busily, after 
all these weeks. Persil Power is the 
new-generation detergent that gave 
<H? rnp of your washing a bit of a 
thrashing because it contains a sub- 
stance (manganese catalyst acceler- 
ator) that cuts up rough in extreme 
conditions. Unilever relaunched 
Persil Power, and claims that the 
problem has been remedied. 

Procter & Gamble, Unilever's arch 
enemy, has ripped into Unilever. 


MICHAEL % 
THOMPSON-NOEL J 


And Unilever - prissily - has 
agreed that "somewhere between 
research and marketing, something 
went wrong". But I wonder If Uni- 
lever's marketing department and 
advertising agency are failing to 
spot a wonderful trick. 

Years ago I was shown around 
Unilever's research laboratories at 
Port Sunlight, in the north of 
England. Everywhere I looked, 
washing machines and driers 
churned and whfaaed. The research- 
ers I was introduced to were preter- 
naturafly brainy. There were equa- 
tions on black-boards. 

It was very hush-hush. The stuff 
they won testing was doubtless a 


meek ancestor of Persil Power. 

As a result of that visit, I came to 
appreciate the intense technological 
and marketing effort that underpins 
the dull-sounding, but in fact mani- 
cally competitive, detergents mar- 
ket. Europe: £6bn a year. 

But I have a small problem. My 
clothes last too long. 1 create no 
friction, so they never wear out. 
Some of them are older than Mich- 
ael Portillo. I want them to shred 
and rot, so I can buy some new 
ones. I need Persil Power in its orig- 
inal formulation, or even something 
za nier Persil SplattU With vicious 
Persil Splatt!! I could become a new 
person. 


Unilever should stop apologising 
and switch to the attack. 


It Is easy to tease newspapers about 
their smugness and sluggishness. 
Jon Katz, a US media critic, wrote 
recently in Wired magazine that 
newspapers were besieged. “Televi- 
sion has stolen much of their news, 
magazines their advertisers and 
best writers, cable many of their 
younger readers. And the digital 
revolution has pushed them still 
closer to the walL" Newspapers 
were “the biggest and saddest losers 
in the information revolution. . .our 
least hip medium, relentlessly 
one-way, non-toteractive." 

Katz is unimpressed by newspa- 
pers' efforts to join the media revo- 
lution. So far. he says, on-line news- 
papers do not work conceptually or 
commercially. With few exceptions 
they seem to be expensive hedges 
against on-rushing technology with 
Uttle rationale of their own 

We have heard all this before. But 


Katz doesn’t think that newspapers 
are doomed to early wipeout, even 
though they need to re-attract an 
alienated public. IF newspapers are 
to invest heavily to anything, he 
says, perhaps it ought to be to 
younger, more talented, more 
diverse staffs so that they «»n redis- 
cover their vibrancy and relevance. 

I agree. I believe that newspapers 
will still be around when man is on 
Mars. But they need their own revo- 
lution. My crystal ban atoms enor- 
mous clouds of advertising expendi- 
ture forming and massing, like 
inter-stellar gas, and sweeping this 
way. But to claim their share, news- 
papers must spend mightily. 

They will have to bid competi- 
tively against other media for the 
best writers, editors, investigative 
reporters, commentators and ana- 
lysts, and for those rare souls who 
can inject pace. Hair, quirkiness, 
eccentricity and fractiousness into 
newspapers' tired veins. This sort of 
thing is called old-product develop- 
ment. It can be just as exciting as 
Persil SplattU 




T ' : ;r 


PIONEERS AND 
PROPHETS 

Mary 

Parker 

Follett 

Even m academic circles the 
name of this Bostonian 
polymath (1888-1935) 
occasionally provokes the 
question "Mary who?" 

Follett’s posthumous fame, 
however, is growing and a new 
book doe to be published to 
January* seems certain to bring 
ber work to a wider audience. 

Peppered between extracts of 
her writings on conflict, power, 
leadership and other issues 
moreover, are glowing 
testimonials from distinguished 
authorities such as Rosaheth 
Moss Kanter, Peter D nicker, and 
Henry Mlntzberg. 

“FoUett’s espousal of mutual 
problem solving foreshadows 
employee involvement, 
■participative management, 
quality circles and other 

team-based approaches to 

Involving the workforce In 
diagnosis, analysis and solution 
finding,” says Moss Kanter, 
Drucker enthuses: "Every one 
of ber comments is fresh, 
pertinent and insightful, but ber 
true Importance lies in her 
vision. She saw the society of 
organisations and she saw 
management as its generic 
function and specific organ well 
before either really 
existed. . .She was the prophet of 
management” 

A political scientist who never 
worked to business, Follett • 
applied her original Ideas in the 
. field of social work. She was 
. profoundly interested to the 
individual to groups and to 
society, developing a brand of 
democractic governance based 
<m participation and 
* responsibility. 

The seeds of late 20th century 
empowerment cross functional 
thinking and leadership styles 
are firmly planted to her 
■ writings. 

' On conflict she argued that . 
differences of opinion 
different interests should not be 
pushed under, the carpet; 
problems ought to be resolved 
jointly through searching for an 
“integrated" solution while 
Imposed settlements, however 
benevolent; were ultimately 
doomed to failure. 

Follett was eagerly listened to 
by senior managers in the 1920s, 
She developed her ideas In a 
series of lectures In New York in 
1929 and just before her death at 
the inauguration of the London 
School of Economics’ 

Department of Business 
Administration. 

Her advocacy of conflict as & 
constructive ami creative means 
of problem solving and her 
criticisms of hierarchical 
structures were out of tune with 
thinking after the second worid 
war, and ber Ideas fell Into 
neglect in the west Drucker 
rejects sexism as an 
explanation, Moss Kanter Is not 
so sure. 

The Japanese, however, were 
not so blinkered and 
incorporated much of Follett’s 
teaching into their management 
culture to the late 1950s. 

Much of the credit for 
unearthing the Follett story 
deserves to go to Pauline 
Graham, editor of tiie 
forthcoming book. Graham, now 
a freelance lecturer and 
consultant in North London, 

- discovered her “mentor” In the 
mid 1980s. 

* Mary Parker PoUett - 
Prophet of Management. Harvard 
Business School Press. Probable 
price ©ft 95 hardcover. 

Tim Dickson 



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4 


I 





FINANCIAL TIMES MONDAY OCTOBER 1 7 1994 


13 


Hilary 
mwiitas 
^ o n 
. * r °*an(i 




s- 


* 








n*iM- 


♦ 




When people get serious about business, 

they start reading Forbes. 



Forbes circulation climbs to a record high of 779,125. 

Success isn't something you will into existence. It takes drive. 
Vision. And of course, the right tools. Which is why today's top 
business executives spend more time reading Forbes than any 
other business magazine. A well-known fact reconfirmed by a 
recent independent study. After all, Forbes provides its readers 
with a candid, inside look at the events and personalities shaping 
the business world. Information they can act on. Throughout their 
careers. As evidenced by record increases in both our circulation 
and newsstand sales, the number of people serious about business 
continues to grow, if you're serious about reaching this influential 
audience, make an executive decision. Advertise in Forbes. 

Fbrbes 

CAPITALIST TOOL* 









u 


US visa waiver 

The US visa wafoer 
programme, which 
due to end this month, has 
now been extended for 
■nattier two years, writes 
MfcflMf Skaptaker. 

The programme attows 

the natforato of most 
European Union countries 
to travel to the US without 

a visa, provided they stay 

for less than 90 days. 
JowneBsta and 
government officials 
continue to need a vise. 

The legislation to extend 
the programme had been 
held up in Conpvss but 
has now been passed. 


FINANCIAL TIMES 


MONDAY OCTOBER 


17 1994 « 



Brussels train service 

Belgian railways 
expects to slat 
a regular . 
high-speed 
service from 
Brussels' MkS 
station to Waterloo. London. In 
the mklcflg of next month. . 
foflowtng last week’s 
inauguration of Belgium^ 

cross-Channel passenger train 
service. 

The service can provide up to 
15 return jotmeys aday, 
although to start there is fikaiy 
to be only ana. Eurostar trains, 
carrying up to 794 passengers, 
leave from a now terminal at 
Midi station. Fufler details, 
induefing fares, between 
London, Paris and Brussels are 
expected to be published today. 


BUSINESS TRAVEL 


Danish road/rati link 

Denmark's Prince Joachfah ' - 
became the lb«* parson to 
walk under the Great Belt 
strait at the weekend, 
through a railway tunnel 
that is Denmark’s largest . 
engineering project The • 
five-mite tramot is part of a ' 
raB and road Bnfc across the 
strait that separates . 

Copenh a gen ao the wa» 

Baffic bland of Zealand, 

from the Jutland peninsula. 

The last port of tite ' 
DKr2f ,6f» (e£27btl) 
prefect, a road bridge which 
wBf connect Zealand fro the 
island of Sproflo, bunder 
const w ctton. Trdwart 
expected to erase the Cheat 
Belt to 1996, and road 
traffic the year after. 



jfewjHgte to Beirut 

A new British 
aiffme is.due to 
start cteSy . 
non-stop Aafcus 
A320 flights v 
from London’s. 
Heathrow to Beirut on October 
28, wBb return fares starting at 
£348. In doing so, ft Is 1 " 

on con&iuing pesos in 
war-tom Lebanon. - 
Tbs aitilne, British 
Mediterranean Airways, is ■ • 
backedbya Biftish-Hsaflan- - 
Apgertfrawoonsoftxm- 
“Three yeas of peace have 
.seen stdbSty return and 
Latwwn Is once again settd 
attract tege votomes of trade - 
aid tourism" an ahtin© 
spokesman sakl ' 


Ffightirterference ‘.1 

• 'A. — ■- — — «wi|nnttsl ■ ■ • 

ACMPBwKt8fHminN>. • 

tried to open ar drqa f fs ; ‘ 

ttoftr at Mah dHh a k luf •* 

been charged vrftft trying to 

uiMi MS 

(uxv rwrr wnn an 
ffl bhfc . 

The 34 ye a r old i 
efttoen, wee asTesterfw tiun . 
an A meri ca n toftniT p-tt 
made an n aac faa rtffi e d s t op ‘ 
at gcuffle -Tacntna ahpqtt : . 
on a ffigW ftewrPalfM'.te- 
Tokyo wflfc 1681 
inl19aaif! 

: Wlhi u Sioa nB U#«a> 
twice to open a raarexft' 
door. The second tone, 
when to aircraft wa* : : 

30,000ft 


through ft* seat No one. 

hurt.' V 


4 Una strfteaodai . - .% 

■ScdndinE^Mfr^.Syatarn^' 
■check-ln st^ fa Copenhagen - 
..twra ended a three-day widest ■. 

. strife* that grounded neat of the 
cantoris European 
stoppage, ended etfler so ■ * ■ • 
afetoationcout agreed to ; 
«tiscussthe$Ufl«flre; tfemsinds. 
and tofcfrtfiero to resume; wafc . 
pWcrato sakt- ■; ‘ r...: 

L The aWr^ pintfy owned by ' : 
-Sweden, Oamak and ftorVt^, 

its rnta-cbtftoena-^ ■« :* ~ 

.ttorpessfe: (6ghto were-not 
affected tiy.fhe action, ndrw&e; ■ 
.otter ititijnes. About WQ. 

empkjyees stopped work last' ' '~ 

; Wetosctaft pratesifag a* the- ; • 
carrier's refusal fo re^stota a - 
Jurabrirtrfgcfalivtohadbeen'" -V ' 
fted. ■ • ■ ■ ■'.■ V *. 


; ■ likely weather in the leading business centres 

22 
24 

14 
14 




• u * 1™ 
ftaoktort 


§ LAngeUtt. 


m am 




ii '# 17 


ftbtouri anwiatuwh Cates 



The recession in Europe may be over, but airline passengers and hotel customers are still being cautious with their money 


Dream of luxury 
loses its appeal 



Rooms with a 
budget price 


airlines' offerings are - at best - 


A irline executives are the 
first to admit that travel- 
ling business class on 
sbort European flights 
these days is an expensive way to 
drink champagne 
This unexpected candour from an 
industry which relies on selling 
dreams of luxury travel that rarely 
live up to reality is no sudden acci- 
dent. In recent months, airlines 
have become increasingly worried 
by the continuing migration of their 
most profitable business customers 
to the economy cabins on their 
European services. 

During the past four recession-hit 
years, many business travellers 
were forced by rigid company bud- 
gets to abandon first- or business- 
class air travel. But with signs of 
economic recovery, many airlines 
were hoping to see business travel- 
lers flock back to business class. 

Although first- and business-class 
traffic has picked up, especially on 
long-distance, intercontinental 
flights, there has been no great rush 
to return to the business cabin in 
Europe. The reason is simple: busi- 
nessmen still find it hard to justify 
the heavy club-class premium on 
short flights. 

A survey by the Gemini Consult- 
ing group of 50 leaders in the Euro- 
pean aviation industry shows air- 
lines acutely aware of the challenge 
facing them. What they have to do, 
the airlines now realise, is rekindle 


passenger enthusiasm for air travel 
through product development and 
innovation. 

Kieron Brennan, the Gemini 
vice-president who conducted the 
survey, says that all the airline 
executives interviewed agree that 
the European industry now has to 
adapt to a much more consumer- 
driven market. 

“We’ve always said we were cus- 
tomer-focused, but over the next 
couple of years we are really going 
to have to prove it,” explains one 
respondent. Another says: “In the 
US the customer plays a key role in 
pushing for lower fares. In Europe 
there is no visible consumer move- 
ment yet, although we’re beginning 
to see the signs on the most compet- 
itive routes.” 

Many feel that consumer demand 
rather than European air transport 
liberalisation will become the driv- 
ing force for change. “Airlines are 
adapting to the same change in con- 
sumer attitudes that has taken 
place in the car industry.” says 
Brennan. “A few years ago people 
were proud to pay a premium to 
buy a Mercedes. They are now 
proud to pay less tor a Lexus.” 

Airlines, it is acknowledged, will 
only survive if they respond to the 
demands of air travellers. “We used 
to think that liberalisation would 
create the environment to change. 
Now we believe the customer win. 
The customer has less loyalty to 


flag-carriers than governments 
have.” remarks one respondent 

An airline executive adds: “The 
whole industry has been run for too 
long by aviation enthusiasts and 
civil servants. It’s now time for a 
consumer-led, businesslike culture.” 

The survey shows that the major- 
ity of respondents expect only one 
in five passengers to travel business 
class by 2000. 

Competition for business passen- 
gers on long-distance flights has 
already led to signifteanfr changes in 
inflig ht services and products. An 
increasing number of airlines have 
dropped their first-class cabins on 
transcontinental routes; instead 
they offer first-class service at busi- 
ness-class fare. 

In Europe, however, airlines are 
still offering “an economy service at 
a business-class fare”, as one airline 
executive puts it Many travellers 
who fly business class on long-haul 
flights feel cheated by European 
business-class standards and prices 
after being treated like kings on 
transatlantic flights, Bre nnan says. 

In future, European business- 
class passengers will have to be 
offered a wider menu of value-added 
services (for example, baggage col- 
lection and delivery, improved 
lounges, better seating, chauffeur 
services). Airlines will also have to 
speed up their rate of product inno- 
vation and continually upgrade and 
improve business-class services. 


“It simply won't be sufficient to 
launch with great fanfare a com- 
plete revamp of business class and 
then do nothing more for five 
years” says Brennan. British Air- 
ways, for example, has just 
announced a £7Gzn r elaunch of its 
Club Europe bustoes&class services. 
And high time. The original Club 
Europe brand was launched in 1988. 

Many airlines already offer some 
of these new and enhanced services. 
But the survey suggests that the 


patchy and fragmented. Such ser- 
vices are integrated only weakly 
with the airlines' sales and distribu- 
tion channels, says the report, so 
that only the most assiduous cus- 
tomers can find out about them. 

As one executive traveller says: “1 
look forward to the day I am treated 
as well as a UPS or DHL parceL” 

Paul Betts 


E uropean business travellers 
who hope their employers 
will allow than to return to 
luxury hotels now the recession is 
over should prepare themselves for 
some depressing news. All over 
Europe, hotel companies are con- 
vinced they are about to see a rapid 
increase in demand for the sort of 
budget hotel that has a Happy Eater 
restaurant attached to it 
Porte, which owns the Happy 
Eater rihain, is rapidly expanding its 
budget hotel business. It is building 
22 new Travelodge hotels in the UR 
this year, bringing the total to 114. 
In 1990, Forte had only 50 Travel- 
odge hotels in the UK. A room in a 
Travelodge costs S3R50 a night. 

Forte is due to open two new 
Travelodges in Spain over the next 
three months. It already has two in 
Ireland and four in France. 

Holiday Inn is working with fran- 
chisees and joint-venture partners 
to build 60 Holiday Ins Express 
hotels in Europe over five years. 
The hotels will be in Germany, 
Poland and the UR and will charge 
£39 a night including continental 
breakfast. 

France has the most advanced 
budget hotel industry in Europe, 
but Forte and Holiday Inn believe 
the rest of the continent is about to 
catch up. John Miller, sales and 
marketing director of Forte’s road- 
side restaurants business, says 
about 15 per cent of hotel rooms in 
France are in the budget category. 
In the US, the figure is 25 per cent 


In the UK, it is only 3 per cent 
France’s budget hotels cover a 
wide range- At the Formule 1 chain, 
run by Accor, guests share bath- 
rooms and pay FFr130 (£15.50) a 
night. Miller does not think UK 
travellers would put up with shared 
bathrooms. Mr Jean-Claude Lutt- 
Tnarm co-chairman of Formule l, 
thinks he might be right 
Accor has opened three Formule l 
hotels in the UK, but they have not 
been a success. The company has 
done better in France, where it has 
nearly 300. Accor's 400 Ibis hotels, 
which have private bathrooms and 
charge FFr260 (£31) a night, are 
probably closer competitors to Trav- 
elodge and Holiday Inn Express. 

Forte's Travelodge rooms are 
built in a factory and then assem- 
bled on site. They have en-suite 
bathrooms, but no telephones, 
although the company is consider- 
ing installing them. Holiday Inn 
Express hotels will have telephones. 

While the hotel chains are con- 
vinced riamanri for these products is 
rising, they concede that some busi- 
ness travellers will escape them and 
stay somewhere more expensive. 

Mffle r believes junior staff who 
were not allowed to travel during 
the recession will now stay in 
Travelodges. Tim Clarke, managing 
director of Holiday Inn in Europe, 
says the Express hotels will be for 
travellers arriving late. 

Michael Skapinker 




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e ration based on mutual trust. ■ DG BANK puts a the WIR PRINZIP, to which DG BANK and its staff 

premium on the partnership dimension. The neces- are wholeheartedly committed. The WIR PRINZIP 

sary rapport is achieved through analysis of each is rooted in the classic tradition of the cooper- 

party's natural self-interest, within a balanced con- ative system linking equal business partners. /. 

cept that can transform strangers into business And it has a great future ahead of it. Because it y 

friends. For both partners want to profit, both want exemplifies the central idea of partnership: that 



• 

- - 


security, in an Increasingly complex business mutual cooperation leads to mutual success. >• 

'•4 

i t 


1 o. 


Head office: DG BANK, Am Plate der Republik, D-60325 Frankfurt am Main Office ^ 

Hong Kong, London, Luxembourg, Madrid, Milan, Moscow, New York, Paris Sio da J^SST^.aiHeh.’ S., 




DGB 4 NK 4 







’fc FINANCIAL TIMES MONDAY OCTOBER 17 1994 





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ad. 




Whistleblowers blast the pirates 

Alan Cane reports on a promising start for Software Crimeline 

ance. decbrpH himcalf i. 11 « • i. - u .. «... j • i V l.i ■ ■ . . _ **!£ !? 


ance, declared himself 
satisfied. The first two days of 
operation of “Software Crime- 
line” had produced more than 
two dozen telephone calls, and 
Ihe work of sorting the genu- 
ine from the mistaken or mali- 
cious was already in progress - 
all this three weeks before the 
organisation starts to reward 
whistle-blowers in earnest. 

BSA is an aggressive indus- 
try lobby comprising the 
world's principal personal com- 
puter software suppliers. Soft- 
ware Crimeline, announced 
last week, is the latest initia- 
tive in the escalation of its war 
against software pirates - com- 
panies or individuals who copy 
software rather than pay f or 
the genuine article. The alli- 
ance reckons to have brought 
more than 500 legal actions 
against such organisations 
since 1989. 


Piracy is thought to cost the 
industry more than £S.5bn a 
year in lost revenues, almost 
half of which is incurred in 
Europe. The figure for the UK 
is £328m. The UK Federation 
against Software Theft seized 
£25m worth of illegal software 
in the first half of 1994. 

Nevertheless, Britain is one 
of only six countries where 
legal software sales exceed 50 
per cent of the market. In 
Pakistan, Thailand and the 
United Arab Emirates, for 
example, pirated software rep- 
resents 99 per cent of the mar- 
ket 

Software piracy is easily per- 
petrated and hard to detect 
Copying software on to blank 
computer discs is simple. Soar- 
ing sales figures for glossy 
manuals covering the opera- 
tion of popular pieces of soft- 
ware are one Indication of how 


easily it can be accomplished. 

Through Software Crimeline, 
individuals are being encour- 
aged to ring a hotline number 
- 0800 510510 - to report the 
use of pirated software. The 
carrot, in this case, is the 
promise of a reward of up to 
E2J50Q in the case of a success- 
ful prosecution. The scheme 
has already been tried success- 
fully elsewhere. In Australia 
there were 150 calls in the first 
week alone. In the US, a hot- 
line has proved successful 
although no reward Is offered. 

What sort of motive do peo- 
ple have for shopping their 
employers or colleagues? Cox 
accepts that a number of calls 
are malicious - made, perhaps, 
by disgruntled ex-employees 
out to settle scores. 

But most calls, he believes, 
come from people who feel 
their honesty is being compro- 


mised by being asked to work 

with illegally -copied software. 

This can happen when a com- 
pany under-estimates its soft- 
ware budget and copies mast- 
ing software. 

Cox leaves no doubt that the 
BSA is losing patience with 
companies where senior execu- 
tives plead ignorance of the 
law, and is ready to press for 
harsher action. Under Britain's 
software protection laws, pen- 
alties include up to two years' 
prison for executives of offend- 
ing companies. 


H e says: “We have a 
feeling that the pro- 
cess of education 
has been going on 
long enough. We were pre- 
pared to give people the benefit 
of the doubt at first, but now 
we are tired of the old excuses 
- 'We didn’t know’, “We didn't 


understand' - and so on". 

Cox makes the point that 
there have been changes in 
software industry practice 
which make piracy increas- 
ingly Indefensible. High soft- 
ware prices used to be blamed, 
but costs have fafltm, sharply 
in many cases. Equally, there 
were complaints about restric- 
tive licensing practices from 
large companies with a 
requirement for many copies of 
a particular program (software 
is often licensed rather than 
bought outright). Easier licen- 
sing arrangements had been 
agreed, he said. 

A survey of computer abuse 
carried out by the UK Audit 
Commission makes clear the 
kind of trouble software piracy 
can cause companies. It notes 
that one organisation had to 
pay £30,000 for new licences 
while another incurred costs of 


£100.000 after a programmer 
was caught with 60 discs filled 
with illegal p ro gr a ms. 

While nobody quarrels with 
BSA’s aims, there are some 
qualms about its latest meth- 
ods. Among the dangers is the 
possibility that a or 

greedy employee could install 
illegal software on his employ- 
er’s system - then tip off the 
BSA. 

Typically, once the BSA 
believes it has enough evi- 
dence against a company, it 
obtains an “Anton Pillar” 
order from the courts, which 
enable It to search premises 
and seize suspect computers 
and discs. 

The telephone hotline is just 
one of the ways the organisa- 
tion has for gathering informa- 
tion about illegal software use. 
But Cox has no intention of 
surrendering the element of 
surprise: There are some 
things.” he says, “that 1 am not 
prepared to talk about.” 


When you 
wish upon a 
keyboard 

W ired, the super-hip Alice RaWSthOIT 

S oU W 1 y on a high-tech 

carries a recruit- film r-hollorwro 


Dixons to open 
specialist stores 


By Neil Buckley 

Dixons, the UK’s largest electrical 
retailer, is launching a new store 
called The Link, claimed to be the 
first specialist retailer of a range of 
communications, entertainment and 
information networks and services. 

Although it will also sell equip- 
ment, The Link’s main focus will be 
helping customers select and sign-up 
to services such as mobile telephone 
networks, satellite and cable televi- 
sion networks and on-line computer 
services - the first time all these ser- 
vices have been marketed under one 
roof. 

Dixons says that being a retailer of 
the latest technology means more 
than selling hardware such as video 
recorders or computers. It also means 
combining access to a network with a 
piece of equipment This calls for a 
different store environment, with 
information and demonstrations pro- 
vided by specialist staff 

These products and services will 
be one of the fastest-growing con- 
sumer markets of the next few years”, 
says John Clare, Dixons’ chief execu- 
tive. . mrm . «... 

Sarah Carpenter; special projects 
director at Dixons, says The Link is 


unlike any retail format she has 
encountered in Europe or the US. It 
could help Dixons become a leading 
marketeer of interactive communica- 
tions services as these develop. The 
group is opening four Link stores in 
the London area, starting with King , 
ston on October 31, then Enfield, Chis- 
wick and Lewisham. Four more open 
next February and the group will 
decide next May whether to extend 
thfi rfriain- 

Although it acquired the Currys 
and PC World chains, and SQo in the 
US - later sold - this is the first time 
Dixons has launched a new concept 
Ideas for The Link developed out of 
plans for a mobile telephone 
shop. 

Stores will have large central desks, 
giving customers space to fill in appli- 
cations for services, assisted by staff 
The walls will carry information 
boards and hardware that can be tried 
out A mobile communications area 
will offer details of consumer equip- 
ment, networks and tariffs - includ- 
ing Mercury One20ne, Orange. Cell- 
net and Vodafone. 

The pager area will offer both con- 
ventional pagers and services, and 
new “calling-party pays" pagers, such 
as Mercury MiniCall and Swatch’s 



- ij&te m 

Lydt van dar Mmt 

John Clare: “These products and services will be one of the fastest-growing consumer markets of the next few years.” 


new w r ist w atch pager. The Beep. A 
section devoted to satellite television 
will include five bays where custom- 
ers can view different channels. Dix- 
ons hopes later to include cable TV 
operators. 

A telephone area will sell a wide 
range of foxes, and will also market 
BT network services, such as call 
waiting, call diversion, and caller 
number display - the first time BT 
has sold such services through a third 
party. 


A final section will be devoted to 
on-line computer services, including 
Delphi and CompuServe - both offer- 
ing exclusive services such as com- 
puter shopping, plus a gateway to 
Internet the global computer network 
- and Tel-me, a network aimed at 
business users. 

Dixons has not always eqjoyed the 
best reputation for customer service, 
but says The Link’s staff have been 
specially selected and given a three- 
week course including instruction by 


service providers. 

Stores will earn a normal retail 
margin on hardware, and agency fees 
or commission on sales of services. 

Sarah Carpenter says that Dixons 
was selling some services in its other 
stores, but that these were not 
equipped to capitalise on the opportu- 
nity. Many consumers signed-up for 
services in specialist outlets, some 
run by service-providers themselves, 
or answered ads in newspapers or 
magazines. 


W ired, the super-hip 
technology maga- 
zine, regularly 
carries a recruit- 
ment advertisement from Walt 
Disney, the entertainment 
group, bearing the slogan: “If 
you're good with a mouse, 
we've got great people, cool 
hardware and big challenges in 
advanced computer graphics”. 

It seems very likely that 
future issues of Wired could 
carry a similar advertisement 
from Disney’s latest competitor 
- the new entertainment group 
being launched by Jeffrey 
Katzenberg, who recently 
resigned as head of Disney's 
movie studios, Steven Spiel- 
berg, the Oscar-winning film 
director, and David Geffen, the 
billionaire music moguL 
The new group, like Disney 
itself, will be anxious to attract 
the cream of the new breed of 
technology buffs if it is to 
achieve its ambition of becom- 
ing a force in feature films and 
animation 

The impact of new technol- 
ogy on the entertainment 
industry not only played a piv- 
otal part in persuading the 
three partners to set up a new 
studio, but will be critical in 
determining its development. 

Steven Spielberg has made 
no secret of the fact that he 
sees the new company as a 
vehicle for his experiments 
with movie-making technology. 
The extraordinarily realistic 
dinosaurs in Jurassic Park, his 
$356m blockbuster, were digital 
creations from the computers 
of Industrial Light »nd Magic 
(ELM), the special effects labo- 
ratory set up in San Francisco 
by George Lucas, director of 
Star Wars: 

Digital technology enables 
film-makers to shoot scenes 
which would otherwise be too 
expensive - or logistically 
impossible - to fihn. 

Jurassic Park proved how 
appealing such techo- trickery 
could be. Digital effects also 
feature in some of this year’s 
box-office bits, including For- 
rest Gump, which creates the 
illusion of Tom Hanks partici- 
pating in famous historical 
events, and True Lies, the 


Alice Rawsthorn 

on a high-tech 
film challenge 
to Disney 

Arnold Schwarzenegger action 
film whose director. James 
Cameron, has teamed up with 
IBM to create his own Digital 
Domain special effects lab In 
Los Angeles. 

Spielberg is intent on further 
developing the creative poten- 
tial of digital effects at the new 
studio. Similarly, technology is 
an essential element of Jeffrey 
Eatzenberg's plans to create a 
new animation company. 

Animat ion is one of the most 
lucrative areas of movie-mak- 
ing (largely because of the high 
sales potential for videos and 
other merchandise). 

But the expense of recruiting 
large teams of stalled artisans 
has traditionally deterred new- 
comers from challenging Dis- 
ney’s dominance of the anima- 
tion field. 

The quality of animated 
films has been transformed by 
the computer-generated tech- 
niques that Jeffrey Katzenberg 
encouraged his animators to 
use at Disney, as illustrated by 
the success of The Lion King, 
one of the most elaborate ani- 
mated films ever, which took 
$2S7m in four months at the 
US box office. 

These new techniques have 
also reduced the need for 
skilled craftsmen, thereby pav- 
ing the way for the new com- 
pany (as well as Warner, one of 
the major studios) to move into 
animation. 

Finally, the technological 
revolution in movie-making 
has drawn new investors into 
the entert ainm ent industry 
from related fields that include 
electronics, information tech- 
nology and telecommunica- 
tions. As a result, there should 
be no shortage of industrial 
partners for the new studio to 
tap for in vestment 

Hollywood rumour-mongers 
have already started to round 
up likely suspects. Microsoft, 
the software giant is at the top 
of the list 


DEC tests over the Internet 


By Motoko Rich 

No intelligent consumer would 
buy a car without first taking 
it for a test-drive. So what 
about computer products? Car 
buyers go to a showroom when 
they want to try a new model 
but buyers of computer 
systems can now evaluate 
hardware or software without 
ever leaving their desks. 

Digital Equipment 
Corporation, the US computer 
maker, is allowing users of the 
Internet, the self-regulating 
global computer network, to 
test the company's Alpha 
computers by using their own 
software programs on its 
hardware. Without having to 
go near the machines, users, 
via the Internet, can tap into 
one of four Alpha computers 
located in the US. 

By activating a standard 
Internet file transfer protocol, 


they can then transfer their 
software to a DEC machine 
and effectively use the 
hardware from any range. 

So for, more than 7.500 users 
internationally have logged-on 
to try out DEC machines and 
test its product claims of speed 
and efficiency. 

James Bishop, faculty fellow 
in the department of physics at 
the University of Notre Dame, 
Indiana, says that when 
hardware had to be shipped to 
customers for testing, time was 
wasted. 

The scheme also reduces 
DEC’S marketing costs. “We 
only have to manage a handful 
of machines connected to the 
Internet, rather than running 
many systems in the 
marketplace, or loaning out a 
large inventory,” says Russ 
Jones, DEC'S marketing 
manager. Some users log on to 
the Alpha system in order to 


test their own programs. 
Software developers, for 
example, use DEC machinery 
to evaluate new codes before 
attempting to market them, 
while software users use Alpha 
equipment to check for bugs in 
their own systems. 

“We have been encountering 
problems in running certain 
software on our systems.” says 
Ignacio Lizardo, an engineer at 
United Technologies 
Corporation’s chemical 
systems division in San Jose, 
California. “By transferring 
our program axles to the DEC 
systems we can determine if it 
is a problem with our system 
or see If we need to make 
hardware upgrades.” 

DEC believes the Internet 
allows for mare rigorous 
testing of its products. “The 
feet that it Is in the puhhc 
domain on the Internet allows 
people to satisfy themselves 


that it is a robust system when 
they combine the hardware 
with, their own software," says 
Olivier DeWandre, programme 
manager for education and 
research at DEC Europe. 

Software buyers can also test 
packages before they band 
over their cash. Unipalm, the 
UK’s largest provider of 
Internet connections, allows 
network users to run several 
progr am s via the Internet 
before deciding to purchase. 

Users who want an 
evaluation copy of a software 
program are given a “key" - 
not unlike an ATM pin number 
- that allows them to 
download programs on to their 
systems. The programs are 
“time-bombed" so that they 
work only for a limited period. 
“If you like the program you 
get in touch with us and we 
will sell you a permanent key,” 
says a Unipalm spokesman. 


PARTNERSHIP 
AND COOPERATIONS 



THE ENTREPRENEURIAL SPIRIT OF THE SABANCI GROUP -THE LARGEST PRIVA TE CONGLOMERA TE 
IN THE FINANCIAL, INSURANCE, INDUSTRIAL, COMMERCIAL, AND-AGRICULTURAL SECTORS IN TURKEY- 
SPEAKS FOR ITSELF IN ITS FOREIGN INVESTMENTS, JOINT-VENTURES AND INTERNATIONAL COOPERATIONS. 

SABANCI'S INTERNATIONAL RELATIONS: 


100 years of London pride 

Colin Amery on centenary celebrations for the city’s survey 

S nmPtimes nubile money ars, historians and measurers torian and Edwardian states- great city whose exist! 
iT wiselv One in post-Thatcherite Britain is men like Sir John Lubbock, record we seek to mark dov 

vears ago a something of a small miracle, author of the first Ancient to preserve of it for her cl 
SIrnartaihle nroiect was The survey started as a result Monuments Act of 1892. dren and those yet to co: 

remarxa n t fmm * eroun led bv Drainer much of the 19th cen- whatever is best in her past 


S ometimes public money 
is spent wisely. One 
hundred years ago a 
remarkable project was 
started that has hwome 
famous as the Survey of Lon- 
don. Its centenary is being 
marked by a display at the 
Museum of London m die Bar- 
bican (until November 27), and 
a slim volume has been pro- 
duced by the survey's general 
editor, Hermione Hobhouse, as 
a permanent reminder of the 
importance of a rare a™ 
turning work of schoforshjp. 

The idea of carefull> rec ' or “' 
ins the buildings of a whole 
einital citv in measured words 
and drawings could have * 
pedestrian and ^onpG- 
anyone interested m 
ture. the existence of the sur 
vcy is as reassuring » tjj* 
presence of Soint Bartholo. 

mew’s Hospital is to the Citj oi 

2 mkss«£ 

aSSsss 

ihss'BjSs 

dapper SwE W— W 
°T"^ 1S S un ;vol of rn 

smau’tooup of dedicated schol- 


ars, historians and measurers 
in post-Thatcherite Britain is 
something of a small miracle. 
The survey started as a result 
of pressure from a group led by 
the great arts and crafts archi- 
tect C R Ashbee in the 1890s, 
and thrived initially with the 
support of the London County 
Council. 

That support was continued 
by the Greater London Council 
until its abolition in 1986. The 
GLC had nurtured a specific to 
look after the historic architec- 
ture of London. Its historic 
buildings division was a pio- 
neer in the care of listed braid- 
ings, and became an exemplar 
to English local authorities. 

When politics intervened in 
the 1980 s, the division was 
taken over by a quango, 
English Heritage. Thankfully, 
someone somewhere was wise 
enough to see that the schol- 
arly survey belonged else- 
where, so it was given a home 
in a non-departmental public 
body, the Royal Commission 
on the Historical Monuments 
of England. _ 

This was inspired, because 
the founders of the royal com- 
mission had an intellectual 
sympathy with the founders of 
the London survey. There are 
portraits in the exhibition at 
the Museum of London of Vic- 


torian and Edwardian states- 
men like Sir John Lubbock, 
author of the first Ancient 
Monuments Act of 1892. 

During much of the 19th cen- 
tury, government action to pre- 
serve or care for historic build- 
ings had been ineffectual- It 
took great energy and political 
manoeuvring by groups and 
individuals to change all 
As a result, the end of the 19th 
century saw the formation of 
the National Trust, the Society 
for the Protection of Ancient 
Buildings (created by William 
Morris and his friends), the 
London Society and the Lon- 
don Typographical Society. 


W e have become 
used to the sys- 
tem that evolved 
at that time, but 
it took a series of campaigns to 
alert politicians to the need to 
preserve the past It was the 
architect C R Ashbee who had 
the idea of creating local watch 
committees to draw attention 
to the historic fabric of the par- 
ishes of London, and to spot- 
light areas or specific buildings 
under threat 

In the words of Ashbee: “We 
plead that the object of the 
work we have before us is to 
make nobler and more 
humanly enjoyable the life of a 


great city whose existing 
record we seek to mark down; 
to preserve of it for her chil- 
dren and those yet to come 
whatever is best in her past or 
fairest in her present. .and to 
stimulate among her citizens 
that historic and social con- 
science which to all great com- 
munities is their most sacred 
possession." 

The work of the London sur- 
vey represents in elegant and 
disciplined form an expression 
of those ideas. The display at 
the Museum of London shows 
many of the glories of London, 
which are also manifest in the 
great volumes that have 
appeared during the last 100 
years and which continue to be 
produced by a dedicated team. 

There i£ a chanra to hear 
much more about the work of 
the London survey in a series 
of lectures on Mondays (until 
November 17) at the Tiinnero 
Society, Burlington House, Pic- 
cadilly, London. Further infor- 
mation can be had from the 
Survey of London, Newlands 
House, 37-40, Berners Street, 
London, Wl. 071-631 5065. 

London Survey'd: the work of 
the Survey of London, 1834-1994, 
is published by The Royal 
Commission an the Historical 
Monuments of England, at 
2735. 


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16 


FINANCIAL TIMES 


MONDAY OCTOBER 17 1994 


PEOPLE 



The commuter who will 
regulate the railway 

Competition lawyer John Swift tells Charles Batchelor that he is 
intrigued by the chance to change sides and start setting the rules 



J ohn Swift's daily train 
ride from Didcot Park- 
way, Oxfordshire, to 
Paddington. London, 
takes just over 40 min- 
utes, a journey time 
that has stayed the same for 10 
years, despite the investment 
that has gone into Britain's 
railway. 

Swift's journey to work may 
not have changed, but almost 
all other aspects or the system 
are in flux. As the recently- 
appointed regulator of an 
industry which is being made 
ready for privatisation, this QC 
and competition lawyer will 
play a starring role in shaping 
the railway of the future. 

Swift, who has an engagingly 
dry sense of humour, is not the 
only new player in the rail 
game. Robert Horton, combat- 
ive head of Rail track, which 
owns the rail infrastructure, 
and Roger Salmon, the more 
reflective merchant banker- 
turned-franchising-director, 
will also help forge the new 
network. But they and others 
will require Swift's approval 
for any deals they put 
together. 

At present. Swift and his 
team are attempting to Impose 
order on the mass of agree- 
ments which are being drawn 
up between the 50 or so organi- 
sations that have replaced the 
monolith that was British Rail. 

It is Swift's job to act as arbi- 
ter between the parties - to 
ensure fair play, for example, 
between Rail track, say, with 
its monopoly of the 10 , 000 -mile 
network, and a company such 
as Gatwick Express, which is 
hoping to win a franchise over 
a mere 27 miles of track. 

Swift has already given 
notice of his intention to inter- 
vene vigorously. The consulta- 
tion process he initiated last 
July suggested that Rail track 
would have its work cut out 
justifying the returns the Trea- 
sury expects it to make on its 
assets. 

Swift chooses words care- 
fully, but his intentions are 
clear. He says: “If I were to 



form the view that Railtrack’s 
charges were such as to give it 
a disproportionate return 
against the risks it is running, 
or its costs, then you come 
close to an abuse of a domi- 
nant position in European 
law." 

Although Railtrack will have 
a dominant position by virtue 
of its size and sole ownership 
of the track. Swift says he is 
not there to pillory a particular 
company but to strike a bal- 
ance. 

"The train operators must he 
treated fairly if the consumer 
is to get a fair deal, but 1 am 
not here just to defend the lit- 
tle guy. Railtrack must have 
confidence that it can come to 
us and justify a charge without 
feeling that we are in one 
camp." 

He wants to be a positive 
force in the industry rather 
than a threat to its stability. 
“Very formidable powers have 
been conferred on me by par- 
liament but I do not want to 


create regulatory uncertainty," 
- thereby creating additional 
risk for investors. 

Nor can he take such a pur- 
ist view that he imposes impos- 
sible obligations on the fran- 
chising director. “I cannot 
burden the franchising director 
with a set of agreements he 
cannot sell in the market 
place.” 

Swift is there not only to 
hold the ring between the com- 
mercial players; he must also 
take into account the govern- 
ment's role. The wording of his 
consultation document showed 
clearly that in some areas he 
was questioning the govern- 
ment's calculations in prepar- 
ing the railways for privatisa- 
tion. 

For example, he queried both 
the rate of return of 56 per 
cent, rising to S per cent over 
four years, which the Treasury 
has insisted on for Railtrack, 
and also the £6.5bn valuation 
put on its assets. 

Both might need to be much 


Timor HunphrtM 

lower, he suggests. 

T have to approach this in 
the most fundamental manner. 
If it appears that the asset 
value is questionable or that 
the rate of return requires revi- 
sion, this is an entirely appro- 
priate matter for the regulator 
to consider. 

“Anything else would be to 
rubber-stamp the proposals of 
the dominant sharehniriar [the 
government].” 

Much of his time fn the past 
few months has been spent 
putting together a team - at 
present about 50-strong - to 
deal with the mass of detail 
involved In establishing a new 
rail structure. 

He is now 54, and was head- 
hunted to lead the Office of 
Rail Regulator after 25 years at 
the Bar. He spent much of the 
1980s representing large corpo- 
rations, including IBM, in UK 
and European investigations 
into competition issues. He 
was also an adviser in some of 
the big takeover battles of the 


period, including the bid by 
GEC and Siemens for Plessey, 
and of Guinness for Distillers. 

Having defended many cli- 
ents against charges of anti- 
competitive behaviour. Swift 
was intrigued by the chance to 
change sides and start setting 
the rules. He became special 
adviser to the government on 
rail privatisation before taking 
on the post of regulator last 
April 

There was tittle in Swift's 
background to suggest a legal 
career. The family company of 
Thomas Swift & Co was a firm 
of Liverpool stevedores 
founded in the 1860s. Swift 
seemed set to continue in the 
family tradition, hut won an 
open exhibition to University 
College, Oxford, where he read 
classics and philosophy before 
switching to law. 

White he was away at uni- 
versity, the family firm was 
sold and Swift went on to pur- 
sue postgraduate international 
studies at the Johns Hopkins 
University in Bologna, Italy. 
After lecturing in law at his 
old college, he qualified as a 
barrister and entered commer- 
cial practice. 

Like many outsiders who 
have become involved in the 
industry, Swift is an enthusiast 
for rail's potential and foresees 
a “virtuous circle of better and 
more frequent services'* 
attracting more passengers. 
More personally, an efficient 
railway allows him to live in 
rural Oxfordshire where he can 
pursue his enthusiasm for gar- 
dening and exotic shrubs white 
commuting daily to central 
London. 

Swift is acutely aware of the 
challenges his group faces. 
“We are going to be an 
extremely high-profile organi- 
sation in contentious areas of 
politics and industry." 

One of the arcane gWRs he 
learned while training to be a 
stevedore was how to splice 
wire rope. Tying together the 
disparate strands of the rail- 
way industry will be no less 


IN THE NEWS 


Araskog leaves 
ITT succession 
still open 

Travis Engen may have 
emerged as the front-runner to 
take over the top job at nr, 
the giant US manufacturing, 
financial serivzces and hotels 
conglomerate, but the race is 
still far from over, writes 
Richard Waters. 

The 50-year old Engen. who 
has been on the fast track 
since joining ITT as head of 
one of its defence electronics 
businesses years ago, was 
last week given operating 
responsibility for rrrs 
insurance and communications 
businesses. On top of his 
previous responsibilities, this 
leaves him in charge of 
businesses which generate 
$l7.4bn of the group's $22£bn 
in sales. 

Engen takes over his new 
responsfinties from Dale 
Comey. 52, himself considered 
a potential successor to ITT 
boss Rand Araskog, until he 
unexpectedly announced his 
retirement last month. 

A lot could still happen 
before Araskog reaches the 
company’s compulsory 
retirement age of 65 in October 
3996, though. It was notable, 
according to one FIT insider, 
that Araskog did not take the 
opportunity last week to 
anoint Engen clearly as his 
heir apparent by naming ’ him 
president and chief operating 
officer. 

That could still leave the 
door to the chairman's office 
ajar for Robert Bowman, 39, 
the chief financial officer. 
Though considered a long shot 
for the job, Bowman has 
wowed Wall Street in his two 
years with the company and 
has been talked about as a 
future ITT boss. 

Meanwhile, there seems little 
chance of Araskog going before 
his two years are up. “We’ll 
have to drag him out of here 
screaming as it Is,” says the 
insider. 


EvA: audacious 
optimism 

Eugene van As, the man who 
engineered South African 
paper producer Sappi’s Sl.Gbn 
takeover of US company S.D. 
Warren last week, has long 
had a reputation as one of 
South Africa's most aggressive 
and audacious businessmen, 
writes Mark Suzman. 

An Afrikaner by birth, van 
As speaks fluent English and 
German and has been Sappi’s 
chief executive since 1978, 
becoming executive chairman 
In 1991, During that period, 

through a number of 


has transformed Sappi from 
being a mid-size South African 
company to one of the world’s 
largest paper producers. 

Known within the company 
by bis initials EVA, van As is ' 
widely admired as a tough, 
no-nonsense manager with a 
fine grasp of the details of the 
paper business and an 
ambitions, but impressive 
vision ofSappfs future a a a 
global paper company. 

Nevertheless, there is also 
suspicion, particularly among 
shareholders, that be has a 
tendency to put his 
empireJjuilding ambitions 
ahead of their interest Over 
the past decade be has 
consistently made new deals 
just when more conservative 
people might be consolidating 
existing operations.. 

ffis first big gamble was the 
construction of a R1.6bn Kraft 
paper mill in tire eastern 
Transvaal in the early 1980s. 
Then, in 1988, Sappi picked up 
Coortaulds’ huge southern 
African pulp interests when 
the UK company dlslnvested. 
In 1990, van As began Sappi's 
international expansion 
programme with the purchase 
of five UK paper mills, and in 
1992 bought German-based 
Hannovter Papier. 

Despite van Ax’s 
irrepressible optimism, 
however, nearly all the deals, 
and particularly the 
Hannovter takeover which 
seriously dented earnings over 
the past two years, have 
proW very difficult for Sappi 
to digest As a result toe 
company has at various times 
been fareed to take drastic 
action, such as suspending its 
dividend, before returning to 
an even keel. 

Now, just as Hannovter 
appears to have tamed the 
comer, van -As has taken his 
biggest gamble yet with the 
highly leveraged Warren deaL 


ss 

But as one analyst notes 
succinctly. “Wba^ r 

may think of 
certainly has got balls. 

Musical chairs 

at Westpac 

Last week’s changes at 

Westpac, the Australia i bank, 

have increased options for 
succession to the managing 
director's chan*, which will be 
occupied by expatriate 
American Robert Joss until 
early 1998, writes Bruce 

Jacques. 

Joss, who earned tns 
reputation reorganising U6 
bank Wells Fargo, has 

m II A* f 


rea raigueu ^ w ~ 

internal contenders ana 
brought in former Citibank 
Australia chairman, Michael 
Cannon-Brookes. 

Cannon-Brookes, currently 
pianaping director of law firm 
preehiD Hollingdale and Page, 
has been appointed Westpac 's 
group executive, operations. 
Tbe new position confers 
stewardship of the bank's 
burgeoning support operations 
and reports directly to Joss. 

But the bank's internal 
chang es, styled by Joss as a 
new focus on performance and 
growth following an era of 
internal repair, may hold more 
clues to the succession. 

They include moving the 
hi g h profile former Treasury 
bureaucrat, David Morgan, 
from retail banking to bead a 
new institutional mid 
international banking division. 
Morgan's position at retail, 
which controls the bulk of the 
bank's assets, has been take n , 
by former institutional 
banking bead, Owen van der 
Wall 

Biggest promotion in the 
Bhuffle has gone to Barry 
Robertson who is overseeing 
the bank's extensive problem 
asset sale programme as chief 
of property finance and asset 
management He adds the 
commercial banking division 
to his duties. 

Speculation on the changes 
has centred around Morgan 
who was touted for the top 
post before Joss was appointed 
last year. Morgan's new 
assignment has perhaps 
unfairly been interpreted as a 
classic sideways move. 

But it would scarcely be out 
of character for Joss to play 
management musical chairs at 
least once more. 



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London - 7 & 8 November 1994 

This annual meeting - the eighth in a successful series arranged jointly with Power in 
Europe - will examine how electricity utilities around the world are responding to a 
more competitive environment. 

ISSUES INCLUDE: 

• California's Plans for Deregulation 

• Stimulating Greater Competition in Europe’s Electricity Markets 

• Cross-Border Purchasing of Electricity 

• The Nuclear Dilemma in Eastern Europe 

• New Fuels, New Technologies in Power Generation 


SPEAKERS INCLUDE: 

• Commissioner Norman D Shumway 
California Public Utilities Commission 

• Mr Hans Lundgren 
Adviser 
Vattenfall AB 

• Mr Ian Brown 

Senior Adviser 

Hungary-EC Energy Centre 


Mr Richard Coldwell 

Head of Government & Overseas Relations 

The National Grid Company pic 

Mr Michael Brown 

Secretaiy 

Cogen Europe 

Dr Gregory J Yurek 

President & Chief Executive Officer 

American Superconductor Corporation 


Financial Tunes Conferences in association with FT Newsletter Power in Europe 

For information about Business Development opportunities please contact Lynette Northey on 071 8 14 9770 


WORLD ELECTRICITY 

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FINANCIAL T IME S MO] 


>AY OCTOBER 17 1994 


17 


EDINBURGH 

The Rambert 
Dance Company, ' 
reborn and with 

Christopher Bruce as Its 
hew director, launches a 
week's season at the Festival 
Theatre. Edinburgh, on Wednesday 
wrttl hw programmes of new work. 


VIENNA 

Europe's biggest and most popular 
■ contemporary music festival, Wien 
Modem, opens on Sunday, Founded 
by ClatJtfta Abbado in 1988, the 
.festival has a special focus this year 

cm American composers, ted by 
Morton Fridman and George 
Crumbi Wien Modem dominates 
concert Ilfs in the Austrian capital for. 
• 9 month. A general pass costing £40 
teta you !n to more than 4Q events, 
Inducing concerts by Abbado and ■ 
other leading contemporary music 
interpraters. 

COPENHAGEN 

The Royal Danish Ballet presents a 
programme of new choreography, 
including a creation by Kim 
Brandstrup, at the Royal Theatre. 


£t%'~ 










AMSTERDAM 

A major retrospective Of the 
late 19th century French 
painter Odilon Redon opens 
at the Van Gogh Museum on 
Friday. It tarings together 
180 works, including some 
important pieces which have 
ody recently come to light. 
The aim is to explore 
Redon's development, 
sources and influence, and 
to demonstrate how the 

dreamlike nature and 
Symbolist aspects of Ms 
work provided a link 
between 19th century 
Romanticism and 20th 
century Surrealism. The 
exhibition comes from 
Chicago and moves to the 
Royal Academy in London in 
February. 


Royal Opera and the twisted Ring 

Daved Murray looks at why the new cartoon-style version of Das Rheingold led to booing at Covent Garden 


to | r ~B" H here was tempestuous 
| booing after the Royal 

■ Opera's new, cartoon- 

I style Das Rheingold last 

■* Thursday. It Bounded 

genuinely angry and disappointed, 
not orchestrated in advance, and it 
was quite specific. Once the soloists 
and the conductor, Bernard Haitink, 
had been warmly applauded, one 
after another, the producer and 
designer were greeted with howls of 
fury on a truly Wagnerian scale, 
unprecedented - within recent 
memory, anyhow - at Covent Gar- 
den. 

You might think* Wagnerians are 
a conservative lot, they want all the 
hoary old paraphernalia intact, and 
the story enacted with uncritical 
piety. The Wagnerites, here includ- 
ing many Wagner-lovers who were 
seeing their first Ring in the flesh, 
would retort: this Rheingold produc- 
tion is unforgivably silly, facetious, 
inconsequent, diminishing. Yet it is 
worth remarking that on the next 
night, Die Walkdre - staged in just 
the same spirit - earned as much 
delighted applause as booing: less 
newsworthy, but an interesting 


fact. The seeds of the trouble (hon- 
estly fated, as I think) lay in Wag- 
ner's own notion of the 
Gesamthmstwerk. the complete art- 
work - which could only be opera - 
in which everything heard and seen 
should be dictated by an overriding 
idea. In Wagner's case that was 
easy; his own taste was for pictur- 
esque naturalism, and at Bayreuth 
he used to supervise every detail of 
the sets, the costumes, the wigs, the 
action. Long after he died, the fam- 
ily establishment that Bayreuth 
became was still dedicated to pres- 
erving all those details. 

Before then, producers and 
designers were barely nodded to. 
Their tasks were respectively to 
organise the chorus and help the 
singers avoid bumping into each 
other, and to illustrate the libret- 
tist’s notional locales attractively, 
and when appropriate impressively. 
Earlier composers - Monteverdi, 
Mozart - were often closely 
involved with the staging, but in 
the later 19th century the burgeon- 
ing of operatic apparatus made that 
unfeasible for anyone less despoti- 
cally privileged than Wagner. When 


Wagner died, however, the concept 
of the Gesam tfams ttoerk lived on; 
and who, in the absence of the origi- 
nal genius, was to realise it? 

Part of the problem, as Wagner- 
ian s outside Bayreuth discovered, 
was that literal adherence to Wag- 
ner's detailed stage prescriptions 
soon looks naff, fusty, lifeless. Our 
tastes in stage manners change. 
The Royal Opera's clever producer 
and designer, Richard Jones and 
Nigel Lowery, must have decided 
early on that there was no mileage 
to be got out of staging Alberich’a 
transformations into dragon and 
toad for real, nor the entry of the 
gods into Valhalla across the rain- 
bow bridge, nor the wild ride of the 
Valkyries. 

Part of the answer came from two 
visionary designers, Edward Craig 
and the Swiss Adolphe Appia, and it 
was driven home by Wagner’s 
grandson Wieland. Simplify every- 
thing, even the visible action; take 
fussy visual details as read, and 
eliminate them; use modern light- 
ing to set the stage suggestively and 
strip it down to an arena for the 
singing actors. Above all, honour 


the concept of the work - which 
may have to be winkled out from its 
old-fashioned format. 

Never mind that some great 
operas seem not to be based on any 
“guiding concept” at all; for Wag- 
ner’s, at least, we have the compos- 
er’s own testimony that his were. 
Now, Der Ring des Nibelungen is a 
heady brew of despairing idealism 
and political prophecy, Jungian 
mythology before its time and 
importunate Affekt, fake-primeval 
epic and ripe 19th-century melo- 
drama. If there really was some 
overriding Wagnerian conception of 
the whole, to grasp it we should 
need to reformulate it in our own 
modem terms - which are inexora- 
bly different 

Ring producers in the 1970s and 
1980s liked to fix it to some one 
modem concept of political power, 
or class resentment, or familial 
tragedy. The peculiarity of the 
Jones/Lowery staging is simply that 
it is a pure post-modernist affair, 
where the designer's fancies have 
equal weight with anything else. It 
offers no all-in reading of the 
operas, but plays catch-as-catch-can 


with any ideas that they happen to 
trigger off, with visual cues taken 
from Picasso, Ernst, Klee and oth- 
ers too numerous to mention. Mak- 
ing the giants Fasolt and Fafner 
into Siamese twins who share a suit 
is one such. Others include garbing 
the Rhinemaidens as gross rubber- 
ised nudes, having Fricka as well as 
Froh and Danner grow a long beard 
when deprived of the golden youth- 
apples. and putting BrOnnhUde into 
a tracksuit with a Hallowe’en top 
and a dinky cheerleader’s skirt 
During the innocent- a ge-of-the- 
world prologue, the Rhinemaidens 
had to weed their way among a 
horde of strange, blue-uniformed 
persons hustling in slow motion 
toward stage left, reminiscent of 
Thmter’s cartoon for “The Day the 
Dam Broke” but quite unexplained. 

In Die Walkitre, those personages 
became corn-dolly figures with lofty 
headdresses. One of them, preter- 
naturally tall, served as the tree 
from which Siegmund must draw 
the magic sword, and he had plainly 
outlined shoulder-pads. At the 
crunch point, Siegmund and Sie- 
glinde pulled at his scarecrow arms 


in opposite directions. Fricka's cart, 
originally “drawn by rams", was an 
armoured car: okay, but did it have 
to sport push-button windows? 

For the epic battle which culmi- 
nates in Siegmund's death, the 
lights go out at the crucial moment; 
and come on again, alter an embar- 
rassing pause, to reveal the remain- 
ing four characters in an absurd 
low-budget-sitcom row at the grave. 
The brute Handing is not felled by 
Wotan’s scathing gaze, but scram- 
bles off unharmed. Cruellest of all, 
when the loyal but guilty Brtin- 
nhilde prevails upon her father to 
mitigate her sentence - not to be 
snatched up by the first comer, but 
only by a great hero - and the 
heart-tearing crescendo reaches its 
climax, instead of the intended 
father-daughter clinch we have 
Wotan breaking suddenly away and 
retreating across half the stage. One 
of the great cathartic moments in 
opera is reduced to something 
shrinking and evasive. 

T his Rheingold founders 
upon inconsequence and 
sheer lack of purpose. At 
the close of the last 
Royal Opera Rheingold, 
Gfltz Friedrich had the effete gods 
tripping up Georges Guetary’s 
“Stairway to Paradise” as deca- 
dently as could be, but at least they 
thought they were going some- 
where. Here they do nothing but 
chase a falling star, literally and 
ineffectually - and utterly at odds 
with Wagner’s trrumpballst music, 
though like all the rest of the score 
Haitink judges it to a nicety. 

Even John Tomlinson's superbly 
robust Wotan can make little of 
that, and in the earlier stages 
Coven 1 Garden’s regular Alberich, 
Ekkehard Wlaschiha, is hobbled by 
being turned into a mere figure of 
fan. Robin Leggate’s artful Mime 
awaits Siegfried for his fruition. 
Commendations to Paul Charles 
Clarke’s Froh and Peter Sidhom's 
Donner for services in difficult cir- 
cumstances, and to Jane Henschel, 
whose distinguished Fricka at last 
escapes her caricatured guise in Die 
WaUcDre; and to Gwynne Howell's 
unexpectedly sensitive Fasolt. Car- 
sten Stabell's Father and Rita Cul- 
Bs’s Freia. 

Robert Tear’s Logs is of course 
incorrigibly engaging and musical 
In Die Walk&re, Ulla Gustafsson's 
very young, shy Sieglinde wields an 
affecting timbre and brave purpose, 
Poul Eluting's Siegmund adds a 
raw, vulnerable edge to a finely 
developed portrayal (stopping short 
of the ultimate exposure), and Mat- 
thias HOUe is a Hun ding of sterling 
menace. Hie great discovery is the 
tall American Deborah Polaski’s 
Brflnnhilde: recklessly heroic sing- 
ing, and a rare degree of whole- 
hearted commitment. With some 
more intimately searching tone-col- 
our, she must soon be one of the , 
great Wagner singers of our day. 


Nash Ensemble 

Lighting 
up the 
Wigmore 

The Nash Ensemble, which over the 
last three decades has established 
itself as one of Britain's foremost 
chamber groups, invests so much in 
its performances that each concert 
becomes a special occasion. So 
much so. that Saturday's pro- 
gramme at the Wigmore Hall cele- 
brating its 30th anniversary needed 
no “gala" trappings: it was imagi- 
natively put together and no less 
imaginatively played. 

The Nash musicians are almost 
legendary for being great commu- 
nicators: they play with an obvious 
sense of enjoyment, balanced by 
that seriousness of approach that 
makes them such polished and 
stimulating performers. They are 
dedicated to exploring the byways 
of the repertory - the group's 
make-up gives it versatility - with a 
special commitment to new music. 
They are equally noted for their 
interpretations of French music. 
Indeed, Saturday's programme, the 
first in a series of six entitled A 
Golden Age of Parisian Music, was 
the start of a long birthday celebra- 
tion. Between now and March, the 
Nash players will be covering the 
work of 13 composers from Saint- 
Saens to Poulenc, and providing 
audiences with many a rare treat 

We heard four composers on Sat- 
urday, beginning with Albert Rous- 
sel’s busy Divertissement for piano 
and wind quintet It made a piquant 
curtain-raiser, a complete contrast 
to the Ravel Trois Potmes de StC- 
phone MaUarmi that followed, with 
Sarah Walker the consummate solo- 
ist. She projected the poet's lines 
with intensify against the shimmer- 
mg accompaniment of the two 
flutes, two clarinets, string quartet 
and piano. Saint-Saens’s Septet 
drew the audience back a musical 
generation to a more robust idiom 
and very different sonorities. It is 
not top-drawer Saint-Safins - the 
melodies are unadventurous, often 
unmemorable - but the Nash’s 
smiling, spirited performance made 
good its shortcomings. 

The second half of the evening 
was devoted to two works by Ernest 
Chausson: the Chanson perpetuelle. 
one of his last works, also exists in 
the version with piano quintet 
accompaniment performed here. 
Once again, Sarah Walker floated 
her mezzo with a perfect balance of 
ardour and lyricism. A ravishing 
performance of Chausson’s Con- 
certo for violin, piano and string 
quartet rounded off the evening, 
with Ian Brown the virtuosic piano 
soloist, and the violinist Marcia 
Crayford alert to the work's deeply- 
felt emotion. This was music-mak- 
ing that brought a reminder of how 
the Nash Ensemble has enhanced 
the London music scene, and it 
whetted the appetite for more. 

John Allison 



% 


1 1 Interna tionalm 

AB 

ITS 

GU 

ID 

a 


BERLIN 


i Linden The 
reduction of 
tonight and 


UK 

m Clark. A 

mann's 
rs In the 
I by Rend 
aded by Janet 
15 4494) 
reek's 

i Dew’s new 
jhenierwith 
Marglson and 
i be nozze di 
ZauberfliAe- 
n Fri features 

■tome. Neil 


jnboim 

armonic 

Sun 


production of Goldoni's Country 
trilogy, directed by Erik Vos 
(890023). Peter Zadek’s Vienna 
Festival production of Shakespeare's 
Antony and Cleopatra can be seen 
at the Berliner Ensemble, with a cast 
headed by Gert Voss and Eva 
Mattes (282 3160). The Deutsches 
Theater presents a British 
Playwrights Week from Oct 25 to 30 
in association with London's Royal 
Court Theatre. New plays by Martin 
Crimp, Kevin Elyot, Meredith Oakes, 
David Graig and David Spencer will 
be performed In German (2844 
1225) 


■ NEW YORK 

THEATRE 

• Uncommon Women And Others: 
a revival of Wendy Wassersteln's 
play about friends at a small New 
England women's college, who meet 
for tea and then for a reunion six 
years later. A Second Stage Theatre 
production directed by Carole 
Rothman. In previews, opening Oct 
26 (Lucille Lortel, 121 Christopher 
St 239 6200) 

• Three Tall Women: a moving, 
poetic play by Edward Albee, 
dominated by the huge, heroic 
performance of Myra Carter. She, 
Jordan Baker and the droll and 

delightful Marian Sekiss represent 
three generations of women trying to 
sort out their paste promenade, 

2162 Broadway at 7Gth St, 239 
6200) 

• Angels in America: Tony 
Kushnerfs two-part epic conjures a 
vision of America at the edge of 
disaster. Part one Is Millenium 
Approaches, part two Perestroika, 
played on separate evenings. The 
cast indudes F. Murray Abraham 


(Walter Kerr, 219 West 48th St, 239 
6200) 

• Philadelphia, Here 1 Comet 
Roundabout Theatre Company’s 
re vivai of Brian Friers 1964 Irish 
drama, with Milo O’Shea, Robert 
Sean Leonard, Jim True and Pauline 
Flanagan. Directed by Joe Dowling. 
Final week (Roundabout Broadway 
at 45th St 689 8400) 

• An Inspector Calls: J.B. 
Priestley’s 1845 mystery In a 
stunning re-interpretation by 
Stephen Dai dry. first seen at 
Britain's National Theatre (Royqle, 
242 West 45th St 239 6200) 

• Guys and Dolls: a top-notch 
revival of the 1950 musical about 
the gangsters, gamblers and 
good-time girls around Times 
Square (Martin Beck, 302 West 45th 
St 239 6200) 

• Carousel- Nicholas Hytner’s 
bold, beautiful National Theatre 
production from London launches 
the 1945 Rodgers and Hammeratetn 
musical towards the 21 st century 
(Vivian Beaumont 150 West 65th St 
239 6200) 

• Kiss of the Spider Woman: pop 
star and ax-Miss America Vanessa 
Williams has taken over the title role 
m the long-running Kander and Ebb 
musical directed by Harold Prince 
(Broadhurst 235 West 44th St 239 
6200) 

• Crazy for You: Gershwin's tunes 
and Susan Stroman's choreography 
are the central pleasures of this light 
and frothy entertainment, now In its 
third year on Broadway (Shubert, 
225 West 44th St 238 6200) 

• Blood Brothers: Wray RusselPs 
musical about twins who, separated 
at birth, eventually meet and tan In 
love with the same girl. The cast 
includes Carole King (Music Box, 


239 West 45th St 239 6200) ' 

OPERA/DANCE 

Metropolitan Opera This week's 
highlights are Arabella tonight and 
Fri with Kiri te Kanawa and Marie 
McLaughlin, Tosca tomorrow and 
Sat with Carol Vaness and Luciano 
Pavarotti, and Le nozze di Figaro on 
Wed with Bryn Terfel and Dawn 
Upshaw. This month's repertory also 
includes La boheme and Cav and 
Pag (362 6000) 

State Theater New York City 
Opera's autumn season runs till Nov 
20. This week's performances are 
daily except tonight and Wed, and 
feature Borodin’s Prince Igor, 
MefistofeJe, Madama Butterfly, La 
boheme, Die Zauberflflte end 
Carmen (870 5570) 

CONCERTS 

Carnegie Han Emerson String 
Quartet with pianist Menahem 
Pressler, give a recital tomorrow 
featuring works by Dvorak and 
Janacek. Roger Norrington conducts 
the Orchestra of St Luke's on Sat in 
a Tchaikovsky programme featuring 
pianist Jon Klmura Parker. Dennis 
Russell Davies conducts the 
American Composers Orchestra on 
Sun afternoon in works by Sessions, 
Lerdahl and Huss (247 7800) 

Avery Fisher HaH Paavo Berg fund 
conducts the New York 
Philharmonic Orchestra tomorrow In 
works by Kokkonen, Sibelius and 
Prokofiev, with violin soloist Midori. 
Thurs, Frf morning. Sat arid next 
Tues: Zden&k Macal conducts 
Musorgsky, Stravinsky and Berlioz, 
with violin soloist Co- Liang Un. Fri: 
Seiji Ozawa conducts Boston 
Symphony Orchestra in Berikaz. Sun 
afternoon: Richard Goode {days 
Beethoven piano sonatas. Sun 
evening: Pinches Zukerman directs 


English Chamber Orchestra (875 
5030) 

Alice TuBy Hall Oct 24: Bryn Terfel. 
Oct 26: Thomas Hampson. Oct 30: 
Borodin String Quartet (875 5050) 


■ PARIS 

CONCERTS 

Th&tra de la Vflle Kronas Quartet 
gives a recital this evening featuring 
works by Gubaydulina, Gorecki and 
others (4274 2277) 

SaHe PJeyei Yevgeny Svetlan ov 
conducts Russian State Symphnoy 
Orchestra tonight GOnther Herbig 
conducts Orchestra de Paris on 
Wed and Thurs in works by 
Schumann and Bruckner. Pine has 
Steinberg conducts Orchestra 
PhVharmontque de Radio France on 
Fri in Saint-Saens and Ravel, with 
cello soloist Anne Gastinel (4563 
0796) 

Theatre des Champs- Syadea 
Emmanuel Krtvtne conducts 
Orchestra National de Lyon 
tomorrow in a programme including 
Debussy’s La Mar and John Adams’ 
The Chairman Dances. Wed: Boris 
Belkin and Salzburg Chamber 
Soloists. Fri: Jean -Jacques 
Kantorow conducts Ensemble 
Orchestral de Paris in Prokofiev, 
Mendelssohn, Saint-Saens and 

Bruch, with various violin soloists. 
Sun morning: Michel Bdroff and 
Jean-Phllippe Col lard duo piano 
recital (4952 5050) 

OPERA 

Bastrte Final performances of Bob 
Wilson’s version of Madama 
Butterfly are tonight Wed and Sat 
with cast headed by Miriam Gatuci 
and Giacomo Aragall. The next 
opera production is a revive! of La 


nozze di Figaro, opening Nov 5 
(4473 1300) 

Chatelet The new Ring production, 
conducted by Jeffrey Tate and 
staged by Pierre Stressor, continues 
with performances of Siegfried on 
Oct 21 and 27, and 
GOtterdSmmerung on Oct 23 and 
29. There win be two complete Ring 
cycles between Oct 31 and Nov 13. 
The cast is headed by Robert Hale, 
Gabriele Schnaut Heinz Kruse and 
Kurt Rydl (4026 2840) 

DANCE 

The Paris OpOra Ballet's 1994-5 
season opens at the Bastille on Oct 
25 with the traditional Grand Ddfite, 
followed by Balanchine's La Palais 
de cristal (Symphony in C) to Bizet, 
The Fbur Temperaments to 
Hindemith, and Jerome Robbins' 
Glass Pieces to PhHip Glass (12 
performances till Nov 17). The 
season also includes a young 
dancers programme, Nureyev's 
production of Swan Lake, a mixed 
bill including works by Balanchine 
and Martha Graham, John 
Neumeier’s Magnificat and a 
Nifmska-NIJInsky programme (4742 
5371) 

JAZZ/CABARET 

Buster Williams Quintet is in 
residence this week and next at 
Lionel Hampton Jazz Club. Music 
dally from 10.30pm to 02.00am 
(Hotel Meriden Paris Etolle, 81 
Boulevard Gouvton St Cyr, tel 4068 
3042) 

FESTIVAL D’AITTOMNE 
A Bob WHson adaptation of 
Dostoyevsky continues daily till Sun 
at Bobigny (4S31 1145). Other 
highlights indude Robert Lepage’s 
Seven Streams of the River Ota (Nov 
18-26), and The Merchant of Venice 
directed by Peter Sellars (Dec 6-17). 


ARTS GUIDE 

Monday. Berlin, New York and 
Paris. 

Tuesday: Austria, Belgium, 
Netherlands, Switzerland, Chi- 
cago, Washington. 
Wednesday: France, Ger- 
many, Scandinavia. 

Thursday: Italy, Spain, Athens. 
London, Prague. 

Friday: Exhibitions Guide. 

European Cable and 
Satellite Business TV 

(Central European Time) 

MONDAY TO FRIDAY 
NBC/Super Channel: FT Busi- 
ness Today 1330; FT Business 
Tonight 1730, 2230 

MONDAY 

NBC/Super Channel: FT 
Reports 1230. 

TUESDAY 

Euronews: FT Reports 0745, 
1315, 1545, 1615. 2345 

WEDNESDAY 

NBC/Super Channel: FT 
Reports 1230 

FRIDAY 

NBC/Super Channel: FT 
Reports 1230 

Sky News: FT Reports 0230, 
2030 

SUNDAY 

NBC/Super Channel: FT 
Reports 2230 

Sky News: FT Report® 0430. 
1730; 





. aafe 


18 


MONDAY OCTOBER 


17 1994 


A fter several years of 
successful expansion, 
the UK publishing 
industry is experienc- 
ing a rare twitch of self-doubt 
It has been shaken, a little, 
by the prospective demise of 
the net book agreement which 
allows publishers to set the 
retail price of books to prevent 
discounting. The agreement is 
due to be reviewed by the 
restrictive practices court, but 
seems to be unravelling 
already as publishers and 
retailers divide over its contin- 
ued usefulness. 

However, it is the growth in 
electronic media and new 
channels of information that 
has really got the industry 
stirred. The prominence of soft* 
ware stands at this month's 
Frankfurt Book Fair was a por- 
tent that publishers are finding 
hard to ignore: could develop- 
ments such as these be the 
death-knell for the book-as-we- 
know-it? 

The snapshot of a family at 
leisure In the 21st century, pre- 
viously constructed by the fer- 
tile imaginations of science-fic- 
tion writers, is now a more 
tangible vision: one parent 
snaps a credit card-sized disc of 
a novel into a compact com- 
puter with CD-Rom drive, sets 
the automatic scroll at the 
appropriate reading speed and 
relaxes for the evening; 

annthw prepares dinner from a 
recipe delivered in multimedia 
format on the kitchen screen; 
meanwhile, the children use 
interactive programmes to 
research their homework. That 
already assumes that all of 
them are not, en famille, 
watching television or a movie, 
or listening to music. 

The idea that the family 
home's bookshelves will be 
creaking with volumes of the 
Encyclopaedia Britamdca, spe- 
cial interest reference books 
and a lifetime of novels seems 
sadly anachronistic. 

Of course, publishers have 
been studying these develop- 
ments for years; what has 
prompted the latest dip in con- 
fidence has been the recent 
cbeCk in the publishing resur- 
gence of the past decade. From 
1981 to 1993, the number of 
new titles (including new edi- 
tions) published in the UK 
nearly doubled horn 46,215 a 
year to 83,780. Even the expen- 
sive sector of scientific, aca- 
demic and professional books 
recorded a near doubling of 
new titles. 

This year, so far, has been a 
different story. Mr Clive Brad- 
ley, chief executive of the Pub- 
lishers Association, describes 
the summer-to-Easter period as 
“disappointing". Despite a 
pick-up over the last couple of 


The 

final 

chapter 

Electronic 
media are 
challenging the 
book, says 

Peter Aspden 

months, sceptics, who have all 
along insisted that the indus- 
try’s expansion was unsustain- 
able, are making their voices 
heard. They have long awaited 
a "turning-point” and, given 

the speed of developments in 
information technology, it Is 
only natural that the very 
future of the book has become 
a focus for concern. 

The two developments that 
threaten the book format are 
digitisation and the multime- 
dia revolution. Digitisation, 
which allows text and graphics 
to be stored electronically, pro- 
vides easy access to very large 
amounts of information. Multi- 
media packages present that 
information through text, 
graphics and sound which the 

*It is still common 
for people to find 
CD -Roms and 
screens relatively 
cumbersome' 


user can manipulate. 

Vital markets such as edu- 
cation and business are expec- 
ted increasingly to turn to 
such formats. Yet Mr Bradley 
points ont that the print 
medium is still holding its 
own: “Even in reference mate- 
rial. it is still a common reac- 
tion for people to find CD- 
Roms and screens relatively 
cumbersome, it is often much 
quicker to pick up a book. 

“Multimedia, though it 
sounds fine in principle, needs 
to be well done to keep the 
attention for longer than a few 
Tnfmffojg, almost Hfcw a movie. 
That costs a lot of money.” 

He also points out that the 
information revolution has not 
been matched by a revolution 
Of the human mind: “We are 
all still waiting for someone 
who can awaken the mind in a 
new way, an Einstein for the 
era, but it has not happened 


yeL Many of the new packages 
around do not offer a great 
deal more than modem text 
books.” 

When it comes to fiction. Mr 
Bradley finds it even more dif- 
ficult to conceive of electronic 
p ublishing - having a si gnificant 
impact on book-buying habits. 
The most advanced develop- 
ment in this area is in interac- 
tive packages, allowing the 
reader to choose between sev- 
eral different endings, accord- 
ing to his or her mood. 

Once the novelty value has 
worn off. it is hard to see these 
packages competing against 
the attractions of a shin, cheap 
paperback that manages to 
make up its own mind. Mr 
Bradley believes. 

"Interactive media are fine 
for developing curiosity and 
search skills, but less satisfac- 
tory for books to be read 
sequentially, " he said. 

A measure of publishers* 
confidence in the book is their 
commitment to the most 
threatened sector of the mar- 
ket: the reference book. It 
mi gh t be t ho u g h t that publish- 
ers would be bringing out new 
reference material only in 
CD-Rom form, phasing out the 
book in much the same way as 
record companies phased out 
vinyl records in favour of com- 
pact discs. 

But that does not appear to 
be the case. Chambers, which 
specialises in reference books, 
has just brought out a new 
encyclopaedic English dictio- 
nary, aimed primarily at sec- 
ondary school children. 
Although it will come out in 
electronic form next year, Mr 
John Clement, chairman of 
Chambers Harrap, says he 
expects the book to out-sell the 
electronic version by about 10 
to one. 

“We are not expecting such 
books to die out in the near 
future,” he said. “The book 
still has the huge advantage of 
sheer facility, primarily 
because of Its portability and 
foe pleasure which can be had 
from browsing it” 

Mr Bradley echoes fhfc senti- 
ment: “The technology of prod- 
ucing a book is cheap, the cul- 
ture of reading a book is very 
well-established. That will take 
it a long way.” 

But once the costs of the new 
electronic media begin to spi- 
ral downwards, will the physi- 
cal frisson of leafing through a 
new volume be enough to 
ensure its survival? And will 
the new, computer-smart gen- 
erations experience it at aB? 

The view that curling up 
with a good book is one of the 
timptasg pleasures of civilised 
life is about to face its most 
radical challenge yet. 


T here is a gaping hole 
where Beirut’s heart 
used to be. Gone are 
the ancient markets, 
art deco cinemas, coffee shops 
and bordellos that made the 
Lebanese capital the Middle 
East’s most glamorous play- 
ground and vibrant financial! 
centre. 

The remnants of the city's 
heyday remained until two 
months ago. But in recent 
weeks 150 buildings have been 
demolished, with another 150 
due to follow. 

From the city's ring road 
there is now a view of the Med- 
iterranean over a wasteground 
of tarmac: L&n sq m of city- 
centre land that is to be the 
site of Beirut’s revival 
Solidere, the $L8bn property 
company set up through a flo- 
tation earlier this year, has 
begun its task. It Is rebuilding 
central Beirut, 

For 10 years, Mr Rafik Har- 
iri, Lebanon’s prime minister, 
has cherished a scheme to rec- 
reate Beirut as the financial 
capital of a newly peaceful 
Miifr fa* East Solidere is his cre- 
ation, and with a 7 per cent 
stake in the company, he is its 
largest declared shareholder. 

Sohdere will now oversee the 
building of offices for the mul- 
tinationals, hanks and compa- 
nies that Mr Hariri believes are 
keen to reenter a region open- 
ing its borders and economies. 
Hotels will go up for the tour- 
ists, who he hopes will now 
return to the region. The Leb- 
anese people's traditional tal- 
ents for trade and brokerage 
will be harnessed. And an 
economy based on financial 
services, traditionally worth 
some 70 per cent of Lebanon’s 
GDP, will be revived. 

But even as Solidere is 
dptnoiishing central Beirut, Mr 
Hariri’s motives in launching 
the project its substance, and 
its wisdom, are all being ques- 
tioned 

Many Lebanese are deeply 
suspicious that Mr Hariri, a 

man who rnarip a Tnillti-h illin n 

dollar fortune as a contractor 
in Saudi Arabia, should have 
created a big contracting com- 
pany to redevelop the centre of 
Beirut 

Some of the landowners in 
central Beirut, who were 
forced to exchange their land 
for shares in Solidere say their 
prope r ty was heavily underval- 
ued at about $L500 per square 
metre. Land prices on the 
fringe of Solidere’s allocated 
land are already at $3,000 per 
square metre, and rising, they 
say. 

“Hariri is going to make lots 
of money from tire downtown 
project" says Mr Adrian Iskan- 
der, a political scientist at the 





Amsterdam 
dep. 09.05 
Berlin 
dep. 05 5Q 
Bruxelles 
dep 09.05 
DBsseldorf 
dec. 09 15 
Frankfurt 

dep 09.D0 

Genera 

dep 09.05 

GBteborg 

dep or 35 

Hamburg 

dec 0920 

Helsinki 

dep. 09 05 

Kubenhavn 

dot 0925 

London 

dep Or 25 

Madrid 

dep. 08 00 

Milano 

dtp 09 (5 

Mfiochsn 

cep. 09.35 

Paris 

dep. 08.10 

Roma 

dep. 09.05 

Stockholm 

dep. 08.30 
Stuttgart 

drp.0900 

Torino 

dec. 09.15 

Venezia 

dep 09.05 

ZBrlch 

dep 09.35 





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The modern face 
of an ancient city 

Central Beirut has been razed in order to revive 
it as a financial capital, writes Mark Nicholson 



Helene Rogers 

Beirut’s Martyr Square (left) will be demolished and (right) the artist's impression of the new city 


American University of Beirut 
“This is not all just for the 
public interest” 

Mr Hariri maintains, how- 
ever, that the prune minister’s 
Solidere shares are held in 
trust and all profits will go to 
his charitable foundation, 
which has paid for the educa- 
tion of thousands of Lebanese 
in recent years. 

Whether or not Mr Hariri 
stands to gain personally from 
the redevelopment, many are 
questioning tile need to raze so 
much of the city in order to 
revive it 

Mr Assem Salaam, an archi- 
tect in Beirut for more than 30 
years and one of the hard core 
of vocal opponents, believes 
Solidere has destroyed the 
“social tissue” of downtown 
Beirut 

“Central Beirut had tradition 
and a memory. It played a role 
in being a meeting point of 
Lebanon's various communi- 
ties. It played a role in the 
fusion of social classes.. It had 
an enormous richness,” he 
says. 

He believes that no more 
than 20 buildings in the city 
centre were truly beyond 
redemption and can see no Jus- 
tification for the scale of Soli- 


dere's redevelopment 
Landowners should have 
been allowed to create smaller 
property companies to rede- 
velop the city centre organi- 
cally from its ruins, he says. 
“Yon are not developing from 
scratch an Abu Dhabi or a Jed- 
dah or a Riyadh,” he says 
alluding to Mr Hariri’s bahk- 

Beirut will be the 
biggest building 
site in the Middle 
East for the next 
couple of years 

ground as a Gulf contractor. 
“You are touching a medieval, 
M editer r anean city." 

Solidere has adapted its 
plans in response to these criti- 
cisms, says Mr Nasser Cham- - 
him Solidere’s chairyum The 
number of old buildings to be 
retained and restored bas been 
increased to 266 from just over 
a hundred to begin with - and 
the company is canvassing 
architectural opinions on ways 
of recreating some of the old 
souqs. 

“All of a sudden a portion of 
our memory has disappeared,” 


he acknowledges. “For the pub- 
lic it’s slightly difficult - but 
that will have to continue.” 

Mr Hariri and bis staff at 
Solidere believe that only 
through ambitious, comprehen- 
sive redevelopment can Leba- 
non succeed. They liken Bei- 
rut’s rebuilding to west 
Germany’s reconstruction after 
the second world war - an 
unmissable opportunity to 
build an gy panripri and mod- 
ernised infrastructure virtually 
from scratch. 

Mr Hariri is seeking to create 
the kind of momentum neces- 
sary to bring back the skilled, 
Lebanese middle-class that fled 
the 16-year civil war - and 
revive die flows of private Gulf 
Arab wealth to the city. Both 
ingredients require confidence. 
Like Canary Wharf In Lon- 
don’s Docklands, the project 2s 
an investment designed to gen- 
erate confidence. It is that con- 
fidence that will then lead to 
the city’s revivaL 

But in selling the new Bei- 
rut, even senior members of 
Lebanon’s government differ 
over quite what a revived Bei- 
rut's economic role would be. 

Some, such as Mr Hariri, 
believe that Lebanon has a 
future as a regional ffnunriai 


hub despite competition from 
Israel which, with an economy 
K) times larger, has its eyas set 
on the same target. Gulf Arabs 
would much rather invert in 
Lebanon, they argue, and Syria 
intends to use Beirut as a cata- 
lyst for its own gradual eco- 
nomic opening. 

Others, including Mr Riad 
Salame. the central tank gov- 
ernor. see Lebanon's future as 
in complement^ develop 

Sentwitii Israel. “We have dif- 
ferent vocations, he says 
“Israel is a predominantly 
industrial, high-tech country, 

but we wUl address the rote of 

an intermediary. It is like the 
relation between, for instance, 
japan and Singapore in the 
Far East" 

There are also political 
uncertainties over the scheme. 
Mr Hariri and his hand-picked 
team at Solidere are identified 
with the project to such a 
degree that many doubt 
whether the country's rehabili- 
tation. could survive his depar- 
ture - in a land where the ten- 
ure of political leaders has 
been as precarious as any- 
where in the world. Similar 
fears revolve around the future 
of Syria. Mr Hariri recently 
called Syrian President Hafez 
ai-Assad the “unknown sol- 
dier" of the reconstruction 
project. Few believe Lebanon.* 2 
and its economy, could survive 
a turbulent succession in 
Damascus unscathed. 

Neither Mr Hariri nor Soli- 
dere can afford to be troubled 
by such concerns. Instead, they 
are hurrying to complete the 
basic infrastructure within the 
next two and a half years. “We 
will have the critical mass of 
central Beirut in place in five 
to seven years,” says Mr SaT 
ame. 

It will be a long time before 
anyone can tell whether Beirut 
can revive itself as a financial 
capital and become “the 
a jirignt city of the future” of 
Solidere’s slogan. 

There are some hopeful indi- 
cators. In the last two years, 
Gulf Arabs are believed to 
have pumped $lbn into the 
city’s real estate market and 
some 40,000 Lebanese expatri- 
ates have returned. Buying by 
Gulf Arabs has also pushed 
Sohdere's share price from its 
issue price in June of 3100 to 
nearly $170. 

The only certainty for the 
next couple of years is that 
Beirut is becoming the biggest 
building site in the Middle 
East, but Mr Hariri's support- 
os argue that there is no bet- 
ter alternative. “None of our 
critics have come up with a *1 
prqject for rebuilding the cen- 
tre which is different from 
outs,” says Mr Chammaa. 


LETTERS TO THE EDITOR 

Number One Southwark Bridge, London SE1 9HL 

Fax 072 873 5938. Letters transmitted should be clearly typed and not hand written. Please set fax for finest resolution 

Right to livelihood, not ‘pristine poverty’ 


From Mr Patrick McCuHy. 

Sir, The World Bank’s Tim 
Cullen (“Sleepless and Irritable 
in. suburbia". October 10) 
mocks the position of those 
who seek to halt the World 
Bank’s support of socially and 
environmentally destructive 
projects, in particular large 
dams. “This group", claims 
Cullen, “would like the bank to 
steer dear of any activities 
that c ha lle ng e the right of peo- 
ple to live in pristine pov- 
erty. . Presumably Cullen 
counts among the members of 
“this group” International Riv- 
ers Network - author of the 
recently released ManfibeK. Dec- 
laration. This calls for a mora- 
torium on World Bank-funding 
of large Harng pending a com- 
prehensive review of the costs 


and benefits of its past dam 
projects - and the more than 
2,000 organisations from 44 
countries who have endorsed 
the declaration. 

Cullen arrogantly dismisses 
the misery caused by the 
Bank’s large dam programme, 
saying merely that people 
“may have to be resettled”. In 
reality, about 10m people have 
been directly displaced by 
World Bank-supported dams 
over the past 50 years. More 
enlightened employees of the 
Hank admit that dam displace- 
ment takes part on a massive 
scale and tears apart poor, but 
often self-sufficient, communi- 
ties, robbing them of their land 
and jobs, an d increasing rates 
of malnourishment, sickness 

flnri dfvtth 


At stake is not people’s right 
to live in “pristine poverty”, 
but their right not to have 
their cultures, self-respect and 
livelihoods destroyed. Large 
infrastructure projects, says 
Cullen, merely “have the 
potential to cause environmen- 
tal damage”: in the real worid. 
Bank-funded dams have 
destroyed hundreds of rivers, 
wiped out riverine and coastal 
fisher ies, and drowned huge 
areas of fertile fa rmland and 
diverse forests. 

IT the World Bank were, as 
Cullen claims, really concerned 
about the well-being of the bil- 
lions of people without access 
to electricity or dean water, it 
would not be promoting uneco- 
nomic and technically flawed 
dam projects which have in 


most cases failed to support 
rural water supply or electrifi- 
cation programmes. The World 
Bank's own “self-critical 
reports” which Cullen boasts 
of (and which the Bank Invari- 
ably ignores) show that its 
large irrigation projects have 
been stunningly inefficient, 
and have had serious environ- 
mental side effects. A 1991 
World Bank study revealed 
that in almost half of the irri- 
gation projects surveyed, crop 
production bad actually faifan 
after project construction. 
Patrick McCuRy. 
campaigns (Erector, 

Nantiya TangwisutJjit, 
research associate. 

International Rivers Network, 
1947 Berkeley Way, 

Berkeley, CaEfomia 94703, US 


How loan pricing is set 


From Mr Paul J L Rex. 

Sir, I could not disagree 
more strongly with Dominique 
de la Barre d’ErqueUnnes’ let- 
ter (October 5) which pro- 
pounds one of the central 
errors committed by many 
lending banks. Even a cursory 
reading of the comments on 
the syndicated loans market in 
Monday’s FT gives a clear pic- 
ture of how loan pricing is 
actually being set at present 

The banking industry has 
been characterised by extreme 
overcapacity for much of the 
part two decades. As in any 
other industry, this inevitably 
pushes down prices, and many 
decisions to lend at low rates 
have been rationalised by an 
over-optimistic view of the gen- 
eral provisioning costs which 
must be covered by the loan 
margin. Since actual loan 
losses are highly sensitive to 
the economic cycle, inadequate 
pricing is often masked in the 
early years of development of 
loan portfolios until heavier, 
specific provisions are 


required. Once the pricing 
inadequacy is exposed, many 
banks exit one lending sector 
and enter a new one, only to 
repeat the same mistake in a 
different setting -creating a 
“cascade” of problem loans. 

A more rational decision 
would have been, as Ms de la 
Barre suggests, to refuse to 
lend, but this would have 
Involved many lending officers 
and their line managers put- 
ting themselves out of work. 

Annual provisioning charges 
linked to the riskiness of the 
underlying transactions will 
not solve the problem of over- 
capacity. However, they will 
force bank managements to 
confront the explicit cost of 
pursuing a given lending strat- 
egy and make it clear that 
much lending business is loss- 
making over the course of the 
economic cycle. 

Paul J L Rex, 

head qf strategic consulting. 

Foirplacs Consulting. 

36-33 Cornkm, 

London EC3V SPQ 


A percentage of which market? 


From Mr Michael Goldman. 

Sir, Market definitions pres- 
ent notorious difficulties as is 
demonstrated by the Pentos 
claim that Dillons at its low in 
June had a market share of 
3L5 per cent (“Pentos £36m In 
the red after exceptional 
costs”, October 12). 

The annual value of the UK 
book market is some £2-5bn 


and Dillons' sales cannot be 
more than £20Qm, which Is 8 
per cent Even if the market is 
defined more narrowly as con- 
sumer books. £20Qm equates to 
about 12 per cqTit What market 
definition produces a figure of 
more than twice that level? 
Michael G oldman. 

2 Lyndale Close, 

Blackheath, London SE3 7RG 


Not economic sophistry, 
but verifiable reality 


Front Mr Stephen Butler. 

Sir, Stephen Beer (Letters, 
October 8) perpetuates a com- 
mon misconception about the 
supposed impracticality of 
“simple economic theory” by 
confusing two aspects of mar- 
ket behaviour. All market act- 
ors who seek returns want to 
be correct in their forecarts, 
not just those concerned for 
their political reputations. 

Such motivations are not 
only no guarantee of good 
judgment (witness former 
chancellor Norman Lamont’s 
hapless performance on Black 
Wednesday), but are in fact 
irrelevant in considering mar- 
kets’ real utility as the best 
available collectors, processors, 
and disseminators of informa- 
tion. 

Mr Beer's “casual observa- 
tion" that “most market partic- 
ipants can be wrong some of 
die time” in fact demonstrates 
this virtue. 

No single person or group 
wifi likely be right about the 
future, or even about very 
much of the present However, 
in generating prices out of 
countless individual calcula- 
tions, markets co-ordinate the 
limited bits of information that 
participants at*pai \ y do have - 
and for more regularly and 
capably than any central insti- 
tution. 

This is not sophistry, but his- 
torically verifiable reality. 

Yes, finawig} markets are 
fall of small traders who 


blindly follow trends, which 
may themselves be based on 
unreasonable or unfounded 
expectations. Yes, they are 
prone to panics and the occa- 
sional disproportionate influ- 
ence of a George Soros, and 
sometimes require correctioc- 
They are indeed imperfect and 
an inappropriate object of any- 
one’s “faith”. 

Nonetheless, their collective 
best guesses about future 
developments such as inflation 
are based on far more informs - 
tioc than could ever fit into a 
brief on Bank of gov- 

ernor Eddie George’s desk. 

Distortions in markets 
exceptional by definition, and 
they correct themselves as no? 

or hitherto under-appreciated 

information comes to light- fa 
central b anks however, usds 
the guise of “correction’', dis- 
tortion is the name of thfi 
game. 

Casual observation suggests 
to me that such intervention is 
very rarely successful or bene- 
ficial - an odd foundation tor 
such important and expensive 
institutions. 

Practical experience h 35 
exposed the folly of attempts 
to direct goods and services 
centrally. 

Why are we still willing to 
countenance similar discretion - 
ary power regarding brads and 
currencies? 

Stephen Butler, 

Jesus College, 

Cambridge CB5 SBL 


* ts 

k. - K 

* - 
• 

' T 

£c 

:i5 


#>1 


& 

V: 








FINANCIAL TIMES 


MONDAY OCTOBER 17 1994 


■ ; i v. 




•• ■••‘I 




d 


FINANCIAL TIMES 

Number One Southwark Bridge, London SEI 9HL 
Tel: 071-873 3000 Telex: 922186 Fax: 071-407 5700 

Monday October 17 1994 


Ulster’s 
missing centre 


John Major's political skills 
probably do not extend to stage- 
managing the internal politics of 
the loyalist paramilitaries in 
Northern Ireland. The tarring of 
their ceasefire announcement last 
week, on the eve of his speech to 
the Conservative party confer- 
ence, was therefore either a stroke 
of lock for the prime minister or, 
Possibly, a deliberate present to 
him from the loyalist leadership. 

The loyalists, like the main- 
stream Ulster Unionists but so for 
unlik e the Rev Ian Paisley's Demo- 
cratic Unionists, have ap paren tly 
decided that “the union is safe" in 
Mr Major’s hands. They believe 
the IRA’s cessation of violence 
since August SI (except as a brutal 
method of pouring its own urban 
strongholds) is an admission of 
defeat They do not believe, as Mr 
Paisley does and as Sinn F6in 
claims to, that the ISA ceased fire 
only because Britain has lost 
interest in Northern Ireland and is 
looking for a way out Mr Major's 
promise of a referendum on any 
new arrangement has reassured 
them, as it has unionist opinion 
generally. That pledge gives the 
majority in the province a veto 
which was not granted to it when 
Mr Major’s predecessor negotiated 
the 1985 Anglo-Irish agreement 

Opposite expectations 

So Northern Ireland begins this 
week free from the immediate fear 
of terrorism, for the first time in 
25 years. That is a blessed relief, 
for which Mr Major certainly 
deserves his share of credit, along 
with his Irish opposite number, 
Albert Reynolds, and the leader of 
the main nationalist party in 
Northern Ireland, John Hume. 

But to call tins ceasefire "peace” 
would be immature because it is 
based on opposite expectations. 
Loyalists believe the United King- 
dom is safe; republicans that they 
are an the way to a united Ireland. 
At least one of those expectations 
is going to be disappointed; the 
British and Irish governments 
may even, as they try to square 
the circle, convince both sides 
that they have been betrayed. 

.. That is the fear. The hope .must 
be that peace will find its own 
momentum: that on neither side 


seen as “men of peace" rather 
than “men erf violence”. The effort 
to include them in negotiations is 
therefore justified. But no one 
should lose right of the fact that 
in electoral terms these are fringe 
parties. They may have the ability 
to wreck a settlement. They do not 
have a manda t e to negotiate one. 

Crucial breakthrough 
Much has been m ade of the par- 
allels between the “peace process' 
in Northern Ireland and those in 
South Africa and the Middle East 
In so far as such parallels have 
any value, they suggest that the 
crucial breakthrough must be 
achieved by establishing a new 
relationship of trust and mutual 
understanding between the lead- 
ers of mainstream, repr esentative 
parties in two hitherto bitterly 
polarised communities. That was 
achieved in South Africa between 
F W de Klerk and Nelson Mandela 


will paramilitary leaders wish to 
incur the odium of breaking it 
That depends in part on those 
leaders themselves gaining psy- 
chological benefits from being 


the relationship reached a point 
where their respective communi- 
ties’ confidence in them depended 
on their ability to continue co-op- 
erating with each other and to 
demonstrate progress, and both 
understood that Between Yasair 
Arafat and Yitzhak Rabin the 
same is objectively true, but the 
process Is in difficulties because 
neither wwwna to be nnnfiftent that 
the other has understood it 

Between John Hume and James 
Molyneaux, who would be the 
analogous figures in Northern 
Ireland, the process has not really 
started. The job of creating such a 
relationship has been left to the 
British and Irish prime ministers. 
The latter certainly need to be 
involved, because nationalists in 
Northern Ireland would not have 
confidence in a purely internal 
settlement But in the last resort 
trust has to be built between the 
two communities, and the leaders 
of the mainstream, representative 
political parties on both sides 
have a crucial part to play. 

Up to now Mr Hume has 
devoted his main energies to 
building an alliance of nationalist 
parties committed to constitu- 
tional methods; and Mr Moly- 
neaux has been mainly concerned, 
to keep the British government" 
committed to maintaining the 
union. Both have succeeded, and 
deserve credit fix' their success. 
Now they need to concentrate on 
finding common ground with each 
other. 


Snail’s pace 
at Japan’s MoF 


It has been clear for more than 
two decades that the rigid com- 
partmentahsatton of the Japanese 
banking system is based cm func- 


tional divisions that no longer cor- 
respond with market reality. Yet 
the deregulation of the system has 
been a peculiarly tortured exercise 
in gradualism, as last week's 
events demonstrated once again. 

The decision by the Ministry of 
Finance (MoF) to sanction the 
plans of five city banks to set up 
securities subsidiaries is an impor- 
tant step. Yet it amounts to no 
more th a n a partial retreat from 
the restrictions of Article 65 of the 
Japanese Securities and Exchange 
Act - the equivalent of the US 
Glass-SteagaH Act, which prevents 
banka from conducting securities 
business. While the city banks 
will now be permitted to under- 
write corporate bond issues, their 
desire to compete in the wide r 
securities area has been fr ustrate d 
by the lobbying of the securities 
firms, whose profits have suffered 
in the aftermath of the bubble 
economy, and by the conservatism 

; the Mop’s own officials. 

That is not to say that limited 
concessions are worthless. In a 
world where corporations increas- 
ingly cut out the banking middle- 
man and go direct to the markets 
for funds, an enttee into the bond 
markets will be welcome to the 
dty banks, just as it has already 
been welcomed by the tong-term 
credit banks. But if regulation is 
to be aligned with market logic in 
bonds, why not in equities too? 


Motor for change 

Of the forces for fi nan c ial 
deregulation in Japan, bad debts 
proving a far more potent 
or for change than external 
sure from the US and else- 
re. Last week, n o doubt wftba 
ae from the MoF, Mitsubishi 
g paid Y200bn (£Ubn) tor a 
rotting stake in Nippon Trust, 
troubled trust bank that ifl 
icted to record the first poet 
loss in Japanese banking his- 
^ in its current financial year. 
Mitsubishi has, in COTBpawate 

x granted a mandate to explore 
those trust bank activities 
wmch another recent set(*semi- 
liberalising measures from the 
MoF has kept off-limits for the city 
banks as a group. In 

Mitsubishi will have access to 

potentially lucrative pension f™ 11 


management business, which will 
be a source of envy to its peers. 

There are plenty of precedents 
for such a regulatory trade-off. In 
the US in the 1980s interstate reg- 
ulatory boundaries and functional 
dividing lines between banks and 
savings and loans were dropped 
on an ad hoc basis to divert the 
cost of socialising bank losses 
away from the federal budget. And 
in Japan last year Daiwa Bank 
was given carte blanche to con- 
duct the full range of securities 
activities in exchange far rescuing 
the medium-sized broking firm 
Cosmo Securities. 

Deficiency of assets 

If there is a difference In the 
approach on either side of the 
Pacific, it is simply that the scale 
of the down payments on a regula- 
tory exeat in Japan looks excep- 
tionally large. For Mitsubishi 
Bank Y200bn Is not enough to 
make a significan t dent in its capi- 
tal ratios, but it is still a high 
price to pay for a trust bank that 
has a sizeable deficiency of assets 
against liabilities. 

Also striking is that liberalisa- 
tion has not, in Japan, been syn- 
onymous with profit Those for- 
eigners who obtained seats on the 
Tokyo Stock Exchange just in 
time for the ooUapae of the Japa- 
nese stock market know that the 
experience can be as expensive as 
it js liberating. And despite the 
enormous freedom that Dalwa 
Bank now enjuys across the finan- 
cial services markets, it has yet to 
translate it into a notably superior 
performance. 

Given the extent of the bad debt 
problem in Japanese banking, 
there will probably be farther 
cases where the MoF is prepared 
to drop Us regulatory guard In the 
interests of stabilising; the system 
more cheaply. Yet the overall pace 
of deregulation looks set to 
remain turgid. That will be a pro* 
found relief to the less efficient 
players in the system. The same 
applies to bankers in more flexibly 
regulated financial centres in 
other countries, since a dispropor- 
tionate aiwimit of Japanese finan- 
cial business will continue to be 
diverted off-shore. It is a remark- 
able feature of this otherwise pro- 
foundly competitive nation that it 
should offer such generosity to its 
rivals in an important area of 
international trade. 



Taiwan/South Korea: in the fast lane 

Totat exports fjlbtit Exports by des tina t ion (Sbn) 



Real GDP growth (annual % change) 
. 10 % 






' 10081603 1889 1883 
SaWcDIM Wn lff 



IW i 

i ii i r 


o l 

180993 138B S3 1B8BB3 186993 198883 188883 1089 SO 

TWm 8 »Komm Ww 8 .Kovm TWM S. Koran 

aoucunnMtmnvMF ScuocOECIXAD& 



T he seemingly unstoppa- 
ble rise of east Asia's 
“tiger” economies is one 
of the industrial mira- 
cles of the late 20th cen- 
tury. Admired, envied and some- 
times feared, their vigorous 
export-led growth is often held up 
as a model for poorer economies - 
and a stiff competitive challenge for 
wealthier ones. 

However, South Korea and 
Taiwan, the two biggest tigers, have 
reached an awkward age. Infant 
prodigies no longer, they are having 
to run hards- to stay in the test 
lane and to keep alive ambitions of 
joining the world's most advanced 
industrialised po w er s. 

Influential observers in both 
countries argue that they are 
increasingly handicapped by bag- 
gage from their past Shedding it, 
they say, requires a radical redefini- 
tion of the role of the state in their 
economies and adherence to stron- 
ger, market-based disciplines. 

Bat atthnu gh many businessmen 
and politicians pay Up-service to 
such calls for change, it is proving 
slow to materialise. 

“Taiwan is still following tracks 
laid down in the 1950s and 19605,” 
says Dr Kai Ma of the Chung Hua 
Institute, a respected economic 
research centre in TfeipeL “But the 
old rules no longer apply. Our 
whole economic and Industrial 
strategy needs to he reviewed.” 

Dr Jwa Song-bee of the .Korea 
Development Institute, a leading 
economic research centre in Seoul, 
broadly agrees: “South Korea must 
set its economic house in order this 
decade. In terms of Hberafisatfon, 
we are foiling behind. If we don’t 
act decisively now, we wifi be 
bypassed by late-developing Asian 
economies like Malaysia.” 

So far, such concerns have not 
dented economic performance. 
Taiwan is heading for 6 per cent 
real growth this year, and Korea for 
more than 8 per cent Both enjoy 
negligible unemployment, buoyant 
exports and robust capital invest- 
ment, while their stock markets 
have recently hit new highs. 

However, new challenges are 
crowding in from all sides. The 
most pressing is fiercer regional 
competition. Countries such as 
China, Malaysia and Thailand, with 
wage levels as low as one- tenth of 
those in Korea and Taiwan, are 
undercutting than in older indus- 
tries such as textiles and shoes - 
and may soon do so is newer 
ones like petrochemicals and 
steeL 

The result is a shift of more 
labour-intensive production out of 
the tigers. Taiwan has lost 12 per 
cent of its manufacturing jobs since 
the late 1880s, as more than 20,000 
companies have moved productive 
assets estimated at |20bn to main- 
land (Hiina, 

The impact has been less dra- 
matic in Korea, partly because, 
unlike Taiwan, it has avoided sharp 
currency appreciation. Nonetheless, 
regions such as Pusan, where tradi- 
tional irpmufHfl hiring industries ere 
concentrated, have been hit hard. 

The impact of competition from 
title emerging economies has been 
partly offset however, by (he rapid 
growth of regional markets, which 
both countries hayp been quick to 
exploit South-east Asia has over- 


Increasing regional competition is forcing 
Taiwan and South Korea to run faster to 
stay ahead, says Guy de Jonquieres 

The tigers face 
a challenge 


taken the US to become Korea's big- 
gest export market. Despite 
Taiwan’s ban on direct transport 
links with China, its exports to the 
mainland are expected this year to 
match those to the US. 

But both countries are keenly 
aware that, to stay ahead of 
regional rivals, they need to raise 
their performance closer to levels in 
the industrialised world by shifting 
into activities with higher margins 
and value-added. 

Each brings to that task contrast- 
ing competitive strengths, reflecting 
distinctive industrial structures 
evolved over the past 30 years. 

Taiwan’s economy is built on the 
spirited entrepreneurship of 
swarms of .small manufacturing 
businesses, which account for most 
of its exports. Niche producers par 
excellence, they have prospered in 
sectors ruled by fashion or rapid 
technical change and have made 
Taiwan the world’s largest exporter 
of bicycles and printed circuit 
boards for personal computers. 

If Taiwanese are east Asia's 
skilled artisans, Koreans are its for- 
gemasters, The sprawling chaebol. 
or family-controlled conglomerates 
that dominate die Korean economy, 
have long sought advantage in 
large-scale heavy industry, gam- 
bling ever larger investments in 
giant mass-production facilities. 

This heroic risk-taking - long 
encouraged and underwritten by 
government support - has made 
Korea the world's biggest ship- 
builder and its sixth largest pro- 
ducer of steel and cars. In all these 
sectors, further ambitious expan- 
sion is planned. 

Despite these differences, the two 
countries share some important 
weaknesses. Both depend heavily 
cm imported technology and compo- 
nents, above all from Japan, with 
which they run large trade deficits. 
These amounted last year to &5 per 
cent of Taiwan’s gross national 
product and 3.5 per cent of 
Korea’s. 

Though Korean semiconductor 
makers have recently gained world 
market share in D-Ram memory 
chips, their achievement awes less 
to trail-blazing technology than to 
continued heavy investment in pro- 
duction capacity at a time when 
recession-bound Japanese producers 
were cutting back. 

Most Korean and Taiwanese com- 
panies also remain “fast followers", 
not innovators, and lack strong 
jntpp iq tjnu fll co nsum er franchises 
and marketing skills. Much of 
Taiwan’s output is still sub-contract 


wenk for foreign companies, which 
distribute the products under their 
own names. Some Korean groups, 
such as Hyundai and Samsung, are 
trying to establish their brands 
overseas. But despite increased 
attention to quality, their products 
have yet to overcame a nondescript 
image as second-best alternatives to 
Japanese goods. 

As a consequence, the two coun- 
tries’ exports stiU sell heavily an 
price, leaving them hi ghly sensitive 
to exchange rate movements. In 
Korea's case, the problem is cam- 
pounded by the fact that many of 
its exports are in sectors where 
Japan is the acknowledged quality 
and technology leader. 

Similar doubts were, of course, 
expressed about Japan’s prospects 
as recently as 15 years ago. How- 
ever, there are important differ- 
ences. Western manufacturers, 
which once provided soft targets for 
Japanese exporters, have grown 


Protection has 
exacted a price by 
encouraging excess 
capacity and slowing 
industrial 
rationalisation - 


tougher, as global competition has 
farced them to restructure, improve 
quality and innovate faster. 

Japan also controls access to its 
most sensitive industrial know-how 
more strictly than did the western 
countries whose technology it bor- 
rowed freely eariy in its develop- 
ment. Even though Korea’s Sam- 
sung recently developed the world’s 
first 256MB D-Ram, it must still rely 
on Japanese equipment to make the 
devices in volume. 

Faced with these obstacles, Kor- 
ean and Taiwanese b usinessman no 
longer talk as thnng h emulating 
Japan’s industrial ascendancy were 
just a matter of time. They increas- 
ingly accept that their economies 
can aspire to match its achieve- 
ments only in selected areas. 

Same Korean exporters are also 
placing less emphasis on the US 
and western Europe, after losing 
market share there. They aim 
instead to concentrate in the next 
few yeans on less demanding third 
world markets. Many are also eye- 
ing keenly the potential of North 
Korea’s market, in the belief that 
the two countries may soon be uni- 
fied. 


Longer term, the two tigers are 
pinning hopes to government- 
backed pushes in high-technology. 
Both countries are stepping up 
spending on research and develop- 
ment, investing in science parks 
and have ambitious plans to 
develop aerospace and biotechnol- 
ogy industries. 

Their most valuable assets are 
skilled labour forces and sizeable 
pools of western-educated engineers 
and scientists, many of wham they 
are now seeking to entice back 
home from jobs abroad. “Engineers 
here are good but cost less than zn 
Japan, so we can afford a bigger 
effort,” says Mr Winston Wang, 
head of Nan-Yang Plastics, one of 
Taiwan’s largest manufacturers. 

The catch, however, is that other 
countries can play the same game. 
“China has 90 or 30 times more 
engineers than Korea or Taiwan, 
and they are even cheaper,” says 
one western businessman. 

Taiwan also wants to develop its 
service sector and attract foreign 
capital and technology by becoming 
a centre for the regional operations 
of multinational companies. But it 
faces daunting handicaps. As well 
as its diplomatic isolation and lack 
of direct links with China, Taiwan 
has poor infrastructure, countless 
barriers to foreign investment and 
opaque rules of business conduct 

Both tigers have surprised the 
world before by achieving appar- 
ently impossible feats. But while 
their efforts in the past have been 
geared to storming other countries' 
markets, the challenge today is 
increasingly to tackle structural 
weaknesses In their own. 

Historically, the tigers’ overriding 
priorities have been to replace 
imports with home-produced goods 
and promote export-led growth. 
They have targeted "strategic" 
industries and sheltered their home 
markets with extensive non-tariff 
banters. 

Such protection has exacted a 
price by encouraging excess capac- 
ity and slowing industrial rational- 
isation. Korea, which imported 1300 
cars last year, has four - possibly 
soon to be five - volume producers, 
while in Taiwan II car assemblers 
serve only 20m people. 

Financial markets, meanwhile, 
have been constrained by tight 
exchange controls. Policies which 
directed credit to “strategic” sectors 
on preferential t”™ have turned 
many cnmniargifll hanks into exten- 
sions of industrial policy. 

- In short, policies that have helped 
make the two countries champion 


exporters have insulated their econ- 
omies from global market forces 
and stunted domestic demand. 
Lacking strong pressure from con- 
sumers at home to innovate and 
develop sophisticated marketing 
skills, their industries have fol- 
lowed, rather than led, interna- 
tional market trends. 

Gradually, though, the old order 
is starting to crumble. In both coun- 
tries, authoritarian military regimes 
were replaced by democratic gov- 
ernments in recent years. This has 
loosened governments* grip, on 
industrial policy and encouraged 
lobbies to press for economic and 
financial reform. 

The search for a bigger world role 
is also increasing pressures for 
change. Korea’s impending applica- 
tion for membership of the Organi- 
sation for Economic Co-operation 
and Development, the club for the 
world's leading economies, wifi 
expose its restrictions on capital 
Dows to critical scrutiny. Taiwan’s 
bid to join the General Agreement 
on Thrifts and Trade as an industri- 
alised economy this year will 
require it to adopt a more liberal 
trade policy. 

But although both governments 
say they are committed to liberalis- 
ation. progress to date has proven 
halting and haphazard. The politi- 
cal drive from on high faces formi- 
dable obstruction from bureaucrats 
below, who fear deregulation will 
erode their power. 

I n Taiwan, democracy is also 
blamed for slowing reform 
efforts. “Democracy makes 
the economy more transpar- 
ent and fair, but less effi- 
cient," says Mr Vincent Slew, chair- 
man. of the government’s Council 
for Economic Planning. “In the days 
of martial law, we just did what was 
right for the country. It is much 
harder to posh through derisinp s 
now." 

Such interventionism has tradi- 
tionally been even more pro 
nounced in Korea, where the gov- 
ernment seems even more reluctant 
to accept that genuine liberalisation 
would restrict its scope to intervene 
in the economy. 

Ministers' amtinning inclination 
to meddle is exemplified by their 
strenuous behind-the-scenes efforts 
to prevent Samsung from starting 
car production and Hyundai from 
competing in steel, on the grounds 
that they would undermine the 
profitability of existing producers. 

“ Minis ters and Officials think 
they have to plan liberalisation in 
every detafl,” says Dr Jwa of the 
Korea Development Institute, who 
acts as an adviser to the firmnea 
ministry. “They have no clear con- 
cept of what a free market means." 

All the evidence suggests that 
entrenching market-based reforms 
in Korea and Taiwan will take time. 
Perhaps the biggest barrier of all is 
the self-confidence bred by the giant 
economic strides they have made in 
the past 30 years. 

As Dr Young Soogfi. an eminent 
Korean economist puts it: "We 
think we are changing very rapidly 
because we only compare ourselves 
to our own past. What people don’t 
realise is that the rest of the 
world is changing just as quickly, 
and we are in danger of being 
left out" 


OBSERVER 


Vision of an 
empty chair 


The Mfflanninm C ommission 
marfc a decision. The body 
entrusted with dispensing £L6bn to 
mark the new era may be 
lamentably ID-equipped to explain 
how it plans to spot things 
mtUannla asttc. What it ««> say is 
that the man pteked less than two 
monthsago as its chief executive - 
Nicholas Hinton from Save the 
Children Fund - is unsu itable for 
the job. And he was only meant to 
start today. ' 

One can imagine what happened. 
The nine coznmissioriers, a 
geographically representative but 
not especially eminent band of 
worthies, have been travelling the 
country together solicitiiig ideas - 
and bolstering tbair own sense of 
importance as the vastness erf their 
financial power sinks in. Along 
prunes FR ntrm, a Tflftn, 
throwing his weight around after 
nearly a decade building Save the 
Children. He threatens to have an 
opinion or two, so is sent packing as 
summarily as an unsuccessful 
supplicant for an Arts Council 
grant 

Back to the drawing board, then, 
with the advertisement for a boss 
who, first time around, was 
supposed to possess “presence, 
authority and ingenuity”. 

Obviously a misprint for a 
kow-towmg wallflower 


masquerading as a yes-man. 

Meanwhile. Mm H nifftiBUBr y 
might care to consider that, while 
they understandably wish to wallow 
in the glory of picking the dozen or 
so really big projects, the bulk of 
the funds is destined for a 
multiplicity of rather less 
^amorous, but in the end much 
more significant endeavours. When 
it Is time to choose those, that may 
be the moment when the bigwigs 
regret letting Hinton go. 


Down and out 

■ Calling all those with next June's 
G7 summit pencilled in to the diary. 
Book now to avoid disappointment 

The powers-thal-be have just 
twigged that the picturesque but 
sleepy city of Halifax, Nova Scotia 
(population 300,000) cannot possibly 
accommodate those thousands of 
officials, journalists and assorted 
hangers-on who grace these lavish 
jamborees. 

Having jettisoned the notion of 
nving vacationing students' empty 
digs to house the overflow, 
iwftmhftrB of the Canadian 
organising committee are now 
hastily calling up the big cruise 
lines. Any dance of piloting a 
luxury vessel or two from the Med 
or the Caribbean up into Halifax’s - 
notoriously polluted - harbour? 

. Wdl, not much, actually. The 
reaction to date has been 
remarkably cool. Either the budget 
even for a G7 jolly will not stretch - 
or else the cruise operators can 



‘She’s malting her own brand cola’ 

think of better ways to market 
themselves than filling their cabins 
with squabbling bureaucrats. 


One step forward 

■ Absent from the massed military 
forces g n a rdfng the return of 
Jeaa-Bertrand Aristide to Haiti’s 
capital Port-au-Prince over the 
weekend were the fifty soldiers 
President Lech Walesa so readfly 
promised BUI Clinton last raontb- 
But not for want of trying. 

The first hurdle was a reluctant 
domestic cabinet, miffed at Walesa’s 
freelance activities, and Initially 
unwilling to produce funds for 
tropical uniforms and medical jabs. 


But the defence ministry has finally 
stumped up and the troops are 
kitted out and awaiting an 
American aircraft Only trouble is, 
they have now mustered so much 
equipment that a single machine 
may be insufficient The US State 
Department counters that it is 
“between financial years" and 
hence not in a position to fund 

arMiHnmal tr ans port. 

Oh, the trials of a country on the 
long march to NATO membership. 


Not at liberty? 

■ Having endured months 
watching vast quantities of red ink 
haemorrhaging from the state-run 
French bank, staff at Credit 
Lyonnais apparently reckon the 
worst is now over. That, at least is 
the promising-sounding finding of 
an internal opinion poll, 
assiduously leaked to a number of 
French newspapers last w eek. But 
then, just how believable is a 
survey in which it also emerges 
that 89 per cent of staff purport to 
be “very” or “fairty* satisfied with 
the level of interest in their jobs? 


Rank outsiders 

■ The rich are not like you and me 
- especially when they live in 
Switzerland. Nearly half of the 
country’s 50 richest residents are 
not Swiss nationals, according to 
the latest rankings in Swiss 
business magazine Bilans Among 


the 25 Swiss franc multi- 
billionaires. all but seven are 
foreign, including Otto Beisheim of 
the German Metro retail group. 
Octav Botnar, the fugitive British 
car dealer, and Johann Rupert, of 
the Rotbmans tobacco and 
Vendome luxury goods businesses. 

Notably absent from this year’s 
list, however, are the 
Brenntnkmeijers behind the C&A 
clothing store chain. The reclusive - 
family complained last year that, 
while its wealth might be 
co nsiderabl e, and many members of 
the cbm might five in Switzerland, 
no single family member possessed 
a particularly large chunk of the 
fortune. Bilauz still believes that 
the Bremrfukmeijers are wealthier 
than the officially designated 
number ones, Vera Oeri-Hafflnann 
and Lukas Hoffmann, inheritors of 
the Hhffmasn-La. Rocha drugs 
group, who weigh in at some 
SFrlOimeach. 


Sold short 

■ No doubt the Italian stock 
exchange authorities, always eager 
to enhance the bourse's standing 
within the international firarafai 
community, thought long and hard 
before christening a new futures 
contract - based on the index of 
leading Italian shares - the FIB 80. 

• If the product takes off, trading 
on the Italian futures market can 
then be termed fibbing; with 
specialist Italian, dealers 
affectionately known as fibbers. 




SHEERFRAME 

Specified 

Worldwide 

LB.PIaslics Limited 

Tab oconi •* 


FINANCIAL TIMES 

Monday October 17 1994 


OAG GRUPPE 

Osterreichs Markt fuhrer im SamiSf- una 
HefzungsgroBhandel. 




Revelations appear on eve of Queen’s visit to Russia , Merck tests 


money-back 
prostate 
drug offer 


Book on prince raises 
fears for UK monarchy 


By James Blitz 

Senior UK government ministers 
yesterday tried to quell public 
anxiety about the Future of the 
British monarchy after newspa- 
per publication of extracts from a 
controversial book about the pri- 
vate life or the Prince of Wales. 

Tlie book, written by Mr Jona- 
than Dimblcby. a well-known 
broadcaster, contains a detailed 
account or the difficulties of 
Prince Charles's marriage to 
Lady Diana Spencer. 

The extracts appeared on the 
eve of Queen Elizabeth’s state 
visit to Russia, the first by a 
reigning British monarch. 

Mr Douglas Hurd, the foreign 
secretary, said recent revelations 
in books and newspapers about 
the royal family had led to the 
monarchy's detractors "getting 
everything out of proportion". He 
said: "I don't believe all this non- 
sense about a republic knocking 
on the door or the House of 
Windsor being besieged Like the 
Romanovs." 

Mr Jonathan Aitken, chief sec- 


retary to the Treasury, said the 
book posed no threat to the mon- 
archy. "U is the monarchy, of 

which Prince Charles is ulti- 
mately the heir, which matters, 
not the flotsam and jetsam of 
journalism about personal feel- 
ings, however sincere they may 
be." he told Sky television. 

Prince Charles said through his 
private office yesterday that he 
had no regrets about helping to 
write the book, and that it could 
be regarded as "a balanced and 
thoroughly researched appraisal" 
of his development as an individ- 
ual and the way he has 
approached his role. 

Quoting from the prince's dia- 
ries and letters, the book claims 
he had partly decided to marry 
Lady Diana under pressure from 
his father. Prince Philip. 

Officials at Buckingham Palace 
admitted that the timing of the 
serialisation had been unfortu- 
nate. "In an ideal world it would 
have been preferable to defer 
publication,'' Mr Charles Anson, 
the Queen's press secretary, told 
royal reporters in Moscow. But 


he said that it would not “detract 
from ... the roost important 
state visit for ten years”. 

Interviewed on BBC radio, Mr 
Hurd, who will accompany the 
Queen to Moscow, attacked the 
determination of the British 
press to divulge intimate secrets 
of the royal family's lives. 

He said: “I am worried about 
the way in which chattering peo- 
ple concerned with headlines and 
mass circulation do chip away at 
our institutions in this country, 
of which the monarchy is per- 
haps the most important and in a 
way the most vulnerable.” 

However, Mr Barry Sheerman, 
a spokesman for Labour, the 
main opposition party, said the 
book bad merely compounded the 
debate about the future of the 
monarchy. “What the Prince of 
Wales has fallen into is the belief 
that by communicating more 
about the Royal family that will 
improve the situation,” he said. 
“The reverse is true.” 

Crowning glory for the last of 
his line. Page 4 


Kim Jong-il poised to assume 
leadership of North Korea 


By John Burton in Seoul 

Mr Kim Jong-il's first public 
appearance yesterday in almost 
three months signalled that he 
will soon be named formally as 
North Korea's new leader. 

Mr Kim attended a memorial 
ceremony in Pyongyang, mark- 
ing the end of the 100-day mourn- 
ing period for his hither, the late 
president Kim H-sung. 

Analysts in Seoul believe the 
end of the mourning period will 
dear the way for Mr Kim, last 
seen in public at his father’s 
funeral on July 20, to assume the 
presidency and head the ruling 
Korean Workers party in the 
next few weeks. 

Mr Kim, who appeared some- 
what haggard, was flanked by 
leading members of the ruling 
hierarchy in an apparent show of 
unity. The absence of Mr Kim 
from public view has led to spec- 
ulation that his assumption of 
power may be encountering 
internal opposition. 


One sign of continued stability 
has been North Korea's negotia- 
tions with the US over its nuclear 
programme, which have shown 
some signs of progress in the 
past week. But weekend discus- 
sions in Geneva rem aine d stuck 
over North Korea's refusal to 
accept international inspection of 
undeclared nuclear facilities. 

However, analysts believe Mr 
Kim is already firmly in control 
of the government and avoided 
formally taking power during the 
mourning period because it 
would appear unseemly. 

"Since the death of Kim fi- 
sting. there has been no sign of a 
power struggle in North Korea, 
including a conflict with the mili- 
tary. Moreover, there are no rival 
candidates at present who can 
compete against Kim Jong-il,” 
said Mr Hideshi Takesada, resear- 
cher at the National Institute for 
Defence Studies in Japan. 

“Kim Jong-il has been consoli- 
dating family loyalty by recruit- 
ing relatives and classmates to 


major official positions.” said Mr 
Kii Jeong-woo, director of policy 
studies at the Research Institute 
for National Unification in SeouL 

He also “seems to have secured 
absolute support from the major 
figures in charge of the three mil- 
itary organisations,” which have 
been mentioned as the main 
source of possible opposition to 
his rule. Mr Kim may have used 
the mourning period, during 
which most public events have 
been suspended, to consolidate 
his power further by promoting 
more loyal officials. 

The nuclear talks, begun by 
Kim ll-sung. have shown little 
sign of deviation since his death. 
“Policy making in North Korea is 
the product of team work among 
leading figures. Kim Il-sung’s 
death did not have any drastic 
impact on security strategy,” said 
a former East German diplomat 
in Pyongyang. However, Mr Kim 
may be forced to share more deci- 
sion-making with the top leader- 
ship. 


By Daniel Green 

Merck, the biggest drugs 
company in the US. is offering 
satisfaction to users of Its pros- 
tate drug Proscar, or a refund on 
the cost of the drug. 

The drug is designed to treat 
the enlargement of the prostate 
gland, a condition commonly 
seen In men over the age of 50. 
The enlargement causes diffi- 
culty in urinating and can in 
extreme cases lead to kidney fail- 
ure. Surgery is the treatment of 
last resort 

In the scheme it is testing, 
Merck will refund the $275-plus 
cost of a course of Proscar if the 
drug fails to improve the 
patient's condition after six 
months. Money will also be 
refunded if the patient needs sur- 
gery within two years. 

The scheme has so far proved 
popular, having been taken up by 
SO Veterans Administration hos- 
pitals and 11 health management 
organisations - companies which 
specialise in buying healthcare 
services from hospitals and 
doctors. 

Merck will not reveal what the 
refund rate has been, but clinical 
trials have suggested that 80 per 
cent of men respond favourably 
to the drug. The improvement is 
usually apparent within two 
weeks of starting the. course of 
treatment. 

The company concedes, never- 
theless. that Proscar, which was 
launched in 1992, had a difficult 
start, with sales growth slower 
than expected. It was a new 
approach to treating enlarged 
prostates “and doctors are con- 
servative", Merck said. 

Mr Vincent Lawson, managing 
director of the company's UK 
operation. Merck Sharp and 
Dohme, said the money-back pro- 
motion was "a real sharing of 
risk with real effects if promises 
are not kept”. 

He acknowledged that the pros- 
pect of money-back guarantees 
might be “terrifying” for some in 
the drugs industry. 

Merck said it could be some 
time before a similar scheme was 
introduced outside the US. The 
US healthcare industry is largely 
privately owned and fragmented, 
with individual hospitals able to 
make commercial decisions. 

The UK-based Glaxo, Europe’s 
biggest drug company, said it 
was not using such techniques to 
sell Its drugs. 


Kohl claims victory 


Continued from Page l 

vote, after failing to make the 
minimum necessary 5 per cent in 
iwo. 

For the SPD. Mr Gerhard 
Schroder, prime minister of 
Lowlt Saxony and a member of 
tin* parly's three-man election 
te.un. vtiil the probable majority 
w.is ‘■nilii'uluu.s”. He said the 
result was a “cat as trophic 
rtofiMt" for the ruling coalition. 

The far-right Republicans 


failed to make any impression on 
the election, with a final vote 
forecast at less than 2 per cent. 

In the three state elections 
which took place yesterday, the 
SPD narrowly held Us absolute 
majority in the Saarland, in west 
Germany, but failed to dent the 
lead of the CDU in the two east 
German states involved, Meck- 
lenburg-Vorpommern and Thu- 
ringia. However the PDS will 
control the balance of power in 
both those states. 


New York power takeover 


Continued from Page 1 

tax-exempt revenue bonds. 

Yet if public ownership makes 
sense for Lilco. some argue, why 
not nationalise all the other pri- 
vate-sector utilities? Or for that 
matter, the rest of US industry? 

Mr James McFadden, a utilities 
analyst at the securities house 
Bear Steams, says: “The question 
is whether you want more utili- 
ties owned by the government 
sector or not. Most in this coun- 


try would say you want smaller 
government, and this runs at 
cross-purposes with that” 

On Friday Lilco said it was 
“seriously evaluating" the pro- 
posal; but its shares were trading 
only $Ui up at $17%, far short of 
the §21.50 a share proposed by 
New York State. At that price, 
the market is betting either that 
the Federal government will 
intervene to block the bid - or 
that Mr Cuomo will not be re- 
elected to pursue it 


Europe today 

4 north-westerly current between an area of 
strong high pressure over Scotland and low 
pressure over northern Scandinavia will draw 
rather cold air over nonhem and eastern 
Europe. Numerous snow showers will occur 
along the Atlantic seaboard of Norway. Further 
inland, Sweden and Finland will have less 
cloud. England, the Low Countnes, France and 
Germany will also be mainly dry with sunny 
periods. Western parts ol the Mediterranean 
,\i!l tw changeable with heavy showers at 
tunes. Greece and Turkey will have a few 
showers, some of them with thunder. 
Meanwhile. Italy will have relatively tranquil 
ccndilrons with sunny spells and only Isolated 
showers in the south. 

Five-day forecast 

Central and western Europe will start the week 
calm and sunny with night-time frost and 
unseasonably low temperatures during the day 
as high pressure moves into the continent. 
Northern Europe wifi have another wintry spelf 
with snow showers near coasts and frost 

-ntand. During the second half of the week. 

most of Europe will change very rapidly to 
wind and rain, as a senes of low pressure 
areas arrives from the Atlantic. 


TODAY'S TEMPERATURES 





1030 . 7 i e ,♦ \l 

f 7,^ \ s * 

i . HIGH I •> ' 7 I \. 





9. 

» tyS* rt_22, 

w fan 

-V. ^ 


17 




_21“V 


PJ 

24', 


22 


Cold front 


\ 4*0 \ 27 ■*. 


26 

Wind speed In KPH 


Situation Of 12 GMT Temperatures maxmm fer day. forecasts by Mefeo Consist of the Nethertavls 



Maximum 

Beijing 

sun 

17 

Caracas 

fair 

31 


C^3iun 

Belfast 

cloudy 

12 

Cardiff 

ion- 

13 

' AL’J Dh.iti 

sun 

as 

Belgrade 


10 

Casablanca 

fair 

■22 

1 A,vr.i 

•.Jiowei 

31 

Ekrfln 

shower 

7 

Chicago 

sun 

19 

■tloiw. 

rain 


Bermuda 

shower 

26 

Cologne 

sun 

10 

i £i:i*!i-fdJI11 

lair 

it 

Bogota 

thund 

10 

Dakar 

sun 

30 

j •Vlwns 

shower 

23 

Bomoay 

fair 

33 

Danas 

mund 

26 

1 "!'ar.:j 

sun 

2-i 

Brussels 

fair 

10 

Delhi 

sun 

30 

1 6 A:IC9 

fair 

16 

Budapest 

loir 

13 

DuW* 

sun 

36 

: 6 turn 

fair 

12 

G.tagen 

In 

8 

Dublin 

fair 

13 

j F wnkol 

show*?r 

33 

Coho 

SUl 

30 

Dubrovnik 

shower 

19 

! Barcelona 

Slwwer 

21 

Cape Town 

cloudy 

21 

Edinburgh 

lair 

11 



No other airline* flic*:; to more cities in 
Eastern Europe. 

© 

Lufthansa 


Faro 

cloudy 

22 

Marfrid 

lair 

19 

Rangoon 

show 

32 

Frankfurt 

fair 

10 

Majorca 

Shower 

22 

Reykjavik 

rain 

7 

Genova 

fair 

13 

Malta 

shower 

24 

Rio 

shower 

26 

Gibraltar 

lair 

22 

Manchester 

lair 

12 

Rome 

sun 

22 

Glasgow 

fair 

12 

Manila 

thund 

31 

S. Fisco 

fair 

19 

Hamburg 

f3>' 

8 

Melbourne 

lair 

23 

Seoul 

fair 

18 

Helsinki 

fair 

4 

Mevico City 

cloudy 

22 

Singapore 

thund 

33 

Hong Kong 

fair 

30 

Miami 

fair 

27 

Stockholm 

ter 

6 

Honolulu 

fair 

32 

Milan 

sun 

18 

Strasbourg 

Wr 

11 

Istanbul 

shower 

20 

Montreal 

eui 

13 

Sydney 

sun 

25 

Jakarta 

lair 

33 

Moscow 

ter 

3 

Tangier 

fair 

21 

Jereey 

lair 

12 

Munich 

lair 

a 

Tel Aviv 

shower 

27 

Karachi 

sun 

35 

Nairobi 

far 

27 

Tokyo 

cloudy 

21 

Kuwait 

cloudy 

36 

Naples 

tan- 

22 

Toronto 

sun 

16 

L Angeles 

fair 

23 

Nassau 

fair 

28 

Vancouver 

fair 

14 

Lag Palmas 

fair 

26 

New York 

sun 

17 

Venice 

fair 

18 

Luna 

cloudy 

21 

Nice 

sun 

20 

Vienna 

ter 

11 

Lisbon 

cloudy 

20 

Nicosia 

shower 

2J 

Warsaw 

fair 

5 

London 

fair 

13 

Oslo 

fair 

8 

Washington 

sun 

19 

Luy.bouig 

fair 

9 

Paris 

fair 

11 

Wellington 

doudy 

12 

Lyon 

sun 

15 

Perth 

ter 

27 

Winnipeg 

rain 

13 

Madera 

fair 

2a 

Prague 

shower 

5 

Zurich 

fair 

9 


THE LEX COLUMN 


Back to German basics 


Any sighs of relief in German bond 
and equity markets at Chancellor 
Kohl’s close run victory last night are 
likely to prove short-lived,- the mar- 
kets rose strongly last week in antici- 
pation of a coalition victory and Inves- 
tors will soon be turning their 
attention back to fundamentals. 

Here, nothing has changed. The Ger- 
man equity market is propped up by 
expectations of a near-doubling of cor- 
porate earnings this year and further 
substantial profits growth in 1995 and 
thereafter, but still looks expensive by 
historical standards. It is yielding 2.5 
per cent for this year, which does not 
look attractive in comparison with 
yields of just under 7.5 per cent on 
German government bonds. 

The outlook for bonds could have 
changed significantly for the worse 
had a high-spending, left-leaning coali- 
tion taken power. With Kohl re- 
elected, the government is likely to 
press ahead with further fiscal tight- 
ening but this alone will not persuade 
the Bundesbank to cut short-term 
interest rates further. Prudent fiscal 
policy, in any case, will be no easier to 
achieve, given the the coalition's thin 
majority in the Bundestag, and its 
weakened position in the upper house. 

In the meantime, the focus will be 
on the Mgufli factors which determine 
inflation over the mid-term: the rate of 
growth in the German economy, the 
money supply, and the outlook for 
next year's wage round. In ail three 
cases the Bundesbank has plenty to 
worry about, despite the fall in head- 
line inflation towards 2 per cent. It 
will will want to see, at the very least, 
September's data on money supply 
and Industrial production before revis- 
ing its position on interest rates. 

British Steel 

Recovery in the steel industry is in 
full swing. One sign of this is British 
Steel's decision last week to commit 
nearly £100m to building a mini - mill in 
the US, its biggest investment in the 
past four years. The group has also 
successfully pushed through six suc- 
cessive price increases since the begin- 
ning of last year. Steel prices may still 
be significantly below the peak they 
reached in late 19S9, but so great is the 
operational gearing within the 
trimmed-down industry that British 
Steel's profits over the next few years 
are likely to grow rapidly. Analysts 
calculate that pre-tax profits, which 
amounted to £80m in the year to 
March, may rise to more than £lbn by 
1998. The dividend could quadruple 


British Steel 

Sham price relative to tfia 
FT-SE-A AH-Share Index 

iio. ' 


100 



1091 92 

Source; FT SraphHe 

over the same period. 

In common with other cyclical 
stocks, the group’s share price has 
risen well in advance of earnings, 
more than trebling since its low point 
in 1992. On previous form, it will also 
turn down again long before earnings 
reach their next peak. The question 
for Investors is when to sell. 

At present, the shares trade at about 
five times expected 1998 earnings. This 
is more expensive, relative to the mar- 
ket, than their peak rating during the 
last cycle. Arguably, the higher valua- 
tion would be in order if the European 
steel industry had sorted out its griev- 
ous problems. But the capacity cuts 
pledged by manufacturers may be 
shelved until the next downturn. This 
suggests that British Steel's shares are 
near the limits of their outperform- 
ance, even if the group is set to report 
buoyant profits for years to come. 

US economy 

The overwhelming impression from 
last week’s range of US statistics is of 
an economy still expanding fairly 
strongly despite the good headline 
news on Inflation. Industrial produc- 
tion was flat in September, but that 
followed a sharp gain in August. Cap- 
acity use dipped slightly but from a 
figure that had been revised upwards. 
At 84.6 per cent it displays little sign 
of slack. Last but not least, retail sales 
still look strong, with Friday’s Michi- 
gan consumer sentiment survey show- 
ing improved confidence. None of that 
offers grounds for a reprieve from a 
further interest rate rise. 

Indeed, the Federal Reserve may 
have to remain in li g h tening mode for 
some time, whatever happens over the 
next few weeks. Like the producer 
price data on Thursday, the retail 
price figures on Friday benefited from 


a sharp fell in energy prices. The dif- 
ference was that the underlying rise, 
excluding food and energy, was slight- 
ly more muted than expected. But 
there is no guarantee that inflation 
will remain so easily contained, espe- 
cially given the underlying upward 
pressure on producer prices for inter- 
mediate goods and raw materials. 

To that problem has suddenly been 
added dollar weakness. The immediate 
cause of Friday’s sharp fall was 
demand for D-marks ahead of yester- 
day’s German election. But the slip- 
page against the yen is also a 
reminder of how strongly underlying 
world capital flows work against the 
US currency. If dollar weakness spills 
over into Treasury bonds, the Fed may 
even have to contemplate a rate 
increase sooner rather than later. 

Chemical industry 

Id’s shares endured a torrid end to 
last week, falling nearly 3 per cent in 
two days. That was the culmination of 
an 8.6 per cent decline since the start 
of August Its performance, and that of 
other European commodity chemicals 
stocks, is bizarre because of the global 
shortage of ethylene, the basic build- 
ing block for plastics. 

In the US, demand has been so 
strong that production problems at 
two plants have caused physical short- 
ages. Spot ethylene prices, which at 
the start of the year were as low as 13 
cents a pound, have recently reached 
48 cents. Wall Street has taken this on 
board; chemicals have been the best 
performing sector in the US market 
over the last 12 months. Dow’s shares 
have outperformed by 20 per cent, 
Geon’s by 42 per cent, and Union Car- 
bide's by 54 per cent. Prices may pause 
momentarily as capacity comes back 
on stream and a few new plants start 
up, but the market looks set to remain 
tight for at least two years. 

For European chemicals companies 
any pause in US prices is an irrele- 
vance because of the low volumes of 
American chemical exports. Strong 
demand has helped European ethylene 
prices climb 23 per cent in the last two 
quarters. Such price rises and volume 
growth should help generate a bumper 
third quarter. Yet apart from the 
Netherlands' DSM, European stocks 
heavily involved in petrochemicals 
have failed fUlly to emulate their US 
counterparts. BASF has outperformed 
the market by just 8 per cent in the 
hist 12 months. 1C1 by only 13 per cent. 
It is time for a rerating of European 
commodity chemicals stocks. 




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The systems integration business will trade as Parity Systems. 





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A Burnt* d» Yrwh Ccmroaorv WIT 


Monday October 17 1994 


MARKETS 


THIS WEEK 


BR0KVEN MADDOX: 

GLOBAL INVESTOR 
Globalisation is a word heard these 
days from only a handful of 
industries. Once the height of 
fashion, used to justify the 
acquisitive tendencies of 
companies right across the stock 
market, it fed from popularity when 
many of those deals proved disappointing. Page 24 


PETER NORMAN: 

ECONOMIC NOTEBOOK 
The recent wild gyrations of the 
rouble may be a world away from 
the day to day preoccupations of 
foreign exchange markets. But they 
have been a reminder that 
currencies can be very volatile and 
have the capacity to spring 
24 




surprises. Page 


BONDS: 

The return last week of Argentina to the syndicated 
loan market marks a significant stage in Latin 
America's financial rehabilitation. Argentina secured 
a $500m 18-month credit with a spread of 150 
basis points above Libor on Tuesday. Page 26 

EQUITIES: 

London - the UK stock market looks a more 
confident place and the final quarter of the year 
offers promising prospects. New York - analysts 
say stocks may have difficulty making much 
headway this week, even though the third-quarter 
reporting season Is in foil swing. Page 26 

EMERGING MARKETS: 

Taiwan wants to use Its economic might to beoome 
a regional financial centre. However having a stock 
market that is highly restrictive to foreign 
investment poses a formidable obstacle to such 
ambitions. Page 25 

CURRENCIES: 

Foreign exchanges wifi start their week digesting 
political events. The point of departure will be the 
outcome of yesterday's national pod in Germany. 
Page 25 

COMMODITIES: 

Leaders of the world's lead and zinc industries, 
who have been meeting fn Vienna over the 
weekend, today begin the 39th foil session of the ; 
International Lead and Zinc Study Group. Page 24 

UK COMPANIES: 

Morris Mechanical Handling, the UK cranes, hoists 
and warehouse systems producer, has been taken 
over, just four months after it was sold In a 
management buy-out Page 22 

INTERNATIONAL COMPANIES: 

Beta Funds, a London-based company, is planning 
to launch a $50m (231 m) Investment fund for Cuba 
and has created the first arvestment management 
company to be represented on the island. Page 23 


Hammerson clinches Australian deal 


By Peggy HoOinger 

Hammerson, the UK property 
group, yesterday clinched the 
sale of its Australian property 
interests for £25 lm (J396m) in 
cash, after a heated bidding race 
between five companies helped to 
push the price to a 40 per cent 
premium on recent valuations. 

The UK company, with an 
international portfolio valued at 
about £LTbn, is now expected to 
launch an aggressive acquisition, 
programme in continen ta 1 


Europe, particularly France. 

Hammer son has conditionally 
agreed to sell six office buildings 
and one shopping centre to Aus- 
tralian Mutual Provident Society. 
The properties were revalued last 
year at £178.3m, down from 

pgitTw in 1392. 

Mr Bon Spinney, who led a 
wide-ranging reorganisation 
since arriving as chief executive 
last year, said bidding had been 
fierce for the Australian proper- 
ties, which include one of the 
largest regional shopping centres 


in Australia. 

“There has been a considerable 
improvement in conditions in 
Australia over the last six 
months,” he said. 

The properties last year con- 
tributed income of AJ27m. Mr 
Spinney said that Hammerson 
(tedded to sell when it became 
apparent they would require fur- 
ther investment. 

Hammerson intends to use n* 
proceeds over the next 15 months 
to increase its exposure to retail 
developments. The company will 


also seek to bolster Its portfolios 
in the UK and continental 
Europe. 

Hammerson is in advanced 
talks on potential property deals 
in France. Mr Spinney said that 
the group would seek opportuni- 
ties in Germany in due course. 
Both countries were “If not at the 
bottom of the economic cycle, 
close to it”. 

Yesterday’s deal was expected 
to enhance Hammerson' s earn- 
ings per share. Even leaving the 
cash on deposit would add L9p to 


earnings, Mr Spinney said. The 
company's gearing - debt as a 
percentage of shareholders* Hinds 
- would initially fall from 63 per 
cant to 36 per cent as a result of 
the deaL 

Last year the group raised 
£199m through a seven-for-15 
rights issue at 285p to bolster a 
weak balance sheet. 

Mr Spinney said just two sig- 
nificant properties remained to 
be sold. These were North Ameri- 
can office blocks valued at more 
than SlOOm. 


Chemical Banking chairman Walter Shipley explains why asset quality is paramount 


Rationalise and keep 
risks to a minimum 


STATISTICS 

Base tending rates 

29 

London resent Issues . 

— 29 

Company meetings 

10 

London shares 

29-32 

CMdand payments 

IQ 

Managed fends — 

3941 

FT-A World b-KjtCW 

24 

Money marksts — — 

— 29 

FT Gukta to ctmndea _ 

25 

New lm bond Issues _ 

— 26 

Foreign exchanges 

29 

World stock mkt indices.. 28 


F or a mao of 6ft Sin (2.06 
metres), Mr Walter Ship- 
ley does not impose him- 
self, being quiet, courteous and 

imacgmnlng Ufa hanlr a ten frag a 

low profile for its size. With 
$166bn of assets, Chemical Bank- 
ing is the fourth largest bank 
holding company In the US, but 
is still known primarily for the 
two banks that formed it 
Yet 2% years after the merger 
of Manufacturers Hanover and 
Chemical Bank - two ailing 
money centre banks whose head- 
quarters faced each other across 
Park Avenue - it has started to 
gain a reputation as more than a 
product of a marriage forced by 
mutual weakness in hard times. 

Mr Shipley also appears to be 
enjoying his new-found promi- 
nence sinc e taking over as chair- 
man and chief executive this year 
on the retirement of Mr John 
McGilUcuddy. Mr Shipley, the 
former chairman of Chemical 
Bank, agreed to serve under Mr 
McGillicuddy as part of the 
merger. 

His statement, in a recent ’ 
interview with, the Financial 
Times that he was prepared tor 
Chemical to lose its dominance of 
the OS syndicated loan market 
rather than accept loose terms 
and conditions on loans, was part 
of a determination not to squan- 
der Chemical Banking's new- 
found strength. 

The most obvious symbol of 
that is the restoration of its tier 
me ratio of core capital to risk- 
weighted assets to more than 
double the 4 per emit Basle 
accord minimum. This contrib- 
uted to Moody's, the credit rating 
agency, raising its long-term rat- 
ing to A2 from A3 this April 
Mr Shipley is most impas- 


sioned when talking of bow cru- 
cial it is for £ht> hanlr to maintain 

and improve its rating. Compa- 
nies are now willing to accept it 
as a partner in long-term con- 
tracts such as interest rate 
swaps. “There is no single thing I 
can do that is more important 
than being the champion of asset 
qualify. Everything else we do 
can be overwhelmed by poor 
assets.” he says. 

Mr Shipley says, moreover, 
that day-to-day management is 
affected by whether the bank is 
perceived as strong or weak. “We 
went through a period where we 


*We can switch to 
the offensive and 
chart a coarse 
and keep to it 9 


were an the defensive, and exter- 
nal events determined our dally 
and strategic thinking. We have 
emerged into a period where we 
can switch to the offensive and 
chart a course and keep to it The 
me thing I can import to my 
successors is the power of that” 

Getting bigger without taking 
true account of the risks lay 
behind the problems of both 
Chemical and Manufacturers 
Hanover. The banks were in turn 
assailed by the less-developed- 
country debt crisis and real 
estate lending problems in the 
US, and had to sell assets to 
restore capitaL 

So perhaps it is unsurprising 
that Mir Shipley does not see the 
new Chemical - as it is known 
internally - reasserting itself 
through aggressive growth. 


Indeed, his determination to curb 
risk in syndicated landing could 
thrpatrm jts position in (me of the 
few markets it truly dominates. 

He sees “chapter two” of the 
merger as being primarily 
devoted to cost-cutting rather 
than generation of more income. 
This is particularly so in its retail 
and mid-market operations in 
New York, New Jersey and Con- 
necticut, and in Texas through 
its Texas Commerce Bank. 

T.iltft rthw ITS h anV« fqryri w ith 

the prospect of narrowing net 
interest margins, Chemical has 
embarked on ratinnflfigatmn Mr 
Shipley points out that Its reduc- 
tion from 430 branches to 280 in 
the New York area has left ft 
with deposits of $S5m per branch, 
compared with an industry aver- 
age of $3Qm. “We have been kept 
busy getting the merger done, 
but chapter two is a tough view, 
business by business, ” he says. 
“It is rationalise, rationalise, 
rationalise. Traditional ways of 
banking are becoming more and 
more obsolete as technology 
brings new ways to deliver prod- 
ucts.” 

Mr Shipley professes no great 
appetite for taking part in the 
current phase of consolidation of 
US h« t> king fo which vmall hanbi 
are being bought to fill in the 
networks of larger regional 
banks. Smaller banks are now 
commanding prices of about 2H 
times book value. 

Chemical has concentrated 
instead cm building its product 
range in retail banking. This 
means a stronger focus on credit 
cards, and the 3330m acquisition 
in May of Margaretten Financial, 
a New Jersey-based residential 
mortgage lender. 

Mr Shipley is also cautious 



about diversifying in corporate 
banking. Although it is natural 
for the bank to use its powers in 
debt securities underwriting as 
an extension of its strength in 
loan syndication, he says ft will 
taka a long to build strength 
in equity origination. 

“The Jury is out on the extent 
to which commercial banks can 
truly became a major factor on 
their own in equities," he says. 
He cites the efforts of JJ*. Mor- 
gan. "Morgan has a clear bead 
start on everyone else, but they 
too have got a long, long way to 
go,” he says. He sees Chemical’s 
task in the medium term as a less 
clear-cut one than Morgan's 
attempt to bridge the divide of 
the Glas^Steagali Act separating 
commercial and investment 
hanking fti the US. “By defini- 


tion, we do not have a singular 
reputation because we have a 
diverse base.” he says. 

Instead, Mr Shipley wants to 
push through operating improve- 
ments, shifting capital into its 
highest return areas, and gradu- 
ally trying to push its return on 
equity up from last year’s 16.6 
per cent during a good trading 
year to a 16 per cent minimum in 
bad years for fi na n cial markets. 

This is not a particularly glam- 
orous mission, but Mr Shipley 
believes it is the only choice 
without taking excessive risk. In 
the long term, he does not rule 
out a merger with annthar large 
bank. Bat the medium term 
promises a continuing struggle to 
reinforce Chemical’s new name. 


John Gapper 


Business 
group 
seeks $2m 
amends 

By Peggy HoWnger 

British businesses which paid a 
total of S2m in retainers to a US 
company in the hope of raising 
finance which they say never 
materialised have joined forces 
to press the US and UK authori- 
ties for compensation. 

The issue will put further pres- 
sure on Britain to increase regu- 
lation of off-shore havens. 

The FBI has intensified its 18- 
month Investigation of the US 
company. Bond Street Commer- 
cial. Law enforcement officers 
estimate up to flOOm has been 
taken in “retainers” by the com- 
pany world-wide, or those con- 
nected with ft, in return for help 
in raising finance. 

Almost 20 UK companies have 
formed the Tnrnberry/Bond 
Street Pressure Group to high- 
light their plight. 

The companies each paid 
retainers of between $30,000 and 
$230,000 to Miami-based Bond 
Street Commercial, previously 
known as Tnrnberry Underwrit- 
ers. In return, they were prom- 
ised help to raise almost SlOOm, 
in the form of collateral to 
secure bank loans. 

In many cases, the loan was to 
have been repaid by a flotation 
arranged thorough a company ran 
by the former president of Turn- 
berry, Mr Les Mersky. 

Yet no company coaid meet 
the terms of the Bond Street con- 
tract in the time allowed. Several 
companies even paid further 
retainers for extensions but still 
could not complete. 

The arrangement appears to 
have broken down during bonk 
to bank discussions. In one case, 
Tumbeny’s bank was discovered 
to he an offshore private institu- 
tion, the Guardian Bank and 
Trust (Cayman) Ltd. 

Mr Gwyn Davies, of Cardiff- 
based solicitors Edward Lewis 
Bevan Ashford representing the 
group, said they wanted “to 
draw attention to the authori- 
ties’ failure to regulate Turnber- 
ry/Bond Street in the UK, US and 
Caymans.” 

Tnrnberry and the Guardian 
Bank were the focus of an article 
in the Financial Times last year. 
Other UK companies have been 
put in touch with Bond Street 
through national newspaper 
advertisements. 

The ads are often placed by US 
and UK agents. One such agent, 
based in New York and trading 
under the name EFG or EF Gib- 
son, was involved in most of the 
pressure group cases. 


This week: Company news 


EUROTUNNEL 

Departure delays 
leave investors 
counting the cost 

Eurotunnel's often strained relations 
with its shareholders took another 
knock last week when an ill-judged 
comment from its finance director, that 
revenue targets from the Channel . 
tunnel would not be met, jangled 
investors* nerves. 

Co ming just ahead of the company's 
announc ement today of its first-half 
results, the news of the missed targets 
left Eurotunnel's shares down 20p on 
the week at 228p. 

That Eurotunnel was likely to miss 
its forecast of £137m ($216m) revenues 
in 1994 has been obvious fin 1 some time 
as a result of delays in the launch of its 
freight and passenger services. 

But the casual way in which the 
company appeared to acknowledge this 
did little for its image. _ 

Eurotunnel says it is still within the 

financing limit agreed with banks m 
May at ite£856m righto iss^ but 
analysts are not so sura The delayed 

start may have lopped £30m to ESOm off 
revenues while the poor performance of 
its shares makes ft unlikely owners wfll 
want to exercise their 300p warranto. 

Eurotu nn el calculated in May that it 
had £419m for contingencies. But if the 
income from the exercise of warrants 

and the effect of a leasing deal are 
taken out then the margin was only ■ 
£34m. ,, _ 

The delayed start could put 
gurotwmel in breach of its 
covenants though it * unlikely the 

hanks would force the issue. 

Having come this far With the £10to 
project they have no desire to bnng it 

d0 St tnii indicates Hurt the «™Peny 


s-r-Mssssag- 

Shs while the sinldngof^^ 

Estonia has put into P ers ^^J^^ 
Sabout the safety of the tumwL 


Eurotunnel Units 



.1904 


•SoUnw FT Gc*»«ta 

1NVL BUSINESS MACHINES 

Engineering a 
success story 

International Business Machines will 
report third-quarter results Thursday. 
The world's biggest computer company 
is in the midst of a broad 
“re-enginemring” effort to boost 
profitability. Wall Street analysts 
forecast third-quarter earnings of about 
90 cents per share, compared with 
losses of 12 cents per share. 

Mr Lou Gerstner, IBM chairman, said 
last week that the company is making 
progress. “Unfortunately we have an 
uneconomic cost structure but we are 
well into fixing the problem.” In 

Europe, IBM to ahead of schedule in 

reaching competitive cost targets. 

Stroogertimn-expected sales of 
mnfafirgmp computers have boosted 
IBM’s profitability in the last two 
quarters and analysts will be watching 
to see whether that trend is continuing. 
Sales of IBM’s new Aptiva horns 
computers, introduced last month, 
should help to boost the performance of 
IBM’s PC division, which has suffered 
market share losses this year to the 
face of fierce competition from Compaq 
Computer. 

IBM will introduce new desktop and 
portable personal computers on 
Monday. The desktop models, aimed at 
corporate PC users, are expected to be 
loaded with IBM's recently announced 
“Warp” s oft w a re, which competes with 
Microsoft’s Windows. The company will 
also launch new versions of Its popular 
“ThinkPad” notebook computers. 


OTHER COMPANIES 

Intel on course for 
3Q earnings rise 

■ Intel The world's largest computer 
chip maker will report its third-quarter 
results after the dose of trading in New 
York today. Analysts are forecasting 
earnings of about $L5i per share, 
compared with $133 in the same period 
last year. Intel has just begun an $80m 
advertising campaign to boost sales of 
PCs containing Pentium, its highest 
performance microprocessor, during the 
busy Christmas selling season. The 
company continues to battle imitators 
in the microprocessor market Last 
week, total sought a temporary 
restraining order to force Advanced 
Micro Devices to halt sales of 
microprocessor clones. 

■ Credfto Italiaaa The recently 
privatised Italian bank launches an 
issue of new shares and bonds today to 
raise up to Ll,52Qbn ($965m) for future 
acquisitions. The discounted share 
Issue is priced at LI ,500 a share, against 
a c u rre n t market price of about LL970. 
The exercise of warrants attached to 
both bonds and shares could raise a 
further LL120bn by the end ofl9S7. 

■ SnrtthKline Beecbanu Third-quarter 
figures from the Anglo-US ding 
company, to be announced tomorrow, 
will be scanned for dues to progress in 
integrating DPS, the drug distributor ft 
bought for $23bn in May. It win also be 

the first fall quarter to show the effects 
of the expiry of the patent on Tagamet, 
the ulcer drug, once SmithKtine's best 


Sham price (5) 
80 — - 



less 

Source FT OapNta 


MW 


selling product. The nine-month pre-tax 
profit figure should nevertheless be 
well above £900m, ($L42bn) compared 
with £S41m a year earlier. 

■ Smiths Industries: Full-year prefax 
profits are expected to advanced per 
cent to about aiASm when the UK 
aerospace and medical products group 
reports cm Wednesday. The dividend is 
likely to be lifted in line with forecast 
earnings growth of 8 per cent 

■ Amstrad: The consumer electronics 
group is expected to report full-year 
pre-tax losses of up to £5m on 
Thursday, hampered by the problems of 
the personal computer Industry and 

tough competition in consumer 

electronics sales. 

■ Highland Distilleries, maker of 
Famous Grouse, the second largest 
Scotch whisky brand in the UK, is 
expected today to report fall-year 
pre-tax profits of about £42m (£3&Sm). 


Compmlss bt this Issue 


Bond St Commercial 

21 

Ford 

7,1 

Long island Lighting 

1 

British Gas 

20 

Hansneeaon 

21 

Mahlndra & Mahtadm 

1 

British Sted 

20 

Hughes Comma 

23 

Mazda 

7 

Chemical Banking 

21 

IBM 

21 

MKnkoshi 

23 

Seotrofux 

23 

ito-Yokado 

23 

Rover 

7 

Euro Disney 

23 

Jusco 

29 

Satyu 

23 

Eurotunnel 

21 

Kvaanar 

23 

Skopbark 

23 



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2"> 


FINANCIAL TIMES MONDAY OCTOBER 17 IW4 


COMPANIES AND FINANCE 



Tie-up has come sooner than expected after management buy-out 

MM II acquired for $25m 


By Andrew Baxter 

Morris Mechanical Handling, 
the Leicestershire cranes, 
hoists and warehouse systems 
producer, has been taken over, 
just four months after Trafal- 
gar House, the engineering and 
construction group, sold it in a 
management buy-out 

Harnischfeger Industries, 
based in Milwaukee, Wiscon- 
sin, has bought Morris, for- 
merly Davy Morris, for about 
S25m (E15.Sm). The combina- 
tion of Morris and P+H, Har- 
nischfeger’s materials handling 
arm, will create a new world 
force in the industry. 

The old Davy Morris had 


been only a very small part of 
Trafalgar House, acquired in 
the 1991 takeover of stricken 
process plant contractor Davy 
Corporation. Its purchase in 
June by management, for 
undisclosed terms, was the pre- 
lude to a search for link-ups in 
materials handling, aimed at 
establishing Morris as a world 
player In the industry. 

In the event, a tie-up has 
come much quicker than 
expected. The alliance com- 
bines P+H’s strengths in the 
US market with Morris’s 
strong customer base in the 
rest of the world. It will have 
annual turnover of £i50m and 
1500 employees at manufactur- 


ing centres in the US, UK. 
South Africa and Mexicc. 

Morris has about 750 employ- 
ees. two thirds of whom are 
based at Loughborough, and 
annual sales of about £60m. It 
is expected to report pre-tax 
profits of £3 -2m for the year 
ended September 3a 
The Leicestershire company 
has one of the industry's 
broadest product ranges, mak- 
ing everything from huge ship- 
to-shore cranes to han&oper- 
ated pull-hoists. Engineered 
products account for two 
thirds of turnover, with stan- 
dard or mass-produced prod- 
ucts making up the rest 
Mr Mike Maddock and Mr 


Bruce Nonridge, managing 
directors of the two product 
sectors, said Morris and P+H 
had a complementary range of 
cranes, hoists and controls and 
associated services; the new 
combined operation would be 
extended by Morris’s range of 
engineered cranes and auto- 
mated warehousing equipment 
The deal was carried out 
through the purchase by Har- 
mschfeger of MME (Holdings). 
It is part of the US company’s 
strategy to transform its mate- 
rials handling group into a 
core business with the techno- 
logical knowhow, global pres- 
ence and after-market potential 
to generate significant profits. 


DTI will ignore RJB chiefs ‘bonus 5 


By Peggy HoHinger 

The Department of Trade and 
Industry is not expected to pur- 
sue reports or controversial 
payments made to Mr Richard 
Budge, chief executive of RJB 
Mining, which last week 
became the government's pre- 
ferred bidder for British Coal's 
English mining assets. 

Mr Budge was cited in a 
report by receivers to AF 

Faber Prest 
pays £3m 
for Debrian 

Faber Prest, the industrial and 
distribution services group, 
has acquired Debrian (Hold- 
ings) and R&M Shorthouse, its 
wholly owned operating sub- 
sidiary. for abont £3m. 

R&M Shorthouse is a West 
Midlands-based operator of a 
dedicated specialist fleet of 
vehicles under contract to the 
steel distribution industry. In 
the year to May 31 1994 its 
pre-tax profits were £413,000 
on sales of £3.11m. 

Net assets at that date were 
£lm, including net debt of 
£ 20 . 000 . 

The consideration for the 
acquisition will be satisfied as 
to £l-54m in cash. £841,500 in 
loan notes and the balance in 
ordinary shares. 


Budge, the family business 
which collapsed in 1992, for 
receiving payments without 
evidence of proper boardroom 
approval. 

Mr Budge, who says the pay- 
ments were a performance 
bonus, has since repaid 
£325,000 to the receiver without 
admitting liability. 

Meanwhile, it emerged that 
one of the bids for British 
Coal's assets included a clause 


to give members of the Union 
of Democratic Mineworkers up 
to 20 per cent of the 
company. 

A consortium of the UDM 
and Coal Investments, led by 
Mr Malcolm Edwards, the for- 
mer British Coal commercial 
director, is believed to have 
offered £510m for two of the 
central ft ngfand regions. 

This figure included a £35m 
payment to the government for 


the issue of a 15 per cent stake 
to the mineworkers. A further 
5 per cent would be set aside 
for mineworkers to buy 
through an employee share 
ownership plan. 

The consortium is believed 
to have provided a further sub- 
stantial amount to extend 
indefinitely the generous 
redundancy terms which the 
government has said must be 
provided until March 1998. 


CROSS BORDER M&A DEALS 


BfDDER/INVESTOR 

TARGET 

SECTOR 

VALUE 

COMMENT 

Sappt (S Africa) 

S D Warren (US) 

Paper 

£ 1.01 bn 

SA's rehafcm- 
atJor continues 

Viag (Germany) 

Units of Sf Sanofi 
(Francs) 

Food 

processing 

£52 5m 

Pat of 

disposal 

programme 

K one (Finland} 

Montgomery Elevators 
(US) 

Lifts 

£177m 

Doubling N Am 
market share 

Ulster Bank (UK) 

TSB Bank (Ireland) 

Banking 

Clift n 

NatWast ami 
raises bid 

Vodafone (UK) 

Socfete Franca/sa 

Telephone (France) 

Mobile telecoms 

Cl 05m 

Stake pert of 
wider alliance 

Amersham Inti (UK) 

Nhan Mecfr+Phystas 
(Japan) 

Healthcare 

£55m 

Stake rein- 
forces global 
ambitions 

Campfael S 014 ) (US) 

Units of Albert Fisher 
(UK) 

Food 

packaging 

£37.1 m 

More Fisher 
disposals 

Cimpor (Portugal) 

Gmerttos de Mocambique 
(Mozambique) 

Cement 

£12_7m 

Cimpor cont- 
ue a inter- 
nationafisation 

Pflfdngton (UK) 

Laftden Lasftehdas 
(Finland) 

Glass 

£9m 

Buying out 

minority 

holders 

BAT Industries (UK) 

Java (Russia) 

Tobacco 

n/a 

S70m Invest- 
ment planned 


Hil raises 
funds for 
German 
plant 

By Chris Tig he 

Hil Technologies, a designer of 
electrically powered commer- 
cial vehicles, is offering 25m 
£1 shares at par to raise funds 
to build a manufacturing a nd 
assembly plant on a former 
Russian military base near 
Eisenach, Germany. 

The unquoted company 
hopes to raise £l8m in the UK 
and Hong Kong. It needs a 
i pinifflnm of £i5m to tr i gg er 
an offer of £45m towards the 
project from Treuhand* the 
privatisation agency operating 
in former East Germany. 

The company grew out of HU 
Electric, which raised £500,000 
under the business expansion 
scheme to fond the design of 
electrically powered commer- 
cial vans. Hil believes there is 
a potential volume market for 
environmentally friendly com- 
mercial vehicles. 

Its aim is to begin construc- 
tion of the plant in early 1995. 
Tim first phase of the plant, 
which would be operated by a 
subsidiary, HO Antomobilwerk 
Eisenach, would be an assem- 
bly facility producing 45,000 
units by 1998. Hil hopes cus- 
tomers will include large fleet 
vehicle owners attracted on 
commercial grounds as well as 
ecologically minded companies 
and institutions. 

Hil's prospectus has been 
sent to 2,500 institutions and 
individual ethical investors. 
Closing date is November 30. 


Net asset value 
rises at Value 
and Income 

Fully diluted net asset value 
per share of Value and Income 
Trust was 106.6p at September 
30, up from lDl.lp a year ear- 
lier . 

Net revenue for the half year 
was up 28 per cent, from 
£684,000 to £852,000. 

Earnings per share rose to 
L98p (1.56p) and the interim 
dividend is lifted from 2p to 

2.1p. 

The directors intend to rec- 
ommend a final of 2-lp. 


Parity pays £8.3m for 
ACT’s systems business 


ACT, the Birmingham-based 
computer services group, has 
tafcpn a further step in its 
transformation into a financial 
software products company 
with the sale for £8 .3m of its 
systems integration and train- 
ing interests. 

The buyer is Parity, formerly 
Comae, an information tech- 
nology staff agency and ser- 
vices group headed by Mr 
Philip Swinstead. The acquisi- 
tions, ACT Business Systems, 
ACT Business Systems 
(Ireland) and BIS Training, will 
help Parity achieve its objec- 
tive of becoming a broadly 
based computing services com- 
pany- 

The total cost includes the 
repayment of £3 .8m of intra- 


group debt Some £&3m wffi be 
payable on completion and the 
remainder on the second anni- 
versary of completion. The 
consideration will be met 
through a placing and open 
offer, fully underwritten by 
Samuel Montagu, to raise a net 
£5.7m. The balance will be met 
from Parity’s existing 
resources. 

ACT, which took over the 
BIS Group last year, has been 
selling off non-core activities 
as it concentrates on software 
products for the financial sec- 
tor. The company is likely to 
have annualised revenues of 
about £170m: last year it 
achieved pre-tax profits of 
£28-5m. 

Market worries over the cost 


of restructuring and product 
development have hit the 
share price, however, which 
closed yesterday at just over 
joOp. Parity intends to create 
an new division. Parity 
Systems, to complement its 
existing consultancy, training 
and agency operations, with 
the acquisitions, annualised 
turnover Is likely to reach 
about £l20m- 

Mr Swinstead said: “In 12 
months our small agency com- 
pany has been transformed 
Into a significant IT services 
business." 

Parity Systems will be man- 
aged by Mr Keith Jennings, 
recruited from Easams, part of 
GEC. The marketing director 
will be Mr George Waddington. 


Scholey 
retires from 
BT board 

By Alan Cane 

Sir David Scholey, who steps 
down as chairman of SG War- 
burg next year, has retired as a 
non-executive director of Brit- 
ish Telecommunications . 

Sir David, 59, joined the 
board of BT in 1985 and is leav- 
ing on the completion of his 
third term of office. 

Sir Tain V aiianra , BT chair- 
man, paid warm tribute to Sir 
David's work for the company 
during the most tempestuous 
period in its existence. 

Sir David said he was leav- 
ing when BT was "acknowl- 
edged as a global market 
leader within the telecommuni- 
cations industry”. 


DARTMOOR Investment Trust 
has received acceptances in 
respect of 55.3m shares in 
Sphere Investment Trust (45.6 
per cart). Taken with its cur- 
rent holding of 8.5m shares 
(7.01 per cent), this brings total 
acceptances to 63_&n (5058 per 
cent). 

GLENCAR EXPLORATIONS: 
74 per cent of the shares 
offered under the recent 
l-for-10 open offer have been 
subscribed. The remaining 
662,213 shares have been 


Aberdeen 
Steak losses 
at £137,000 

Aberdeen Steak Houses Group, 
the restaurant operator, 
reduced pre-tax losses for the 
six months to June 30 from 
£197,000 to £137.000. 

After a good start to the 
year, a combination of hot 
weather, the World Cup and 
the beginning of the rail 
strikes in May and June 
reduced turnover and profit- 
ability to below expected lev- 
els, directors stated. 

Turnover edged ahead from 
£6.16m to £6-76m. 

As turnover is traditionally 
seasonal, the company said it 
was "hopeful” of the year-end 
outcome. 

Losses per share came oat at 
l-2p (l-8p). 


NEWS IN BRIEF 


placed. The Dublin-based com- 
pany is to begin intensive dril- 
ling and evaluation in Wassa. 
rihanw , immediately. 

NOBO GROUP: the open offer 
of A9m ordinary shares at 225p 
each haa resulted in firm plac- 
ings of l.72m shares by the 
directors and their family 
trusts. Of the remainder, 1.44m 
applications were received 
from qualifying shareholders. 
WYEVALE GARDEN Centres 
has acquired the freehold of 
Peter Barrett's Garden Centre 


Swedish 
buy for 
Bodycote 

Bodycote International, the 
metal technology, packaging 
and textiles company, and 
Asea Brown Boveri, the Swed- 
ish electrical engineering com- 
pany, have agreed terms 
whereby Bodycote will buy 80 
per cent of the shares of ABB’s 
wholly owned subsidiary ABB 
Powdermet. The SKr42m 
(£3.55m) consideration will be 
satisfied in cash. 

Powdermet’s total valuation 
is SKr52.5m and it has net 
assets of about SKr40m. Its 
turnover for 1993 was SKr67tn. 
Bodycote will manage the com- 
pany. which will be renamed 
Powdermet Sweden, and ABB 
will hold the remaining 20 per 
cent 


in Washington, Tyne and 
Wear, for £825.000 plus stock at 
valuation. The purchase brings 
the the number of garden cen- 
tres operated by WyeraJe to 44 
The Barra tt partnership owns 
two other centres. 

VERSON INTERNATIONAL 
Group has refocused its loss- 
making press business. Clear- 
ing International, on refurbish- 
ment, press enhancement, 
spares and service. At the 
same time it has reducing 
staffing and overheads. 


X 


This .Minouncenent jppeun a mutter of record onJy 



\ 


First Bangkok City Bank Public Company Limited 

acting through its Cayman Islands Branch 

USD25 0,000,000 

Floating Rate Certificates of Deposit due 1999 

AmiKjccT.v ^ Lctni-Muminnw 

KEX1M Asia Limited 

L JK.C. Far East Ltd/London Forfaiting Company PLC 

Mitsubishi Finance <Hong Kong) Limited 

National Bank of Kuwait S-A-K., Singapore Branch 

Public Bank (L) Lrd 

Sakurti Finance Asia Limited 

Sumitnnu* Finance (Asia) LimiceJ 

Sumitomo Trust Merchant Bank (Singapore) Ltd. 

Tokai Asia Limited 

L'nited Overseas Bank Limited 

West LB Asia Pacific Limited 

Cn-lj-tul .l/i.'iiii.ccr.v 

Landcsbnnk Berlin, London Branch BjnkKVtclIschiift Berlin Group 

Burgan Bank S.A.K. Kuwait 

Citibank, N.A. B1BF 

The Gulf Bank K.S.C.. Kuwait 

Hanii International Finance Limited 

I.TCB Asia Limited 

National Westminster Bank PLC, Singapore Branch 
S.inwa International Finance Limited 
Shinhan Bank 

Standard Chartered Asia Limited 
Senior .l/wiiiJuiTv 

American L.-cpress Bank GmbH. Frank fun 

Banco di Napoli S.p.A.. Hunt; Kong Branch 

Bank of Hawaii, Singapore Branch 

1NG Bank, Bangkok International Banking Facility 

The International Commercial Bank of China, Offshore Banking Branch 

N DC Merchant Bank Led 

Norddcutschc Landesbank Girozentralc, NORD/LB Singapore Branch 
Bank of Bahrain and Kuwait B.S.C. 

Banque Fran^aise du Commerce Ex ter it* ur, Singapore Branch 
Banque National*.- de Paris, Bangkok International Banking Facility 
Daiwa Singapore Limited 

Hamburgische Landesbank -Girozentrale- Hong Kong Branch 
N.V. Dl* lndoncsische Overseesc Bank (IN DOVER BANK) 

The Nikko Merchant Bank (Singapore) Limited 

MmuifU'r* 

Chuo Trust Asia Limited 

Bank Austria Aktiengcsellschaft* Hong Kong Branch 
Banquc Gencralc du Luxembourg S.A. 

Christiania Bank, Singapore Branch 

Industrial & Commercial Bank of China, Singapore Branch 
Landesbank Rheinlnnd-Pfalz -Gfrozentrale- 
SBl European Bank Limited 

Banea Nozionale dcil'Agricoltura, Hong Kong Branch 

DIE ERSTE osterreichisehe Spar-Casse - Bank AG, Firs* Austrian Bank 

First Commercial Bank. NieJerhssung Frank furt/Ftankfurt Branch 

Fuji International Finance (HK) Limited 

Sociere Generate, Singapore Branch 

AV.Vfiv.vc A- Paying Agent 
London Forfaiting Asia Limited 


Chsing Settlement Agent 

KEXIM Asia Limited 




Issue Co-ordinclor 

L.F.C. Far East Ltd 



FINANCIAL TIMES 

Conferences 


CORPORATE RISK MANAGEMENT 
AND THE INTERNATIONAL 
INSURANCE INDUSTRY 


London - 3 November 1994 

As the risk management function within corporations expands and evolves in response 
to an ever increasing array of risks, the ability of commercial risk insurers to meet their 
clients requirement could become a matter of their very survival. This conference will 
examine the implications of the changing balance of the role of brokers, insurers and 
risk managers and explore how the international insurance industry is responding to the 
new challenge. 


SPEAKERS INCLUDE: 

• Mr H Felix Kloman 

Editor, Risk Management Reports 
Former Principal, 

Towers Perrin 

• Mr Walter Kielholz 
Member of the Executive Board 

Swiss Reinsurance Company, Zurich 

• Mr Clive Pracy 

Head of Risk Management. 

London Transport 
Council Member, AIRMIC 

• Mr Stewart H Steffey Jr 
President 

Liberty International Holdings Inc 


Dr Herbert M Harrell 

Chairman, Harrell Associates Incorporated 

Founder, M200 Forum 

Mr John P Ryan 

International Practice Leader 

Tillinghast 

Mr Rodney Meere 
Chairman 

Willis Corroon Hinton 

Mr Wolf-Dieter Banmgartl 

Chairman of the Board 
HDIVaG 


FINANCIAL TIMES CONFERENCES in association with AIRMIC and FT Newsletter 
World Insurance Report 

There are some excellent marketing opportunities attached to this conference, please contact 
Lynetre Northey on 07 1 8 14 9770 for further details. 


CORPORATE RISK MANAGEMENT AND THE 
INTERNATIONAL INSURANCE INDUSTRY 

Please lick rrlevaar boxes. 

□ Conference information only. 

□ Cheque enclosed for £440.63, made payable u> FT Conferences. 

□ Please charge my Masfcrcani/Visa/Amex with £440.63. 


Please return to: Financial Tunes Conference Organisation. 
PO BOX 3651, London SW12 8PH. Tel: 081 673 9000 
Fax: 081 673 1335. 

Corporate Risk Management and the International Insurance 
Industry £375 + Vat 


Name MrfMrs/Miss/Ms/Other 

Job Title Dept 


Card no 


Nome of card holder 


Exp. date — Signature. 


Company 

Address ..... 


1 — M|| ,|f fr p ruurTT ntm~* 

by cAenrtmfd qmtlij onpw) far mat* pt®"- 


Tel. 


—PostCode 
--.Fax 




jw 


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October 1994 








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MENT 


FINANCIAL TIMES MONDAY OCTOBER 17 1994 


COMPANIES AND FINANCE 


Discounting hits Japanese stores 


By Br\Bco Terowno \n Tokyo 

Earnings growth at Japan's 

leading retailers for the first 


■hPMiw WSgerK 0 m on th* to Aug 91 1894 


(nm) 


Chanos on 

W 


Pro-tax Clung* on 

pratt (Vbn) JW (%l 


Angwt was moderate, in spite 
of the income tax cot in June 
and a hot simmer which 
Spurred sales of ltwq p suda as 


The big supermarkets and 
department stores continued to 
he adversely effected by the 
discount boom", as Japanese 
consumers shunned expensive 
brand na m e products. The 
leading supermarkets expect 
further price competition In 
the second half. 

Sales par customer at the 
loading supermarkets toll by 
between 4 and 7 per cent from 
a year earlier. Saiyn said that 
ita price index for August 
declin ed by 65 per cent from 
the same month last year. 

Even Daiei, which saw a 
sharp gftipa h KTpff se trumir* to 
the merger of three supermar- 
- ket chains in March, said that 
* its low price campaigns 
boosted the number of shop- 
pers by li par coat, but aver- 


DeW 

1,284.7 

+25l0 

11£ 

+07 

Ito-YoJado 

75aa 

+1.1 

42.0 

+08 

Jusco 

545.B 


105 

-118 

Seiyu 

fawiR 

-1.7 

11 

-509 

Sewen-Sffren 

1Q8j4 


4£8 

+70 

RsnRyMart 

246.8 

+10£ 

QA 

+17U 

MttaiRneM 

379J9 

-AJ 

08 

- 




age sales per customer fell by 6 
percent 

Daiei said that an fytpni^on 
of business hours, aimed at 
supporting sales, pushed up 
personnel expenses and otter 


per cent 

The company will continue 
Its low-pricing strategy in the 
second half to the fiscal year to 
February and expects sales to 
rise by 23.5 per cent to 
Y2£60bn ($26bn) and pre-tax 
profits to increase by 4A per 
cent to Y23bn. 

Ito-Yokado said that brisk 
summer doe to the hot 
weather end longer business 
hours helped sluggish revenue 
during the previous few 


ti yin tte xt hiftmaH its meagre 
pre-tax profit increase on a 4 
per cent toll In sales per cus- 
tomer and a decline in interest 
income 

For the Adi year to February, 
the company expects sales to 
rise by 3-9 per cent to Yl^B5hn 
and pretax profits by 5.5 per 
cent to Y8&5hn. 

Jnsco’s pre-tax profits toll 
partly because of a rise in 
depreciation costs stemming 
from restructuring and the 
relocation of Us headquarters. 

For the 12 months to Febru- 
ary, the company expects a 2 
per cent rise in pre-tax profits 
to Y2&5bn on a 105 per emit 
rise in sales to Yl,170taL 

Profits at Seiya plunged due 


to cost increases from the 
launch of new stores. For the 
full year Sdyu expects a 4 per 
cent fall in profits to Y75hn 
while sales are projected to 
remain fiat at YXOffShn. 

Mitsukoslti, a leading depart- 
ment store with business links 
with Harrod’e, returned to the 
black thanks to cost c ulling . 

However, the company will 
continue to see Che effects 
lower pricing on its Alii year 
sales, and it is forecasting toll 
year pre-tax profits of Y2-5hn 
cm a 4 per cent decline in sales 
to YTCBbn. 

Convenience stores, which 
have carved out a niche in the 
retailing market, posted firm 
s al e s and profits. 

HOwever, file sector, which 
has been posting double-digit 
earnings growth in recent 
years, has also beat hit by dis- 
counting, increasing com- 
petition is Hke3y to slow future 


Sales at Seven-Eleven Japan 
for the full year are forecast to 
rise by 55 per cent to Y212bn 
and pre-tax profits are expec- 
ted to increase by 55 per cent 
to Y93ba. 


US satellite 
TV group looks 
to Europe 

By Raymond Snoddy 

Hughes Commanicatioaa,the 
main backer of the DirecTV 
satellite television system in 
the US, Is beheved to be inter- 
ested in expanding Into 
Europe. 

Preliminary ap^oaches have 
been marie to the two satellite 
television operators in Europe, 
Eutelsat and SES, the taxem- 
tanrg-taaed organisation that 
runs the Astra satellite system. 

Both organisations have sat- 
ellites due to be launched 
within the next tow weeks bed 
both are understood to be fiflL 

sgfl plans to launch a fifth 
satellite in July 1996 which 
will probably rrffer digital ser- 
vices and Entelsat intends to 
launch a di gital satellite in 
19S6L 

Interspace, a specialist news- 
letter, said yesterday that 
Hughes was interested in try- 
^ing to launch direct-to-the 
home satellite television ser- 
vices to European countries 
not well served by satellite 
television, such as Italy, Spain 
and eastern Europe. 


Skopbank may need more help 


By Christopher Brawn-Huuwa 
In Stockholm 

Skopbank, the stateooteroDfid 
Finnish bank, has warned that 
it might need farther govern- 
ment support before the year 
end, in spite of a 49 per cent 
redaction in net operating 
losses in the first eight 
months. 

The hank said its results 
could deteriorate in the final 
four months of 1994 if It has to 
make provisions to cover poesi- 
ble losses from restructuring. 


The bank has been the big- 
gest casualty of the Finnish 
banking crisis, receiving 
mote than FM17bn ($3.62bn) 
in government assistance 
since it was rescued by the 
Bank of Finland in September 
1991. 

The drop in the bank’s net 
operating lues to F14448m in 
the first eight months followed 
a 58 per emit toll in credit 
losses to FMSTIm. 

The improvement would 
have been greater but for a 47 
per cent decline in income 


from financial operations to 
FM176m. The toll reflects a sig- 
nificant reduction in innrifag 
volumes and a FMSSm loss on 
bonds. 

Skopbanks role as the cen- 
tral bank of the Finnish 

Savings famfra hfl* dianpiri foj . 

lowing the restructuring of the 
Savings Bank of Finland in 
late 1993. 

The bank continues to ser- 
vice domestic corporate cus- 
tomers and also represents the 
savings banks in wholesale 

ma i tota . 


Electrolux to expand in Asia 


By Christopher Bronm-Mumw 

Electrolux, the world's biggest 
manufacturer of household 
appliances, said that it aims to 
double its revenues from Asian 
countries to SKrUttm (lL37bn) 
within five years as part of 
its expansion drive in the 
region. 

“Our target is to be one erf 
the major players, correspond- 
ing to our petition. in Europe 


and the US," said Mr Leif 
Johansson, Electrolux chief 
executive. 

The c ompany also said that 
it was planning to open five 
new factories In the region 
within three years at sites still 
to be finalised. 

Following its purchase of 
AEG's household appliance 
unit, Electrolux has switched 
the focus of its expansion strat- 
egy to Asia. 


It has recently launched a' 
850m investment prog ram me 
in the Aseen region and said 
that it intended to spend gLOQm 
in China over three years. The 
moves anticipate a substantial 
rise in disposable incomes. 

"We expect China to emerge 
as the world's largest market 
for re fr ige ra tors by the end of 
this year and will be exp ortin g 
more fridges than Japan," said 
Mr Johansson. 


Record 
interim 
profits at 
Kvaemer 

By Karon Fosafi in Oslo 


Kvaemer, Norway's second 
largest listed company, 
repented far better than expec- 
ted eight-month results 
shortly after sounding a wain- 


oil and gas division, which 
will weaken overall group per- 
formance for the fuQ year. 

The group achieved record 
Interim pre-tax profits of 
NKrLflffihn (8154m), up. 41 per 
cent on last year’s NKr720m, 
with four at Kvaerner*s five 
business sectors showing 
Sharp improvements, particu- 
larly shipbuilding. 

The eight-month result 
includes NKrlSOm in unreal- 
ised exchange gains, against 
NKriaom in unrealised Josses 
last year, related to long-term 
financing of the group's ship- 


ping fleet 
The advance came in spite at 
a pretax toss off NKrtOSm by 
the oil and gas division, 
reflecting cost over-runs on 
the North Sea Troll oil con- 
crete floating platform 'con- 
struction project and provi- 
sions for future restructuring, 
test year's comparative figure 
was a profit of NKr268m. 

Group sales rose 5 per cent 
to NKrllTSbn but operating 
profit slipped 8 per cent to 
NKrtTSm due to increases in 
operating costs and depreda- 
tion. 

Shipbuilding boosted operat- 
ing profit by NKr251m to 
NKrflaOm as sales shot up by 
NKAOtim to NKtfMKflm. Pre- 
tax profit rose by NKr254m to 

NKrSffim. 

Mechanical engineering 
posted an operating profit of 
NKr4Bm, against a loss of 
NKr76m, despite a NKrlSSm 
dip in sales to NKrl22bn. 

Pulping saw operating profit 
slip by NKrlfim to NKr78m, 
but pre-tax profit rose by 
NKrgfim to NKrlSfim, Sales 
plunged by NKr855m to 
NKrL23ta. 

Shipping posted an operat- 
ing profit off NKrStin, against 
loss of NKr40m, and 
returned a pre-tax profit of 
NKrlfMm compared with a 
las* off NKtt42m as revenues 
rose by NKrllSm to NKrS33m. 


FT GUIDE TO WORLD CURRENCIES 


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Mws thay am sham to bo othanriM. In soino oatMs mariont idea hnwt bean catajated bom ItioM of loraign cummctos to wNch tfwy am Hod. 


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Milan bourse sets date for 
launch of futures contract 


By Andrew HD to MOan 

The Milan stock exchange 
intends to launch its long- 
awaited futures contract, based 
on the new MIB so i™*** of 
leading Italian shares, on 
November 28. 

On the same day, the 
exchange will extend the dose 
off share trading from 41m to 
5pm, and end the distinction 
between shares which can be 
traded only in the afternoon 
session and larger stocks 
which can be bought and sold 
throughout the day. 

Mr Ettore FumagaBi. a mem- 
ber of the exchange council, 
confirmed tbs launch date 00 


Friday, although he added that 
it could be postponed until 
T)ap<wflhp!r 2, if necessary. 

**I ttrink we will have a fiat 
phase at the beginning [of 
futures trading], with a limited 
number of contracts traded, 
but then 1 think we will have a 
be told joarnal- 


The Milan stock exchange 
has been working hard to com- 
pete with other European 
exchanges, and to attract 
Italy's small investors, who 
have traditionally preferred to 
place their savings in govern- 
ment to"* 1 

Today, the exchange is 
launching a regulated system 


fix 1 trading in amen quantities 
of shares, which fan beiow the 
threshold for on-screen trad- 
ing: 

"Zb be complete, this has to 
be a market which allows 
everyone to operate." Mr 
Fumagalh RRid 

The new fixtures contract - 
known as the FIB 30 - will be 
promoted with a series of inter- 
national road-shows, beginning 
in London at the end of this 
month, and will be traded 
between 9.30am and 5.30pm 
ooce the market is launched. 

Hie MIB 30 index, based on 
the 30 largest and most widely 
traded stocks, is to be compiled 
by the exchange from today. 


Frankfurt SE cuts seat prices 


By Andrew Fiiher to FronkSmt 

The Frankfort Stock Exchange 
has cut the price eff floor seats 
by more than half and reduced 
its electronic ordertoating fees 
to make trading cheaper and 
mare KquiA. 

Under new rules passed Fri- 
day, traders abroad will also 
eventually be able to join the 
IBIS electronic trading system. 
The wrtwng ft » accou nt ing for 
thre&quarters off business m 
Germany's seven stock mar- 


kets - said Interest In IBIS 
Tftftmh ftrahi p bad been, shown 
from trmrirgY i Amsterdam 
Paris in particular, and from 
Switzerland and Luxembourg. 

The fee for admission to 
floortrading has been cut from 
DM500,000 (9322,580) to 

DM200,000, with brokers' foes 
down from DM200,000 to 
DMHMJOO. The DM15,000 admis- 
sion foe for imfivUhxal traders 
has also been removed. 

The exchange's current 
membership comprises 138 


basks (half foreign and half 
German) and 97 tankers. 

Mr Werner Seifert, chief 
executive of Deutsche BOrse 
AG, which operates the Frank- 
fort exchange said: “Our goal 
is to offer cVx’wj yn* wnfl more 
bqidrt trading *b»n aH other 
markets in German securities." 

Members using only the elec- 
tronic order-routing system 
will pay half the annual 
DM24,000 trading fee; the 
annual fee of DM3,000 per 
trader has also been waived. 


Beta to launch fund for Cuba 


By Pascal Hatcher In Havana 

Beta Funds, a London-based 
Company, is planning to 
launch a $50m investment fund 
for Cuba and has created the 
first investment managmnpTit 
company to be represented on 
the i sland 

Havana Asset Management, 
a new subsidiary off Beta Funds 
International, win twen^gn the 
planned ftoha fnv Bwtmeirt fnpd, 
which is expected to be estab- 
lished early next year. 

Mir Peter Scott, Beta's chief 
executive, said its expected 
areas of Investment included 
hotels end tourism, mining, 
food and beverages, the Mgfr- 
tech pharmaceutical sector and 
specialised manufacturing. It 
would invest in new joint ven- 
ture companies, existing 


Cuban wanptmlftg and foreign 
companies with a significant 
exposur e to Cuba. 

Beta specialises In spotting 
new markets and pioneered the 
creation of investment man- 
agement companies In Viet- 
nam and Poland It has more 
than S23Qm invested in emerg- 
ing markets. 

The Cuban government has 
Opened up sectors off the econ- 
omy to foreign investors. It has 
signed more than 100 new 
trade and investment deals, 
from OH exploration and min- 
ing to cosmetics and te xt ile s . 

Mr Scott said the Cuba fund 
had aroused interested in the 
UK, Scandinavia, Switzerland 
Spain, Italy and Mexico. 

Besides Beta, the other 
shareholders in Havana Asset 
Management are Nueva Cam- 


pania de Indies, a S panish trad- 
ing company operating in 
Cuba, and James Miora, of 
Nlnecastle Overseas, a HE 
in v estment managemen t com- 
pany. Mr Scott said Cuba had 
provided legal safeguards for 
foreign Investors by signing 
I n v airtrognt p romotirm and pro- 
tection agreements with a 
number off countries, including 
the UK. 

Mr Scott said the fund's 
articles would not penult the 
participation of in vestors from 
the US, whose government 
maintains a trade and financial 
embargo against Cuba. He 
believed relations between 
Cuba and the US would follow 
the same path as Vietnam, 
against which Washington 
lifted a long-standing economic 
embargo earlier tills year. 


The most frequent flyer 

to Osaka. 



jAL have cieiiy rhrec. 
more than any oh 


i * s f r o n i t u r o o e z o J & pares s o c o no ! a r go s t c i t y 
ai hi no. C a ! I uxir local JAL o f f i c e j o r cJ e r a Us. 


Japan Airlines 

A WORLD OF COMFORT 


JJP. Morgan & Co. 
Incorporated 
US$300,000,000 
Subordinated floating rate 
notes due April 2005 

Notice is hereby gben that for 
the baemst period 17 October 
1994 to 18 April 1995 the notes 
will carry an Interest rate of 
5.725% per annum. Interest 
partite on 18 April 1985 WH 
amount to USS14551 per 
US$5,000 note and USS&1020 
per US$100,000 note. 

Agent Morgan Guaranty 
Trust Company 

JPMorgan 


UJS. $900,000,000 

Floating Bate Newt*, Series I N, 
Due 1999 


UDMnxxaf 
BdocMndtaiBeiilw 
PROVINCE DE QUEBEC 

Neman BOOBY GtVBNftttfcr fee 
litta a Period 17th October. 1994 to 
17tfi Jmuur. 199S. the irneaax ate *43 
be ££»)( peruana. 

Ibelttcxcx pzpUe an lWiJanr. 
1995 acrinn Coupon No. 3 will be 
U3. 614.98 per U3. 01,000 Note, 
UA *1 4330 per UA 810300 Ncce ud 
tt£ St,«O00 per U* *100300 Hen. 


Bar* of Montreal 

■ mocMteWH 


tt 


FINANCIAL TUMXS 


MANAGEMENT REPORTS 


AUTHORITATIVE 
MARKET 
REPORTS 



-Td»« 


iatSnSi 
+44 <0)71 814 9770 

+44 (0)7181 4 9778 




m 

kgp 


mmmM 




September 16, 1994 


StiQwater Mming Company 

httredeeoiedttoSO%iBtermmUieCoB^»sy 
owned by a nMdlaiy of 

Chevron Corporation 


»d processing opeoikBis, 

Stillwater Mining Company 

b» ooinpfeted a private pboemeot of 

10^)00,000 shares of Common Stock 
and 

$25,000,000 8% Subordinated Notes 
due 2001 with Warrants 


Kemper Securities, Inc. and Renting Mafia lac. acted as fi n a ncial 
advisoo to Stillwater Mnh^Ccanpaiiy aid aiplaceoieat agents in flic 
above fiaanefog. 


Kemper Securities, Inc. 


Miirtin 


Fleming 

Efcariag Martin fee. 


Sce nlifei «nd Swefc B acfato p ) fc gyfa* 1992. Jt O om aril 


k DriAa aM LMdM te to) 1Mi te N«w 



DRAGON OIL PLC 

Mtor. tm, tmtntmdnHvtmt 
ftjtourfMtoki 357X) 

Placing of 165,000,000 Units with Sinofl 
and 

Rights Issue of 56^19^53 Units 
at a price of Stg4p per Unit to raise approximately 
Stg£7.9 DuOkm net of expenses 





*■ (-% PLC. 7 FkraBLot Styan. D-HW 2. tatad. 


t7 


m*. 



V 
































FINANCIAL TIMES MONDAY OCTOBER 17 1994 


His ?Wl4t ^ 
T^r^FTT 


FINANCIAL TIMES 


ingA£)bank 


MARKETS 


Best Emerging 
Markets Bank 


INGJtt»BANK 


W si ;; •» 


THIS WEEK 




Globalisation Is 
a word heard 
these days 
from only a 
handful of 
industries. 
Once the 
height of fash- 
ion, used to 
justify the acquisitive tenden- 
cies of companies right across 
the stock market, it fell Cram 
popularity when many of those 
deals proved disappointing and 
* when recession squeezed mar- 
gins and balance sheets. 

But in some comers it lives 
on. At least two companies 
among those declaring third- 
quarter corporate results this 
week continue to wield the lan- 
guage or globalisation 
unabashed. They do not sug- 
gest that the pursuit of inter- 
national scope is damaging in 
itself but they do lend some 
weight to the sceptics. 


Global Investor / Bronwen Maddox 


Masters of a fragmented universe 

s that WMI “has haaltli? Total return In local currency to 13/10/94 

c**™ The prescription for health? ** ^ P™®" 1 


WMI 


Waste Management Interna- 
tional. the UK arm of WMX 
Technologies of the US, which 
releases its third-quarter 
results today, is one case. WMI 
has pursued growth through 
acquisition: last year it made 
48 acquisitions in 12 countries, 
and in the second quarter this 
year another 16. 

WMl's directors argue that 
pollution control is a global 
business, hast year's annual 


report declares that WMI “has 
established a strong leadership 
in [the] global marketplace" for 
environmental services, and 
values this market, excluding 
North America, at £l50bn. 

It is true that that environ- 
mental regulation has been 
tightening in industrialised 
countries as well as in some 
industrialising ones in 
southern Asia. In particular, 
there has been a drive, both 
national and international, to 
tighten standards on disposal 
of solid waste and hazardous 
waste, the areas on which WMI 
focuses. In regulating pollu- 
tion, many countries targeted 
threats to air and water Erst 
and have only recently turned 
to solid waste. 

But what benefits does inter- 
national scale bring to a com- 
pany in those markets? Stan- 
dards are set nationally or 
regionally; the ability to man- 
age a landfill in the UK does 
not imply that the company 
can do the same in Germany. 

WMI argues that its experi- 
ence allows it to improve the 
management of the businesses 
it takes over. That is plausible. 


FT-SE-A 
Ail-Share index 


110 




Cash 

Week 

US 

0.09 

Smith Kllno ; 

Month 

041 

Beech am 

Year 

3-44 


Bonds 3-5 year 


_ /V ... 

Week 

0.58 

/ .1 

Month 

-0.28 

JM » 

Year 

-2.76 


.4b change owr period . 


0.16 OlIO 

0.70 0.46 

8.25 5.59 


particular. But the group will 
be under pressure to demon- 
strate that the world's waste 
industry is not simply a frag- 
mented collection of essen- 
tially different businesses, and 
that global presence pays off. 


S mithKlin e 


Sauce: FT GrapOBe 


but risky. The liabilities of 
waste companies that have 
been technically lax as well as 
inefficient are potentially huge. 

WMI also argues that once it 
has entered a market it can 
grow organically by winning 
new contracts because it has 
advantages over local compa- 
nies. It can. it says, display to 
government officials a track 
record of managing large scale 
projects. Its size also reassures 




e .Richard -fvto.c5;iey 


Lead and zinc group meets 


Leaders of the world's lead and 
zinc industries, who have been 
meeting in Vienna over the 
weekend, today begin the 39th 
full session of the International 
Lead and Zinc Study Group. 

The session, which continues 
tomorrow, follows committee 
meetings among the 300 gov- 
ernment and industry partici- 
pants. Many will have been 
continuing debates begun at 
last week’s London Metals 
Week on the influence on 
metal markets of the influx 
over the past two years of 
money from international 


investment funds, which have 
come to regard commodities as 
a long-term asset to be traded 
as alternatives to traditional 
securities such as equities and 
bonds. 

The distortions this has 
entailed will be a factor when 
the study group considers 
demand and prices for the two 
sister metals. 

A report published last week 
by Billiton Metals said both 
metals were "poised to derive 
significant benefits from the 
period of synchronised growth 
emerging in the major 


industrialised economies". 

“On the production side," it 
said, “mine cutbacks have 
resulted in substantial short- 
falls of concentrate [an Inter- 
mediate material]. In 1993 con- 
tained zinc output fell by some 

450.000 tonnes (8 per cent), 
while that of lead declined by 

300.000 tonnes (13 per cent). 
Further reductions will be 
experienced this year, 
although restarts and new 
additions to zinc capacity are 
already starting to reverse this 
situation. These will have little 
impact on lead concentrate 


. '• . i:i .. ; : . ! >v 


CREDIT LYONNAIS 


is pleased to announce rhe transfer 
of its International Private Banking activity 


84/94 Queen Victoria Street 


to its new offices nt 


BERKELEY SQUARE HOUSE 


BERKELEY SQUARE 


LONDON W1 


MONDAY 17th OCTOBER 1994 


Tel (44) (O) 171 - 499 9 U6 


Fax (44) (0) 171 -499 9168 


Telex 924077 


A number of the SFA 


Offices worldwide 


GENEVA * ZURICH - LUXEMBOURG - NEW YORK MIAMI - PARIS - MONACO 


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Banda 7-10 year 
Week 0.99 

Month -a 56 

Year -7.56 

Equities 

Week 3.4 

Month 0.4 

Year 4.2 


Some* Cash & Bond* - Utaran Bwtfi**. HuMfeO Ne t W —t aecurMos- 

The FT-Actuart* Wcxtd hdees ore Joint* owned by The Rnondri Ttaes Unfed. 
Goldman Sasha & CO-. m NaOWatf Sttufltar Uifea 


them about its ability to meet 
potential liabilities; adequacy 
of financial resources became a 
condition of UK waste licences 
earlier this year. 

However, one of the unfortu- 
nate near-global characteristics 
of the waste industry is that 
choice of contractor is fre- 
quently influenced by special 
deals, if not corruption, partic- 
ularly where local government 
awards contracts. It is not too 


cynical to ask whether the 
attractions of the profession- 
ally run “outsider" to such 
markets will prevail over those 
offered by local rivals. 

In WMl’s case, the question 
of whether the group's rush for 
international presence has left 
It capable of organic growth is 
now in the forefront some ana- 
lysts believe its hefty goodwill 
write-offs and consequently ris- 
ing gearing are a constraint to 


ftirther acquisitions. 

It is perhaps too early to 
judge. The group has had nota- 
ble success in winning con- 
tracts in Asia, bat it is harder 
to assess its chances in Europe 
given sluggish economic recov- 
ery. The slump of some 15 per 
cent in the share price relative 
to the FT All-Share Index since 
its 12-month peak in September 
largely reflects concerns about 
European growth; and Italy in 


Some of the same points can 
be put to the world's pharma- 
ceutical and healthcare giants, 
including S mithKl ine Bee- 
chain. which reports third- 
quarter results on Tuesday. 

SmithKline 's results will 
shed more light on the impact 
of the loss of US patent protec- 
tion for Tagamet the group's 
ulcer treatment. But most 
attention will be focused on 
the integration of the two 
recent mega-deals: the $2£bu 
purchase of Sterling Winthrop, 
the over-the-counter medicines 
group, in August, and the 
$2_3bn purchase of Diversified 
Pharmaceutical Services, one 
of the four largest US drug 
wholesalers, in May. 

The strategy, which pushed 
gearing up to nearly 300 per 
cent, aa mmiRs that the deals 


will help protect margins and 
profits growth as competition 
from generic drugs grows and 
as governments pare back 
healthcare budgets. In the case 
of the Sterling deal, which 
makes SmithKline the world 
leader in over-the-counter 
drugs and sharply reduces its 
dependence on the US, that 
reckoning looks sound. 

According to SmithKline, the 
worldwide OTC market grew 
by more than 7 per cent last 
year, twice as fast as in the US. 
SmithKline hopes to use its 
distribution network in 100 
countries to lift sales across its 
product line. It is also betting 
that European governments, 
hard pressed to pay the cost of 
prescription medicines, will 
increasingly back OTC reme- 
dies. 

Analysts question whether 
the long-term profitability of 
the OTC market is as great as 
SmithKline expects, and are 
anxious to see evidence that it 
can cut costs as promised. But 
their bigger concerns are 
directed at the DPS deal. 

It is unclear yet whether the 
deal will be the platform for 
the provision of wider health- 
care services, as SmithKline 
hopes, and whether that con- 
cept can be exported to Europe 
and beyond. Given the wide 
variations in national health- 
care systems, it would be sur- 
prising if there were a simple 
prescription for success. 


output, and a further deficit 
seems likely this year." 

• Other events this week 
include the 1st International 
Conference on Mining Environ- 
mental Management in Reno 
Nevada, which began yester- 
day and continues until 
Wednesday. The conference, 
sponsored by Mining Journal 
and Mining World News, will 
focus on mining-oriented envi- 
ronmental legislation, the 
financial implications, the 
available technological solu- 
tions and management control 
systems. 


The recent 
wild gyrations 
of the rouble 
may be a 
world away 
from the day 
to day preoc- 
cupations of 
foreign 
exchange markets. But they 
have been a reminder that 
currencies can be very volatile 
and have the capacity to 
spring surprises. 

Indeed, the many instances 
of foreign exchange market 
turbulence since the collapse 
of the semi-fixed Bretton 
Woods exchange rate system 
in 1973 have meant that 
exchange rate stability is 
rarely far from policy makers’ 
minds. 

Trading in leading curren- 
cies has been comparatively 
calm so far this year. But this 
summer's celebrations of the 
,50th anniversary of the Bret- 
ton Woods agreement trig- 
gered an extensive review 
among policy makers and aca- 
demics of the current state of 
the international monetary 
system. 

The first obvious point to 
emerge from a plethora of con- 
ferences and reports is that 
nobody is particularly satis- 
fied with the so-called “non- 
system” of floating exchange 
rates for the world’s leading 
traded currencies. On the 
other hand, it is difficult to 
think of anything better. 

The last of the big confer- 
ences marking the 50th birth- 
day of Bretton Woods took 
place just ahead of this year’s 
annual meetings of the Inter- 
national Monetary Fund and 
World Bank in Madrid. 

It was clear that there was a 
strong desire for greater 
exchange rate stability, partic- 
ularly among such interna- 
tional monetary luminaries as 
Mr Paul Volcker, the erst- 
while chairman of the Federal 
Reserve Board, and Mr Jac- 
ques de Larostere, the former 
managing director of the 
International Monetary Fund 
who now heads the European 
Bank for Reconstruction and 
Development. 

Equally striking was the 
rejection by practising finance 


Economics Notebook 


Problems with 
exchange rates 


G3 exchange rates: tow a r ds more stability 


DM per S Yen per S 

Yen against the S ' j 


- — 250 


D-Mark against the $ ^ 


10 u l l — U. t- — | — i — i — k — i — i — i—i — s — l — r so 

1978 80 82 84 88 88 90 92 94 


Souaaa: OMasae m 


ministers and central bankers 
of the idea that the big three 
currencies - the dollar, yen 
and D-Mark - should be con- 
fined within “target zones". 

The general perception was 
that financial flows were too 
strong to permit any attempt 
by the Group of Seven leading 
industrial countries to peg 
currencies in a more formal 
way. With characteristic 
bluntness, Mr Kenneth 
Clarke, the UK chancellor, 
said that a return to targets 
for exchange rates was “not 
remotely in the gift of the GT. 

The accompanying chart, 
prepared by Ms Wendy Dob- 
son, a professor at the Univer- 
sity of Toronto and a former 
senior nanariian finance min- 
istry official, suggests that 
pressure for formal target 
zones may be misplaced. She 
points out that “a fair degree 
of stability" has existed 
among the leadin g currencies 
since 1987. Although floating 
rates are thought to worsen 
the climate for investment 
and international trade, world 
trade and investment have 
grown faster than world 


incomes since 1983. 

But these relative successes 
are no reason for leaving the 
system unchanged if it can be 
improved. 

In considering ways of pro- 
moting exchange rate stabil- 
ity, officials have been looking 
at the surveillance responsi- 
bilities of the International 
Monetary Fund. 

At present the IMF is 
charged with exercising “firm 
surveillance over the 
exchange rate policies of coun- 
tries". To this end it examines 
international monetary issues 
and analyses in detail the eco- 
nomic policies of its members, 
usually by sending missions 
to national capitals. These 
comb through the relevant 
data and discuss the results 
with the governments con- 
cerned. The findings from 
these so-called Article IV con- 
sultations are discussed by 
representatives of member 
countries in the IMF board 
but generally kept out of the 
public eye. 

Earlier this month, the 
Fund’s policy making Interim 
Committee, representing its 


179 members, ordered the 
IMF's executive board to work 
on strengthening Fund sur- 
veillance. 

The idea is that if countries 
can be persuaded to pursue 
sound and compatible eco- 
nomic policies, there will be 
less danger of exchange rates 
moving out of line. 

However, surveillance has 
been around for some time 
and has not always proved 
successful. Mr de Larosi&re 
pointed out in Madrid that it 
had foiled to prevent a sharp 
increase of public indebted- 
ness in industrialised coun- 
tries in the 1380s. 

The policy environment 
may be more encouraging 
today, even though this 
month's IMF meetings were 
marred by a row between the 
G7 countries and other 
nations over a proposed boost 
to global monetary reserves. 

Industrialised and develop- 1 
ing countries are in broad 
agreement on the policies 
required to foster sustained 
non-inflationary growth. With i 
policies and performance 
more in line than before there , 
should be fewer fundamental 
reasons for exchange rates to 
move out of line. 

There are also plenty of 
ideas for making surveillance 
more effective. Ms Dobson has 
put forward suggestions lor 
improvements to the gristing 
surveillance system “to pro- 
mote international peer group 
pressure for sound domestic 
policies". In particular, she 
suggests that the results of 
the IMF’s Article IV consulta- 
tions should be published. She 
has called for the greater 
involvement of the fast grow- 
ing east Asian countries in 
discussion with the G7 
nations. 

But although surveillance is 
fashionable, Mr Michael 
Mussa, the IMF’s chief econo- 
mist, warns that it would be 
going too for to see it as a 
stepping stone to a more fixed 
exchange rate system. 

Such words will encourage 
the supporters of target zones; 
they have lived to fight 
another day. 


Peter Norman 


FT-ACTUARIES WORLD INDICES 


jWntlyOTTi^Wbir Tlx, Finance Times Ud.. Goksrwn, Sachs A Co. and WM Securities UA. m cor*jncflon with the manure of and Fl^ of AetuartM 

REGIONAL MARKETS TODAY OCTOBER 14 ISM — THURSDAY OCTOBER 13 1994 


REGIONAL MARKETS 
Figures In parentheses 
Show number of Ones 
Of Stock 


Australia (68) 

Austria (16) ._ 

Belgian (37) 

Canada (103) 

Denmark (33) 

FHand (24 ) 

France (101) 

Germany (SB) 

Hong Kong (S6) 

Ireland 114} 

Holy (58) 

Japan (468) 

Malaysia (97) 

Mexico (18) 

Nfflhartsnd (19) 

New Zealand (14} ........... 

Norway (23) 

Singapore (44) 

South Africa (59) 

Spain (3® . — 

Sweden {34} 

Swtaariand (47} 

United Kingdom [204) 
USA (515) 


US 

Dollar 

Index 

Krfhfl 

since 

31/12/93 

Pound 

Storing 

Index 

Yen 

Index 

_.,_i6a.ia 

0.8 

156.57 

104.49 

84.45 

-0.3 

171.71 

114.59 

— JfiB-42 

42 

157.71 

105.28 

137.48 

12 

127.96 

85.41 

.....253.48 

2 JS 

235.96 

157.48 

192.99 

560 

-I70.ES 

1f&69 

171.69 

-2.4 

159.83 

108.67 

14&26 

4.3 

136.16 

9037 

-_._387.76 

-20.8 

360-93 

24091 

_._.211.74 

14.3 

197.11 

131-55 

7861 

14S 

73.37 

4896 

_ — 162.48 

24S 

151.26 

100.85 

— ...56&S2 

-4A 

524.04 

349.73 


Local Local 96 Gretas us Pound 


•JliiutJfcH 13 1894 DOLLAR INDEX- 

Local Year 

Yen DM Currency 52 week 52 week ago 
Index Index Index High Low (appro*) 


r 


^ v tO n 




!# , 

• ..fiMCi 


r~" 

***— ‘ 



iiarket h 


.2287-50 

.217.78 

73.04 

_..„20&et 

. 394.78 

321.83 

143.73 

234J57 

16832 

301.19 

191.41 


EUROPE (709) 

Nordc(1i6) 

Pacific Beam (747) 

Bmq-Pv&c (1466) 

North America (BIS) — 
Europe Ex. UK (506) 
Pacific Ex. Japan (279) . 
World Ex- US (1636) 
World Ex. UK 0947) ...... 

World Ex. So. Af. R083 
WortJ Ex. Japan flfiS® . 


174.15 

—227,80 

171J6 

172.69 

168.09 

15634 

283-00 

174.80 

177.00 

178-22 

190.06 


an el 


The World Index (2151) -- 


CepyTON. TT* Ftoenctt ftmiUwM, GtWMen. Sacha & Co. and Natweet SacutM IXnuxl 1987 

Base vakMX Doc 31. 1898 «i Oft RnSiKt Dec Ji. i«S? ■ 1184Q7 MS * knmj, 90 . 7 W (Pturd Storing and (Loont rkxdc Doc 30 . 1988 


150-47 180, BO 


-iraasussb***), Iiua (Pound St**#** 1333*1** 









k FINANCIAL TIMES MONDAY OCTOBER 17 1994 



NEW YORK 


Frank McGuriy 


LONDON 


Terry By land 


International offerings 


Further rise 
likely to meet 
resistance 

Last week’s barrage of economic data 
was not quite a clean sweep for the 
Dulls, but four out of five winners were 
more than enough to soothe Wall 
Street’s interest rate woes, at least for 
the time being. ■ 

Nevertheless, analysts say stocks 
may have difficulty matin g much 
headway this week, even though the 
third -quarter reporting season is in full 

swing. 

Part of the reason is the market 
surged during most of last week. Since 
the release of surprisingly t imid 
employment data during the first week 
of the month, the Dow Jones Industrial 
Average has appreciated nearly 3 per 
cent 

The impression of moderating 
economic growth imparted from the 
jobs report was reinforced, last week by 
news of a downturn in producer prices, 
a tame reading on the consumer level 
and stagnant output by US factories 
and mtnp s 

Best of an, the rate at which the 
industrial sector was utilising its total 
capacity slipped, suggesting inflation 
would stay benign in the coming 
months. Only September retail sales 
came in a hit stronger than expected. 

The prospect of an imminent move by 
the Federal Reserve to lift short-term 
rates now seems remote. Thus, 
monetary policy has joined Haiti. 
Kuwait and U&Japanese trade relations 
on the list of threats which have 
receded as immediate concerns. Most 
economists believe the Fed will wait 
until after the November elections 
before tightening its policy. 

But the market may have already 


Dow Jones Industrial Average 



3920 - 



expended its potential to trade higher 
an the relief The Dow has been 
brushing a gainst tgrfmicai resistance at 
the 3210 level while the more broadly 
based Standard & Poor’s 500 will have 
difficulty breaking through the 470 
mark. On Friday, it closed at 469J0. 

“It's hard to see what will push the 
market higher in the short ran, outside 
of good earnings news," says Mr James 
SoUoway, an analyst at Argus Research 
in New York. The trouble is. it’s hard 
to judge how much of the improved 
earnings is already built into share 
prices.” ' 

Last week, investors’ expectations 
were mostly vindicated but strong 
performances did not always translate 
into big gams in share values. Chrysler 
was the first of the Big Three car 
makers to release third-quarter results, 
announcing a 55 per cent prefits rise. 
But its shares improved only slightly. 

This week General Motors is expected 
to publish its results. Some analysts 
fear its key North American operations 
will post a loss, though a robust bottom 
hne is widely forecast. 

IBM’s third-quarter results, still the 
computer groups' bellwether, are also 
due. Wall Street expects to see 
continued progress from the company, 
which was running at a loss a year ago. 


Final quarter 
promises 
more gains 

Suddenly, the UK stock market looks a 
more confident place and the final 
quarter of the year offers a more 
| promising prospect Since the beginning 
, of October, the market has recovered by 
about 5.7 per cent after its prolonged 
setback over the previous month and, 
more importantly, the gilt-equity yield 
ratio has returned to around 2.19 times. 

The first question cm the bps of every 
market analyst is whether the market 
rebound will carry it up to those 
optimistic year-end targets set up 
earlier hi the year. This would require a 
further gain of well over 8 per cent 
from Friday nighFs levels, so it may be 
a little early to start cheering. 

The technicians, as always, sound 
cautious. Derivative Securities, the 
futures market specialist, having 
correctly pointed out that the market 
was markedly oversold at the end of 
last week, is now wary of the steepness 
of the sudden rise; “far too steep to be 
sustained for too long”, it comments. 

If the market breaks out above the 
Footsie 3,110-3,135 band. Derivative 
Securities sees the next line of 
resistance at 3.175-322CL Still a fair 
distance away from those 3,400-3,600 
Footsie year-end forecasts on record. 

The view consolidating among 
analysts is that the market has been 
overestimating the dangers of ntflaHm 
and the interest rate fears which go 
with thorn *\ . . the frnpiiBfi risk 
embedded in the valuations of gilts and 
equities is way too high,” s ummarises 
Richard Jeffrey at Charterhouse TQney, 
adding bluntly that tiu» belief that base 
rates could move a further 1 per cent 
higher this year "was wrong”. The 


FT-SC-A AB-Sftare index 

1580 : 



strategy team at Yamaichi puts it even 
more strongly, saying the latest 
inflation data that the 

previous figures were “probably an 
aberration”. 

This sea change in views on j pflfltiop 
has been inspired by the US as well as 
developments at home T.fatrgd to 
expectations of a broadly neutral 
Budget next month - at the 
Conservative conference, the chancellor 
of the exchequer stood feist against 
premature tax cuts - the Hfaflihond of a 
further recovery in gilts this week is 
rated highly. And, as equity strategists 
have argued for many weeks, recovery 
in bonds is the required basis for a 
recovery in equities. 

Market s have remained highly 
volatile, and investors would be wrong 
to ignore this just because the trend 
has been upward, for a change. This 
week and the week following present a 
host of hurdles in the shape of global 
and domestic economic data. 

Also overhanging investors will be 
tb» prospects for the November budget 
and the liitrfihnnrt that an important 
by-election will shortly test the nerves 
as well as the political ratings of Mr 
Major’s government The market may 
have to struggle hard for that final g 
per cent gain. 


Strong overseas interest 
in Swedish privatisation 


International investors will 
soon be able to invest in Stad- 
shypotek, Sweden’s largest 
mortgage lender, currently 
being privatised by the Swed- 
ish government 

The international equity por- 
tion of the deal may be smaller 
than originally anticipated by 
bankers advising the govern- 
ment But there are hopes that 
overseas investors could buy 
up to $300m of shares, making 
the one of Scandinavia’s - 
and possibly one of Europe’s - 
biggest international equity 
offerings fids year. 

This could be one of the last 
opportunities for some time tor 
investors to obtain privatised 
Swedish stock because the 
newly-elected Social Democrat 

nrttn l wl rt rarinm is Itxat commit- 
ted to state sell-offs than its 
predecessor. 

“The current government 
has maria Tin commitment to a 
privatisation programme. We 
will see a hiatus with no sew 
paper coining through. The 
flow of paper will dry up for a 
while.” said Mr John St John, 
director of equity capital mar- 
kets at Kleinwort Benson, 
which is joint global co-ordina- 
tor of the deal with Alfred 
Berg. 

Kleinwort and Alfred Berg 
are oo-Ieads for the US tranche, 
with Salomon Brothers as co- 
manager. The tranche for the 
rest of the world, including 


Sweden, involves Goldman 
Sachs. UBS, Cazenove, 
Nomura, Indosuez. J.P. Morgan 
and Dresdner. 

Overall, Stadshypotek. a 
mutual company which con- 
trols about a third of the Swed- 
ish mortgage market, aims to 
raise SKrSbn in an interna- 
tional and domestic offering. 

Bankers are impressed by 
overseas interest "I have been 
astonished at the interest from 
big, blue-chip institutions, both 
in Europe and the US,” said Mr 
Jakob Kinde, director of corpo- 
rate finance at Kleinwort Ben- 
son. 

Kleinwort: Benson was 
brought in after its success 
with the sale of Abbey 
National, the UK building soci- 
ety. and the 1993 demutualisa- 
tion of FBrenlngsbanken, the 
Swedish farmers’ bank. Mr 
Kinde says Stadshypotek repre- 
sents good value. “This is a 
low-risk business with high 
earning s ability.” 

Bankers had hoped there 
would be $500m for interna- 
tional investors, but the 
domestic take-up has so far 
been higher than expected, 
partly because Swedish home 
owners and corporate borrow- 
ers are being offered free 
shares to tempt them to invest 
in Sweden's largest initial pub- 
lic offer. This means the pre- 
cise size of the international 
offering will not be known 


until the sale offer for the 
domestic side - described by 
Mr Kinde as a “rights issue to 
mortgage holders" - closes on 
October 21. 

Kleinwort has introduced a 
unique and complicated struc- 
ture for the domestic side of 
the Stadshypotek deal. 

Borrowers who have mort- 
gages with the Stadshypotek 
will be given 375m shares cur- 
rently owned by the state- 
owned Stadsbypotekskassan or 
Urban Mortgage Bank, for free. 
They will also be offered the 
right to buy a total Of 37.5m 
new shares at SKxSO a share. 

The bigger their mortgage, 
the more new shares they can 
buy. The UMB shares were 
trading at around SKi9Q each 
on Friday. About half of Stad- 
shypotek’s 760,000 mortgage 
holders are property compa- 
nies which may not subscribe 
to the rights, and their entitle- 
ment will form the basis of the 
international tranche. 

The UMB owns all 80m of the 
existing Stadshypotek shares. 
After the capital increase its 
shareholding will be cut to 36 
per cent. All the SKrSbn raised 
from the rights issue will go to 
boost the balance sheet of 
Stadshypotek, allowing It to 
obtain better terms when it 
begins to borrow in its own 
name at the start of next year. 

Martin Brice 


OTHER MARKETS 


MILAN 

The November trading 
account, which starts today, 
will be marked by several 
capital increases, the largest 
being that of Credito Itahano. 
which is launching a rights 
issue, priced at LI .500, to raise 
more than LlhOObn. 

UBS notes that Credito is 
following in the steps of BCI, 
which raised money after the 
summer and, like B&, is 
talking of a possible large 
acquisition. 

“Rumours are already 
beginning to circulate about 
various possible targets and, 
with the improvement of 
banking margins in the second 
hglf of this year, this would 


help to lift the banking sector 
out of its doldrums.” 

Meanwhile, Milan’s new M3b 
30 index, to be used as a base 
for futures contracts, is 
launched today calculated on a 
basket of 30 blue chip shares. 

The index will be adjusted 
every five minutes and every 
minute when the futures 
contract is in place. 

The base value of the Mb 30 
was set at 10,000 using the 
value of December 31 1992. 
Further measurements are 
based an the gristing BCI-30 
index run by Banca 
Commercials Italians 
The new index will be 
assessed daily from start of 
nego tiations and will finish 
with the end of contract 
cancellat ions. 


PARIS 

Thn market /*flntimn»a to be 
volatile, although most 
commentators have an 
overweight position, favouring 
France over Germany an a 
mariiitm to long-term view, 
writes John Pitt. S-G. Warburg 
is overweight in the consumer 
sector, and it also likes the 
luxury end of the sector, such 
asLVMH. 

However, within the luxury 
segment, Jtemy Cointreau, due 
to release half-year results this 
week, is less favoured by 
brokers. James Capel has 
downgraded the stock to hold, 
given the drain on profits due 
to heavy investment in 
upgrading its distribution 
network. 


JOHANNESBURG 

The South Af rican markets 
will be foaming on the release 
of the major gold producers’ 
quarterly results this week, 
including Anglo-American, 
J ohannesb urg C onsoli d ated 

Tnv na+mrmtg «nri ften gnlri 

writes Mark Suzman . 

The country’s other major 
mining house. Gold Fields of 
South Africa, reported last 
week. It showed improved 
profits and attributed them to 
a fell-off in the election- related 
unrest and work stoppages 
that hqd dented the June 
figures. Following the 
successful resolution of this 
year's wage negotiations, the 

othar mining mm pflnteg am 

also expected to have boosted 


production on the quarts’, 
which should cheer investors. 

Whether the results have a 
significant effect on the stock 
market, however, is largely 
dependent on the fluctuating 
gold price, hi recent months, 
the bourse’s All Gold Index has 
been rising steadily on the 
back of an improving gold 
price. 

However, after the metal 
failed to breach the 
psychologically important 6400 
an ounce barrier, speculators 
have started to sell and in the 
past two weeks it has since 
tumbled back below 6390 an 
the bade of profit-taking. Gold 
shares have largely followed 
the metal’s downward trend 
and are currently well off their 
September peaks. 


TOKYO 

Subscribers who have been 
reallocated Japan Tobacco 
shares for the second round of 
sales have until Thursday to 
purchase the stock. The 
ministry of finance announced 
last week that 883 per cent of 
the Japan Tobacco shares 
offered had been unsold. Mr 
Jason. James at James Capel 
expects, however, that 
investors will remain 
ungathuriagtlc, that 
Y300bn of the issue will remain 
unsold. 

While Japan Tobacco's sa g a 
has hail little Im part on the 
broader stock market, the 
ministry hac yet to decide 
whether to release the unsold 
shares on to the secondary 


market following the listing of 
JT on October 27. Any such 
move this week could dent 
investor confidence. 

Meanwhile, earnings 
revisions will continue to exert 
an influence on share prices 
this week, as will the yen’s 
movements. 

HONG KONG 

Nerves aze creeping into the 
market, as nxter na l influences 
combine with a growing 
realisation that south-east Asia 
does not have a monopoly on 
economic growth, writes Louise 
Lucas. 

The week will again begin 
with the absorption of the 
latest US data, with brokers 
looking at capacity utilisation 


for does on forthcoming 
movements in interest rates, 
which could feed through to 
Hong Kong. Concerns are also 
spreading from across the 
border. Shanghai suffered 
another volatile week, in spite 
of official assurances of the 
robust health of China's leader, 
Deng Xiaoping. 

Meanwhile, a trickle of unit 
trust redemptions is sparking 
fears of a more widespread 
sell-off in Hong Kong. 

Investors are discovering 
growth in their own home 
markets, not least the US, as 
well as other emerging 
markets such as South 
America, eastern Europe and 
India. 

Compiled by Michael Morgan 


EMERGING MARKETS: This Week 



The Emerging Investor / Laura Tyson 


Market hampers Taiwan financial ambitions 


T aiwan wants to use its 
economic might to 
become a regional finan- 
cial centre. 

However having a stock mar- 
ket that is highly restrictive to 
foreign investment, dominated 
by insiders and subject to polit- 
ical interference poses a formi- 
dable obstacle to such ambi- 
tions. 

The problem has been 
brought sharply into focus by a 
recent string of share pay- 
ments defaults which upset the 
Stock market and sparked 
accusations of lax regulation 
and involvement of politicians 
and officials. 

"This kind of event has hap- 
pened repeatedly. We hope this 
the government, can Insti- 
tute reforms to prevent it from 
happening again,” said Mr 
Daniel Chen, chief economist 
at ChinaTrust Commercial 
Bank. 

“The authorities need to to 
re-examine the whole system, 
to re-examine the regulatory 
framework to see whether the 
securities and exchange com- 
mission has enough power and 
tools to monitor and regulate 
the stock market effectively.” 

Shares fell by nearly 15 per 
cent only to rebound 8 per cent 
last week following the crisis 
which involved 28 securities 
houses and a total of TSTJSbn 
in bounced cheques. On Satur- 
day the market rose almost 2 
per cent. 

Mr Day I into, chairman of 
the securities and exchange 
commission, called an the cen- 
tral bank to relax barriers to 
foreign investment, arguing 


•CURRENCIES 


that funds managed by over 
seas institutions had proven to 
be a force for stability in the 
market. 

Foreign investors continued 
buying heavily into bine chip 
shares, helping counter the 
index’s slide, despite panic sell- 
ing by domestic investors. 

Mr Liang Kuo-shu, governor 
of the central bank, ruled out 
lifting ceilings on foreign 
investment, citing concerns 
over the effect of capital flows 
on the exchange rate. Analysts 
say government officials pri- 
vately fear a covert influx of 
"red” Chinese money and that 
foreign investors would take 
short-term profits. 

Taiwan Is one of the biggest 
stock markets among the 
emerging economies of Asia 
with a total market capitalisa- 
tion of J209.2bn at the end of 
September. At that time direct 
investment by government 
approved foreign institutions 
stood at $4.49bn or 2.15 per 
cent of total market capitalisa- 
tion. 

The central bank imposes a 
ceiling of $7.5bn on foreign 

frrnris which may 

be paid into the counfry fix- 
direct investment in local 
shares. Foreign individuals are 
barred from investing. 

As of October 14, Taiwan, 
authorities had approved 
investment quotas fix 76 for- 
eign institutions totalling 
$&44bn, of which $4.78bn had 
been, taken up. Pending appli- 
cations amounted to $3-3lbn, 
mostly awaiting central bank 
approval. 

Speculative share trading by 


Ten test performing stocks 

Stock 

Coea&y 

Friday 

14/1 (MM 

lKMk oq week change 

S % 

Eregfi Demfr Ve Cafik 

Turkey 

0.1100 

00229 

2029 

Duta Anggada 

Indonesia 

1.2420 

0.1885 

17.90 

SM Prime Hotfngs 

Phffippkies 

0.3327 

0.0397 

1056 

Grupo Fkiandaro Bancoxner 

Mexico 

1.2738 

ai412 

12-47 

Ssangyong Oil Refining 

SJforea 

323285 

3.6364 

12.41 

Advanced Wo Services 

Thafend 

18.0144 

1SSZ7 

12-16 

Cia Carvecarfas Unidas 

ChBe 

£5225 

05958 

12.09 

Korea Mofcfie Telecom 

SJtoraa 

756,229 

752500 

11.05 

Banco de Credito 

Peril 

23387 

02302 

10.82 

Cemex 

Mexico 

9.7204 

09420 

1073 


associates of Mr Oung Ta- 
ming, head of the Hualon 
group and the local market’s 
most notorious stock player, 
triggered the recent incident 

However evidence uncovered 
so far suggests that as many as 
thirty legislators, mostly from 
the ruling party, as well as 
government officials, may have 
played a part in the crisis. 

One of the main problems, 
according to analysts, is that 
the SEC, which fans under the 
ministry of finance, does not 
have the independence and 
authority it needs to regulate 
the stock market effectively. 

It cannot investigate or pros- 
ecute trading irregularities but 
must rely an the justice minis- 
try’s investigation bureau and 
the courts. And despite the 
best intentions of securities 
regulators such as Mr Day, 
who is widely respected and 
considered above reproach, 
investigations can be subject to 
political interference. 

*11 wouldn’t matter so much 
if the government here took a 
hands-off approach, bnt on 
paper this is a heavily regu- 
lated market,” said a analyst at 


a foreign securities house. 

Calls for reform are largely 
drowned out amid the din of 
recriminations as political par- 
ties seek to discredit one 
another ahead of elections on 
December 3. Analysts say that 
reform is in any case unlikely 
in the absence of political will 
on the part of the ruling 
Nationalist party, or Kuomin- 
tang, which directly or indi- 
rectly controls much of the 
country’s finance and industry. 

“Everyone knows the KMT 
itself is the biggest insider 
trader in thig market,” said a 
Taiwanese stock analyst 

Furthermore, analysts say, 
the ruling party is spending 
vast sums to finance its candi- 
dates in elections, which it 
views as critical to countering 
the growing power of opposi- 
tion parties. 

Some of the funds come 
directly from KMT coffers bnt 
legislators are tacitly encour- 
aged to Arid their own financ- 
ing, and the quickest way to 
main* rpRk p money is from the 
stock market 

Analysts say Mr Oung was 
in artfng as fund maw. 


ager for politicians, officials 
and other wealthy individuals 
who cannot be seen investing 
in the stock market under 
their own names. “Oung Ta- 
ming is a magician with 
money. If yon give him a dollar 
one day, he will come back two 
weeks later with ten dollars,” 
said a Taiwanese investment 
banker. 

The source of Mr Oung’s 
magic touch is the wide and 
loyal following he has culti- 
vated among the gambling- 
mad wnaH investors who domi- 
nate trading on Taiwan’s 
bourse. At the height of the 
market in the early 1990s, 
there were 4m trading 
accounts cmt of a population of 
20m. 

Ironically, it was Mr Dung’s 
reputation as the patron saint 
of the small investor that car- 
ried him to victory when he 
stood for election to parliament 
two years ago, just after a simi- 
lar share p a yme n t default cri- 
sis linked to his group. 

The advent of foreign invest- 
ment, first permitted in 1991, is 
slowly changing the character 
of the market, analysts say. 
The foreign-managed funds 
tend to buy blue chip industri- 
als and avoid overpriced finan- 
cial issues or speculative 
shaf as 

Recently domestic investors 
have taken an in t eres t in those 
stocks preferred by foreign 
investors, dubbing them ’for- 
eign concept” stocks. 

“Hualon is living in the 
past,” said Mr Ben Chen, man- 
aging director of the Taiwan 
office of Barclays de Zoete 


Philip Gawith 


German election sets tone for markets 


; will start their week 
events, but key eco- 
11 also shape the pat- 

gparture win be the 
day’s national poll in 

le ruling coalition of 
has been widely tbs- 
larfcets. If this result 
D-Mark strength can 
ted, though the "good 
n the market 
une would be a more 


left-oriented coalition. This scenario 
would cause D-Mark weakness, possibly 
driving the Bundesbank into raising 
interest rates to protect the currency. 

The other important poll was yester- 
day’s Furnish referendum on whether 
to join the European Union. Good eco- 
nomic prospects, and the prospect of a 
yes vote, have recently buoyed the 
Finnish markka, dragging other Nordic 
currencies in its wake. 

A yes vote would lend further 
strength to these currencies, though 
continued volatility is likely in the 


run-up to the EU refarendums in Swe- 
den and Norway in November. 

In tarns of statistics, the key release 
will the US trade figures on Wednesday. 
A number of economists are predicting 
a large merchandise trade deficit, of 
about J17bn, which could prompt a bout 
of dollar selling. A possible counter 
would be an improved bilateral trade 
account with Japan. Some analysts say 
that the stronger yen. and rising eco- 
nomic growth, in Japan, fa vo ur this out- 
come. 

In the UK, the release on Friday of 


the third quarter gross domestic 
product figures will be closely 
watched. 

If, as many economists suspect, they 
show a picture of slowing economic 
growth, this win underline the pre-emp- 
tive nature of last month’s rise in inter- 
est rates, lending lustre to sterling 
assets, and sterling. 

German M3 money supply, and pro- 
ducer inflation, figures are expected 
this week. Assuming a Kohl victory, 
they will shed light on the potential for 
a farther fall in official rates. 


Wedd. “They still believe if 
they ramp share prices high 
enough retail investors will 
jump in. But in the past year 
investors have mostly been 
pursuing stocks with a good 
fundamental story.” 

Analysts believe that as the 
proportion of institutional 
investment, be it foreign or 
domestic, in Taiwan's stock 
market Increases, share prices 
will be less susceptible to the 
manipulations of a handful of 
speculators. It is hoped that 
small investors will learn from 
repeated scandals and avoid 
speculative shares. 

Meanwhile, the outlook lor 
Taiwan’s stock market is posi- 
tive, marred only by uncertain- 
ties surrounding the demise of 
Deng Xiaoping of China. There 
are also concerns that both for- 
mal and informal l ander s will 
tighten credit in the wake of 
the recent cheque defaults 
scandaL 

Nonetheless, the economy 
remains strong with economic 
growth forecast to top 6 per 
cent this year. Corporate earn- 
ings growth for blue chip com- 
panies should average 15 per 
cent in 1995, and in the near 
tom the government is expec- 
ted to sustain the index lead- 
ing up .to the elections in 
December. 


News round-up 


■ China 

New rules for rights issues by 
listed companies are expected 
to help stabilise the Shanghai 
and Shenzhen equity markets 
whose A share indices, 
directed at domestic investors, 
were highly volatile last week. 
AH rights issues must now be 
approved by the China Securi- 
ties Regulatory Commission in 
addition to local governments, 
which previously had the final 


■ Hungary 

Quaestor Befektetesi Alapke- 
zelo, the Hungarian invest- 
ment management house, 
plans to launch a five-year 
property fund, the Quaestor 
Property Investment Fund, 
this week. The fund will use 
the money for buying lands 
and setting up residential dis- 
tricts, mostly around Budapest 

■ Philippines 

The World Bank’s Interna- 
tional Finance Corporation and 


the government-owned Land 
Bank of the Philippines have 
injected an additional 100m 
pesos into All Asia Capital and 
Trust. The infusion, which 
gives IFC a 10 per cent stake 
and Land Bank &33 per cent 
will help the investment house 
diversity into mutual funds 
and venture capital Ail Asia- 
Capital is involved in corporate 
finance, underwriting, securi- 
ties dealing, loan syndication, 
trust services. leasing, con- 
sumer financing and strategic 
investment 

■ Chile 

Telex-Chile SA is to raise 
between 8100m and 8110m 
through an issue of American 
Depositary Receipts (ADRs) 
this month. The company 
plans to place a total of 9.35m 
shares with each ADR equiva- 
lent to two shares. Most of the 
funds raised by the ADR place- 
ment will be used for invest- 
ment abroad. 

Lead manager for the inter- 
national offering is Goldman 
Sachs. 


Baring Securities emerging markets indices 


Index 

14/1094 

Week on weak movement 
Actual Percent 

Month on month movement 
Actual Percent 

Year to date movement 
Actual Percent 

World (3P1) 

Latin America 

—.188.83 

+5.06 

+2.75 

-0.38 

-020 

+20.42 

+12.13 

Argentina (20) 

111.27 

+3.38 

+3.14 

-1.41 

-125 

-4.11 

-356 

Bred (21) 

242.63 

+2-46 

+1/02 

-13.86 

-5A0 

+10228 

+73.74 

ChBe (12) 

225.73 

+14.53 

+658 

+29.10 

+14.80 

+78.19 

+53X0 

Mexico (25) 

15022 

4-7.39 

+4.97 

+3.16 

+2.07 

-5.04 

-3.13 

Peru(16} 

82548 

+4297 

+4.87 

+14094 

+1922 

+349.79 

+60.72 

Latin America (94) 

Europe 

—180.78 

+621 

+3-56 

+1.03 

+057 

+3154 

+21.13 

Greece (IQ 

86.09 

-1.52 

-1.73 

+1.48 

+1.75 

+3.00 

+3.61 

Portugal (18) 

12033 

+222 

+2.12 

-021 

-0.17 

+320 

+7.31 

Turkey (21) 

88.25 

-Z02 

-229 

+8.69 

+1120 

-75.46 

-4626 

B*upe(55) — 
Asia 

—101.32 

+023 

+022 

+2.14 

+2-16 

-1021 

-9.72 

Indonesia (28) 

155.68 

-127 

-081 

-427 

-2.67 

-1526 

-828 

Korea (23) 

16092 

+6.02 

+3.74 

+1039 

+6.63 

+5722 

+52.16 

Malaysia (23) 

239.16 

+3.73 

+1 AS 

-823 

-3.60 

-13.89 

-5v49 

Pakistan (11) 

117.71 

+019 

*0.10 

+3.40 

+228 

+3jQ2 

+529 

Philippines (12) 

291.12 

+3.83 

+123 

+0.63 

+022 

-3125 

-9.72 

Thailand (25) 

272.47 

+1156 

+4.50 

-1.58 

■057 

+822 

+328 

Taiwan (32) 

172.34 

-063 

-037 

-027 

-5.36 

+1883 

+12.12 

Asia (152)- - . 

—22831 

+427 

+1-91 

-089 

-1.88 

+620 

+3.11 


m Mow to X m, Jmwy 7m lM&riQO. Sons Bahg secuAfai 


Global connections: 

AIR CANADA 

300 destinations in 140 countries v.-itti our airline partners 

* Hun or nua are 





26 




The US bond market ended last 
week on a positive note 
following Friday’s barrage of 
favourable news on inflation. 

Treasuries rallied after the 
government published Figures 
showing only modest increases 
in consumer prices and retail 
sales in September. The 
market was also consoled by 
news that industrial 
production in September was 
unchanged and capacity 
utilisation had slipped slightly'. 

After other favourable 
economic reports during the 
week, traders took the view 
that immediate pressure for an 
increase in interest rates had 
eased and the Fed would sit on 
its hands at least until the next 
meeting of its policy-making 
commute*? on November 15. 

With little in the way of 
sensitive data due in the next 
few days, analysts think bond 
prices will drift upwards. 

Few shocks are expected 
from the Figures for business 
inventories today, the trade 
deficit on Wednesday or 
housing starts on Thursday. 


US 


Benchmark yield curve f%}‘ 
rj/ias-r — Montriogc ==> 



‘At vtekls are market convention 
Source: Morrill Lynch 


One possible danger point is 
the Philadelphia Fed business 
outlook survey, also due 
Thursday. MMS International 
forecasts that the net 
percentage of Philadelphia 
companies noting a business 
increase in October will have 
risen to 17.5 per cent from 14.8 
per cent last month. If the 
pick-up In demand Is 
accompanied by adverse 
readings on prices paid and 
prices received, fears of 
inflation could be reawakened. 


Last week's subdued inflation 
figures enabled the gilts 
market to continue its recent 
rally, so traders are braced for 
some profit-taking this week. 

The most Important statistic 
of the week is probably 
Friday's First estimate of 
third-quarter gross domestic 
product growth. Most 
economists expect the recovery 
to have slowed down from the 
second quarter, but Mr Nigel 
Richardson, head of bond 
research at Yamaichi 
International (Europe), is 
plumping for a 

quarteron-quarter rise of 1 per 
cent He believes that this 
should not worry the gilt 
market if growth is seen to be 
coming largely from exports. 

Indications of the strength of 
consumer demand will come 
from the Confederation of 
British Industry's distributive 
trades survey - out tomorrow 
- and Thursday's retail sales. 

The Bank of England will 
publish details of its coming 
auction tomorrow, with many 
traders expecting a five-year 


UK 

Benchmark yield curve i%)' 
14/10"}*—* Mnrahago ■ — ■ 



'All yields am market convention 
Source: Mend Lynch 


stock. The Bank took 
advantage of market strength 
to make two tap stock issues 
last week, and it was able to 
announce there would be no 
need for a November auction. 

Unless the numbers are 
particularly bad, it is not 
expected that tomorrow's 
public sector borrowing 
requirement figures for 
September will move the 
market, given the general 
consensus that the deficit is 
gradually falling . 


Yesterday's German election 
took place against the 
background of an economic 
recovery that looks 
increasingly solid - the 
Bundesbank agrees with the 
government on that - and an 
inflation rate expected to ease 
from the current 3 per cent 
this year. 

It is these economic 
fundamentals and the gradual 
slowdown, of money supply 
growth which will determine 
the progress of the bond 
market, along with events in 
the US, once the vote's 
outcome has been digested. 

The bond and stock markets 
rose last week, with 10 -year 
bund yields easing towards 7.50 
per cent, on the growing 
assumption that Chancellor 
Helmut Kohl’s coalition 
government would be 
re-elected. 

Earlier, however, investors 
were not so certain and the 
markets softened. The prospect 
of a Kohl victory and the 
continuation of 
deficit-reducing fiscal policies 


Germany 


Bonehmaifc ytew curve {wy 

14/KVBa— Month ojo = 



'Afl yields numarVat convention 
Source: Menu Lynch 


injected a new confidence into 
the market Thus said Ms 
Alison Cottrell, international 
economist at Kidder, Peabody 
Securities: “If bond markets 
had votes, Mr Kohl - rightly or 
wrongly - would romp home." 

Even if be was not voted in 
again, she recommended 
investors to move up the yield 
carve, not jump off. The 
Bundesbank would see to It 
that any fiscal laxity in Bonn 
was met with stem monetary 
policies. 


Favourable economic statistics 
and the Bank of Japan s 
manoeuvres on the money 
markets have increased 
expectations of a rise in 
short-term money market 
rates. 

With the new reserve 
maintenance period starting 
today bond market investors 
will this week be focusing on 
the central bank's operations 
and the level of the overnight 
call rates. A rise In the call 
rate above the 2.25 per cent at 
which it closed last week, 
could increase upward 
pressure on short-term money 
market rates. 

Expectations of higher 
domestic short-term rates have 
resulted in Japanese banks 
switching their fundraising 
from the certificate of deposit 
market to the Euroyen market 

Rq pk.s are wary of a further 
rise in CD rates, to which 
short-term prime rates flending 
rates to first tier clients) are 
linked when demand for funds 
remain weak. 

Meanwhile, institutional 


Japan 


Benchmark yield curve (W 
,4/10*4 MOrth3flOe=J 



•AH yields ore maw* convention 
Source: Merrill Lynch 


investors are reluctant to 
increase their holdings of 
long-term government bonds. 

Life assurers and other large 
investors etc continuing to buy 
bank debentures because they 
are unlisted and investors are 
not required to disclose their 
positions at the end of the 
interim term. 

This has resulted m rates on 
five-year bank debentures 
felling: below those of 
government bonds with the 
camp maturity. 


Capital & Credit / Richard Lapper 


lO-year benchmark bond yields 


Attitudes change on Latin America 


The return last week of 
Argentina to the syndicated 
loan market marks a signifi- 
cant stage in Latin America's 
financial rehabilitation. Argen- 
tina secured a $500m 18-month 
credit with a spread of 150 
basis points above Libor ou 
Tuesday. 

The deal is one of the biggest 
by any Latin American govern- 
ment since the continent’s debt 
crisis emerged in the early 
19S0s and reflects significant 
shift in the mood among bank- 
ers, 

“There is a change in mind 
set,” explains one banker in 
New York, who says financiers 
have been impressed by the 
approach of finance ministers 
such as Mr Domingo Cavallo of 
Argentina. 

“It would have been unthink- 
able three or four years ago.” 
explains Mr Peter West, eco- 
nomic adviser with West Mer- 
chant Bank in London. 

Credit Suisse and Chemical 
Bank led the loan, which fol- 
lows an increase in project 
Finance and short-term trade 
lending to Latin America and a 
sharp rise in international 


equity flows towards the conti- 
nent, where governments are 
increasingly adopting the lib- 
eral economic policies, pio- 
neered by Chile. Mexico and 
Argentina. 

So far this year some $5.25bn 
has been lent to Latin Ameri- 
can borrowers in 35 separate 
deals, according to figures by 
International Financing 
Review, the specialist publica- 
tion. 

Borrowers include public 
enterprises and companies - 
such as Pemex, Mexico's oil 
company - as well as banks 
and private companies. 

Latin American borrowers 
have steadily increased issu- 
ance of new bonds, witb 
$12.6bn worth of new offerings 
in the nine months to the end 
of September. 

Nevertheless, they find syn- 
dicated loans more attractive 
because the deals are flexible. 
Although front-end expenses 
can sometimes be more expen- 
sive, the terms of the loans can 
be rescheduled. 

The Argentine transaction, 
which amounts to, a vote of 
confidence for the three-year- 


old economic stabilisation plan 
introduced by the government 
of Mr Carlos Menem, was 
“remarkably easy to syndi- 
cate". said one financier. 

“We have observed some 
enthusiasm for Latin American 
credits. Banks have emerged 
from the Brady era and are 
now prepared to look at sover- 
eign exposures” he adds. 

As well as Chemical and 
Credit Suisse, other interna- 
tional banks participating were 
Banco Santander, Dresdner 
Bank. Bank of Boston. UBS 
and ING. alongside a number 
of local banks. 

Argentina borrowed money 
to cover revenue shortfalls 
prompted by delays in the pri- 
vatisation of several gas distri- 
bution companies, 

Mr West believes that there 
will be no massive rush back 
into the syndicated loan mar- 
ket but he expects that other 
“tailor-made" deals for Latin 
American borrowers could he 
in the offing. 

Nevertheless, there are fears 
in some quarters that in their 
enthusiasm for lending to the 
new emerging markets, hank- 


ers could be opening them- 
selves up to a new debt 
crisis. 

In a recent note Mr Raphael 
Soifer. analyst with Brown 
Brothers Harriman & Co, in 
New York, points to a steady 
increase of aggressive commer- 
cial lending to Latin America 
and other less developed coun- 
tries. 

“Don't look now but LDC 
debt is back," he says, with the 
cross-border exposure of US 
banks to developing countries 
increasing by 33 per cent since 
1990. 

“As those of us who have 
followed the banking industry 
for a while can never forget, 
what began in the 1970s as 
ostensibly harmless, 
short-term ’balance of pay- 
ments adjustment facilities' 
and interbank deposits, by the 
1980s had developed into the 
full-blown LDC debt crisis," 
wains Mr Soifer. 

Mr Michael Atkin, director 
for Latin America at the 
Institute of International 
Finance in Washington, con- 
cedes that Latin American 
indebtedness has increased, 


partly because the internal 
savings ratios of Latin Ameri- 
can economies are still rela- 
tively low. 

“It is certainly true that 
Latin American indebtedness 
is building up. They are 
importing a lot of capital,” he 
explains. 

The total debts of 16 Latin 
American economies moni- 
tored by the HF amounted to 
$529bn in 1994, almost double 
the S27t5bn recorded shortly 
before the emergence of the 
debt crisis in 1981. 

Debt now accounts for an 
even higher percentage of the 
region's exports than it did 13 
years ago. at 264 per cent com- 
pared with 225 per cent. Never- 
theless, he insists that “history 
is not repeating itself". 

The continent's private sec- 
tor is now bigger and more 
widely involved, economies are 
more open to international 
trade and competition and 
macroeconomic policies gener- 
ally are more to the liking of 
lenders. Significantly, govern- 
ments are not resorting to 
external debt to finance public 
spending, says Mr Atkin. 


Percent 



Source: Oatasueam 


INTEREST RATES AT A GLANCE 

USA Japan Germany France ‘ Italy UK 


Discount 

4.00 

1.75 

Overnight 

4.63 

2.25 

Three month 

5JJ1 

2.31 

One year 

6.04 

2.75 

Rve year 

7.28 

4.13 

Ten year 

7.62 

4.71 

O] France- R«oo rats. (T) UK-8aM nua Soura: IWn 


4.50 

6.40 1 

7.50 

5.75* 

4.89 

5.18 

7.93 

4.50 

5.00 

5.46 

8.61 

5.81 

5-53 

6.23 

9.87 

6.93 

6.91 

7.6Q 

12.11 

8.39 

740 

7.98 

11.96 

8.55 


US TREASURY BOND FUTURES (GBT) $100,000 32nds of 100% 



Open 

Sett price 

Change. 

High 

Low - 

Estvot. 

Open kit 

Dec 

99-00 

00-11 

♦0-07 

99-18 

98-13 

'449,244 

399,433 

Mar 

98-10 

98-22 

+0-08 

96-27 

97-25 

2.087 '■ 

- 26,496 

Jun 

97-20 

98-02 

+0-08 

98-07 . 

■ 97-18. . 

.1,071 

• 11,092 





' : 

r -... : ~i.i 

r-‘- ■' o'. 

r-i: 


f Highlights September '94 J 

Langgeng Makmur Plastic Industry Ltd. I 

in-line with projection 1 


The third quarter 1994's net results were in line with the full year projection of Rp 
12.2 billion. Compared with the full year 1993, total revenues were 109.8% higher 
at Rp 47.0 billion and net profit stood at Rp 8.5 billion. 97.7% higher than FY 1993. 


Key Figures 


(in Rp billion) 

September '94 
(9 months) 

FY 1993 
(12 months) 


Total Revenues 

47.0 

22.4 

109.8 

Operating Profit 

11.1 

5.5 

101.8 

Net Profit 

8.5 

4.3 

97.7 

Total Equity 

103.6 

41.1 

152.1 

Total Assets 

120.9 

57.2 

111.4 

EPS (Rp) 

260.8’ 

161.7 

61.3 

Current Ratio (%) 

498.3 

212.0 

135.1 

Net Gearing (%) 

cash 

6.6 

n.a.‘" 


’) Based on weighted average number of shares 
•*) Not applicable 


Key Points 

• Indonesia’s leading consumer products manufacturer 

• Targeted at low-middle income consumer market 

• Strong cash flow and extremely low gearing 

• Expansion will boost earnings substantially in the next two years 

With almost two decades of experience, the company is well positioned to retain its 
leadership in the plastic houseware market which it serves. 


PT Langgeng Makmur Plastic Industry Ltd. 
Surabaya, Indonesia 
(62) 031-8539 550 


OctobeMV1994 ^ 


International / William Dawkins 

Japanese flop sparks pricing rethink 


Japan's finance ministry is 
rethinking how to price equity 
offerings, as the result of what 
could become a costly hitch to 
its latest privatisation, that of 
Japan Tobacco, the state 
monopoly cigarette maker. 

The ministry is under fire 
from both Japanese and for- 
eign securities houses over the 
second privatisation issue to go 
wrong since the Introduction 
of tough new rules on the con- 
duct of equity offerings at the 
end of the 1980s. 

An embarrassed ministry 
announced on Friday that 
there were no buyers for more 
than 65 per cent of the 436,666 
shares allotted to small inves- 
tors in Japan Tobacco. 

As a result, the ministry 
runs the risk of falling Y408bn 
short of the Y958bn ($9.75bn) it 
had hoped to raise from the 
share issue. The ministry is 
offering a total of 666,666 
shares to individuals and insti- 
tutions, comprising a one-third 
stake in the company. At the 
issue price of Y1.438m (£14,631) 
a share. Japan Tobacco is val- 
ued at Y2.S78bn i£29.3bn). 

It is unlikely, in these cir- 
cumstances, that other small 
investors will voluntarily take 
up many of the left-over 
shares, say brokers. Ministry 
officials will decide what to do 
on the results of a second 


attempt to allocate unwanted 
shares by lottery. The final 
reckoning will be on Thursday, 
when payments on those 
shares fall due. 

The flop increases the likeli- 
hood that Japan Tobacco's 
share price will fail when trad- 
ing starts a week later, on 
October 27, unless the finance 
ministry keeps the unwanted 
shares. If the ministry fails to 
step in, a heavy loss could be 
on the way for big investors. 

That could destabilise an 
already weak equity market 
and guarantee a poor reception 
for future privatisation issues, 
like West Japan Railway early 
next year and another tranche 
of the already-privatised Nip- 
pon Telegraph and Telephone. 

Japan’s equity pricing sys- 
tem, to be fair, does serve the 
purpose for which it was 
designed. It stops companies 
on the way to the market from 
covertly handing out cheap 
shares to friends in high 
places, as was the case in the 
late 1980s Recruit shares for 
favours scandal, which pro- 
voked the rule change. 

In drawing up the new rules 
for pricing shares, the finance 
ministry took its inspiration 
for the auction system it has 
used for many years to sell 
government bonds. The result 
produces a system very differ- 


ent from that normally used 
for international share sales. 

One third of the shares to be 
issued are auctioned in 
advance to rich individuals 
and institutional investors. 
The rest are sold by lottery to 
the public, at the mid-price of 
bids made in the auction. 

This drains off all the sur- 
plus institutional demand for 
the shares, before the issue 
even gets to the public, argue 
the system’s critics, and 
ensures that the first few days’ 
trading will be more likely to 
show a loss than in other inter- 
national issues, which give 
advisers more scope to set the 
price at a level likely to stimu- 
late the market. 

Big investors must pay the 
price they bid in the pre-offer 
auction, even if they are 
unlucky enough to have bid 
above the mid-price. In Japan 
Tobacco's case, bids accepted 
by the finance ministry ranged 
from Y 1.36m a share, up to 
Y2.1lm, probably at the top 
end of total bids received. 
“This way. you get no after- 
market,’’ complains one for- 
eign broker. 

A second problem is that the 
pre-offer auction risks setting a 
misleading price, in Japan 
Tobacco's case clearly higher 
than thousands of s mall inves- 
tors will bear. It only reflects 


the valuation accorded to the 
shares by the biggest and rich- 
est one-third of investors, 
rather than the demand from 
all potential buyers. 

Japan Tobacco is not the 
only example of a flotation to 
have hit trouble under this sys- 
tem. Japan Telecom, a private 
sector long distance telephone 
operator, was a high profile 
flop only last month, despite 
the fact Nomura Securities 
priced it at a discount to the 
auction mid-price. Mass selling 
orders for JR East a privatisa- 
tion issue, made the stock 
exchange’s computers break 
down and hit the whole market 
last October. 

Foreign lobbyists, like the 
European Business Council 
have for years been urging the 
finance ministry to adopt 
something like the book-build- 
ing system of pricing shares, 
used in most international 
equity issues. This would § 
reduce the mathematical dis- 
tortions of the Japanese sys- 
tem, it is argned 

The Finance ministry does 
not usually cave in easily to 
outside pressure. But it has a 
dear self-interest in ensuring a 
smooth reception for future 
attempts to raise government 
revenue from privatisations, at 
a time when its tax revenues 
are short of target. 


NEW INTERNATIONAL BOND ISSUES 


Bomwer 


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Bf USA 300 Od.1999 7.75 99am 7.433 M37Vfc-99> DaMsdie Bank Umtiwi 

Ota Motor FmwffMKJ 200 0CH997 7.125 93.71H 7.380 *0)i6V. a <r37| GS Fnt BOSW 

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125 undated tp 9W?s ■ CS Ftrst Bosun 

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rethink 





Ebntritwitjiir Lob Source Deal 


Latest Rates 
Bid/ Ask Contributor Loc 


Source Beal 





'• 'x-' • ‘ - •••'D 


Soots 

rnnfrlhiilrni* I nr Ora 


Fed Chairman Aian Greenspan boosted dollar by announcing currency's tali 

was bad for U.S. economy. 


Latest Spots 

RirfydcLr rnnfrihul-np Ini' Crra 


Japanese parliament elected Socialist Party's Murayama as Prime Minister 

causing markets to move. 


Latest Rates 
Contributor Loc 


Source Deal 



• . ; , ..V. -IT/ •• 3 1 - - 


tfoiifni tuifnr _ I nr Crm 


Tietmeyer prompted speculation of future rate cuts when he told a Bundesbank news 
conference there was no need for worries about inflation expectations in Germany. 


Latest Spots 

El i rfyAct rcrnfri hi i4- nr* I nr*- Crro 


President Clinton told G7 news conference in Naples that economic growth was his 

priority, pushing dollar lower. 


Did they tell you first? 

(They did if you had Reuters Financial Television.) 


Imagine being the first to know when a market-moving story breaks, vital minutes 
before your competition. 

Imagine getting the story direct from the source, live, without delay. 

That’s the advantage you get from Reuters Financial Television. It puts live TV 
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Since its launch in June this year, Reuters Financial Television has carried an 
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speeches from the key players in international finance such as Tietmeyer, Greenspan 


and Mieno, many of them exclusively. The speed advantage over other services has 
been anywhere from 30 seconds to 2% minutes. 

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Be there with Reuters Financial Television. 



»M • «»•* • » Ml 

FINANCIAL TELEVISION 


Making the best information work harder 

For furthar Menntfian contact yotr tocal Rautar effioi or Ana Headquarter* 


v. 











FINANCIAL TIMES 


MONDAY OCTOBER 17 IW 


WORLD STOCK MARKETS 


■ i- hwi Hum 


EUROPE 

AUSTRIA (Oct 14 ■' Sch] 


AusAr 

1.980 

+20 7.300 f .750 3.5 

BhAusl 

B53 

. 1X70 

9*5 oa 

CfBOPt 

617 

♦3 834 

597 16 

EAGaa 

2830 

.. 4X90 

£t95 0 5 

ELN 

1.304 

+6 i.rn i.iw I * 

Lervnn 

1.1S0 

♦5 1.387 1 080 04 

uatt-M 

615 

+ 1 744 

5Ffl 

Ce6h 

970 

_ 1.007 

845 13 

PcrlZm 

IJ10 

-01 l.Cf 0 

805.2 0 

Bjceirt 

Jflj 

♦ 3 498 

197 £5 

Sin-D 

705 

♦: 2Sfl 

171 =9 

V4 r« 

t.T03 

1.180 

874 

’.'ritUF, 

345 

-I 406 

3M 1.7 

VMJTA 

W3 

♦4 79! 

546 X 4 

VfllA/ 

475 

♦ 4 600 

430 1 7 

KirfbQ 

£71S 

+ 14 3*0 3411 IX 


BOWMJJXtmSWitOctUi'fo-i 


.. 4.4"fl 3 705 1.3 

• I 10 6.690 7.350 3X 

•W i.:<» 4 ,o(jo .. 

♦ lu4.5SQJ.S90 *0 
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-SWTt'KST’HiO 7 8 
-1004297% H.0C1 B.0 

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-wuc-rsn »b ao 
-30 2 . too :.iw 3 s 

♦ 30 £,"00 5 700 4 3 
-2 215 IS* 8 B 

♦ 50 ft.000 0.IIW 1 7 
-fl 1.550 1.1* 22 

*10 6.1120 5,110 7.7 

♦ CO J7B1 2.670 4 4 
♦oe “nr.iij.T0 
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_. 4.470 5,550 5 D 
-14 l.£« 1.25K 5 9 

♦ 40 9.100 7.420 5.9 
-4010*10 6 720 1.9 
-V 6 VD J. 160 7 5 
-10 3 1^15 2.700 52 
-40 3209 5.910 2 0 
-W 7.050 0.090 1 0 

♦ 10 6.4COS SOT J J 

-2f. 1 tiVl 1 372 C 9 

V1.HD '«W 
-40 II) 7^ 9X90 2.9 
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-2 533 J20 3B 
-no £■ 200 4.250 4 6 
5 3RP 4.320 4 5 
.W 21UU 7025 5.2 
-5025402015 5.1 
. IS.7M12B0 4 9 
-5 14)75 1 450 0 7 
-KOf/KflflTM 4 1 
-260 1 TBW 9.320 4B 

♦ 2M To 100 27.200 2.4 
-15 2.930 2.440 4 5 


HU1 35960 
kmc 600 
LVMH 879 
LOffiOp 415.60 
LOOJtS 124 
LOreal 1.103 


panaB isi.so 
Pockny 15880 
Fmnc SM 10 
Pnigt 788 
PlnPr 95 1 
PtWl'U UJH 
rwteft 4SJ 
RnmvC225eOnl 
fttmnPA ISA 
FUcUf 584 
auc 730 
&wm two 
ElGotkl G81 
sntul 1.426 
Gonodr mil) 
5CBSA 534 
»mg 368 
Smoo 425 
9ueR 2JB4« 
SOcQen M2 
SctniuA 2,075 
5o*eBi 250 
5 lM 20 252 50 
swm 208 
TiMtn 1555 
TlwnCSf 150 70 
TolalO 328.30 
UAP 138.20 
ira.CC 375 
Unbai 430 
UnrtnFi 417 
Valeo 28150 
Vu*r 296 
WrmjCl 24140 


*4.50 570 360140 
-11 700 500 8.9 

-3 002 661 10 
*340431.34 277 32 
-3 187 70 I KUO . .. 
-94 1.395 10*3 1 0 
-90 7.100 5.400 0.6 
*8.9038650 2103) .... 
-13 624 403 3J 
-.10 274 207.10 1.D 
13830 8730 5.1 
♦ 7 1.348 888 8.5 
-13010080 115 B.1 
_ 260 184 „ 

-IJSO 525 315 5.1 
-3 635361X0 7.0 
•180 234 13850 3.2 
-530 371*546 7.4 
-7 936 752 1.9 
-MUMS 785 .... 
-U1.150 80S 1.3 
*18 004 SEW _ 
-.90 287 201 3.1 
-.901574011180 19 
•14 752 542 1.4 
+10 645 001 1.9 
♦84 31601360 1 9 
-11 734 576 3J 
-32 1,788 1470 3.7 
-8.90 468 BO 337.10 18 
-7 600 472 13 
-15 610 365 7.7 

... TOO 382 7.3 
-12.470 1.790 _ 
-8 792 523 3.9 

-4 2.600 1.710 2.4 
♦2 40 52123210 .. 

-140 377 23416 4-9 

23780 18350 23 

-5 3.120 1281 1.2 
-.30 214 132.10 6.0 
-6X03&T5Q233 10 14 
+2 224 JO 12740 33 
-4 494 333 43 
-4 85042110 59 
*9.50 800 403 73 
-350 107 221 13 

•8.70 335 240 3.2 
-60 395 22710 4.6 


._ SPnOk) 8.980 -5511X006^50 4J) 

.. SM 10.230 -M0 134» 9Xm S.1 
„ a*iBP 1400 -80 2730 1482 15 

r. SSb J.MO -125 5.195 Wg3 fl 

._ ToioAs 24,350 -700 3640024^0 IX 
.... Torfr 17.140 -*3807*062 15.K0 32 
... IMcm 10.000 +10 t&TOO 0.055 1 J 


~ NeiHBIUll0S(0ct14/RsJ 


DENMARK lOct 14 r KM 


♦;p 760 *5 2 4 

♦ 7 261 178 2.7 

♦ 5 933 250 12 

♦so ran s.300 ao 
♦:jj« ikon mum as 

-2 22317550 M 

♦ 1 427 207 3 7 

rm;s iso S7 
-20 615 335 3.0 
-ID 043 445 2 3 

-4 376 ISO IT 
♦4 425 330 2 1 
-35 1.0* 900 0 4 
-13 395 K2 35 
*350.11181 406 0.2 
-0 737 418 1 1 
. . 615 497 OB 
-365 675 425 0 8 
-5 435 J21 25 
-223833 300 .. 

♦ 5 1.972 510 1 6 
... 267 SOI H 4 2 


FINLAND lOd 14 1 MUI 


GEMUUrrfflct 14 / Dm.) 


AE6 182 *418830 140 1.0 

JUjUW 515 -3 605 no 2.3 

AaMnflfl 1.025 +15 1.446 1,000 1A 

AJIr.- 2.365a) -60 2X11 2,122 0.6 

565 -7.50695X0 575 19 
850 *50 1,191 700 _ 

745 -MBO 1.025 615 1.0 
920 90 *590 276 2 5 

dBQ .... SID 435 1.6 
384 -1 455 343 23 

358 80 -2.30 40*00 33010 11 
301 *5 626 25650 3.7 

813 *1650 929 639 U 
427 ._. 575 J95 3 0 

1 4333 -2 1.105 815 1.4 

289X0 *1X0 34810 238 1.7 
3»7 -3 528 974 3.8 

960 *5 »1 750 7 8 

820 +20 13)30 900 IX 

l£ia +10 1.630 1.140 0 8 

Cmm.-tjk 321 +* 3M292JCI 3.7 

Contra 236X0 -ISO 299 22 S 1.7 
DLW 401 -2 000 381 0 5 

Damir 709 +3 904 688 1.0 

DOusoa *80 +50 566 443 15 
mean rw® +i.s)sb&» no _.. 
ttrOiBk 722 *10 B97 5D 6SL50 2J 

OMlIWk 150 +3 188 131 2 7 

DcudS 503 50 -150 607 476 XX 
Drgw* 325 *S 337 280 1.5 

OnOBh 393 +3X0*6650 3*8 3 4 
520 — 618 46S 1.3 

246 -i 307 245 2.0 

780 *10 760 990 IX 

215 . - 245 190 3.0 

HilttSm 1X20 -30 U80 1.141 1.1 

HlWttP 595 +3 681 S62 1.7 

326 -1 440 310 3.1 

978 -14 UBG 657 1.4 

TOW 33150 +6368 50 28420 2.1 

Hbmr 626 it -12 1X15 767 I.fl 

218 -150 253 208 2X 
268 -3 3132S6X0 3.7 

356 +2 433 330 12 

159 +.50 160 131 .. 

KrrJnt 630 *4.60 649 515 2.1 

irtlwt 513 +6 558 451 26 

UNO 128 80 +1X0 16150 11510 — 
AtodiW 147 30 *2 JO 179102/1)3 4 


ABNAftr 50.10 
AEGON 10150 
AM) 40.70 
AK20N 204.70 
BOBWS 3340 
Braun 38.40 
GSM 67X0 
DSU 142.70 
Dtcri% 20150 
Etoir 17-M 
FWDW 1540 
F Arm OR 6050 
Gnrrma 91 SO 
GBTOpfi 44.50 
IWFiqr 139 
Hh*Ji 230X0 

HeiBa 284 
HgvOofl 76 
HunOfll 73 
HTCa 4100 
NG&ft 73. It) 
MMut 84 
KLM 46X0 
KNPBr 50.40 
KPN 52.90 
KPKOofl *am 
ttefyo £120 
NJTWC 93.70 
NUtrOfl 88X0 
OcsVGr 7650 

men &sxo 
7* 60 
114.10 

nodmeo 50 .50 

name 117.70 
Rom B240 
RDuttA 19340 
StotWt 45 
UtUDp 200 
VNU 177*1 
VtVWbH 46 90 
WMOoR 123X0 


-.70 7170 64 5.0 

♦ 1 8011050 90X0 36 

-.53.404280 2.4 
-.10 229 15760 12 
-30 47X0 32.50 3.9 
-.70 52 34.60 3 9 

+.10 77X0 60.80 _ 

16650 IDSBJ 1.1 

-1 20817170 2.4 

-.10 1SLS0 1X50 .... 
-.10 2fi 13X0 4.B 
-.30 88.40 6640 46 
-X0 inn 89.10 4.4 
-JO5&0O4T.4O 28 
+115750 123 ... 
-JO 23020650 1J 
*633550 M* 1* 
+30 B3 4A80 5J 
+ JO 93.50 B0JO 22 
*210 43.70 34.70 28 
•1X0 9470 72.10 OX 
+1 JO 9BJ0 74.70 23 
-X0 57 JO 40 JO 21 
+.40 SUED 42.10 CLB 
-JO 55 10 47.00 
_S7XQ43J0 3.3 
+1XDBSJ0 34 E.B 

-.30 10020 72 24 

-JO 90 65.75 _ 
_ 88 JO 65 JO 2 J 
_5BJ0 40 OX 

-1 0450 71 IX 

-JO 131 112 31 

-.40 68 60 *2 

- 90 13540 11*80 27 
-JO 10050 01.70 6J 
-J9O21540 1MBO 4.4 

♦ 120 5030 40JO 18 

-20 236178.® 23 
*.10 203 15450 20 
-303X3) *5 2.1 

-28013330101X0 IX 


9w8«RD 1M 
730 

704 

SWR BSO 
UnfikBr 1X85 
mtorftj 600 
Zirtw 1.190 


*19 490 302 U 
... 971 782 1.6 
190 14iH5 1.7 • 
-10 901 700 1.6 
+101 J75 1.400 21 
-7 1437 1X33 21 
175 123 ._ 
-m 1.738 1.400 4.7 
+40 2640 2780 ._. 
+S 263 188 01 
-61.540 1.001 — 
+100 1104011.125 0.4 
-4Q 7X70 3.100 (LB 
-GO 2,300 lJ2fi 25 
-9 1JJS5 710 1.4 
-150 227 148 1J 
-0 B8S BSD — 
-4 HTO 831 ... 
-W f J90 1.460 IT 
-3 1,100 845 20 
-4 531 332 4X 

-2 250 173 45 
816 96* 1.4 
+4 770 516 1.5 
-IS 880 733 _ 
+29 1 J03 1X66 2J> 
-10 832 566 27 
•15 ljOIS 1,128 1.7 


PAOF1C 

japan (Oct 14 /Yen) 


— NORWAY (Oct 14 /Kmnei) 


-1 tfZ 60 4.8 
+4 173 130 OX 
-.JO 19X0 11 JO — 
-2 IBS 125 1.1 
-.30 114 60 _ 

♦3X0 140 100 3.4 

+12 3BS 270 2JQ 
+ 1J011550 8* 34 

♦ iSD 266 208 1J 

+3 208 1*0 08 
_. 30518850 1.9 
. .16450 130 33 

♦1JO 91 7250 28 
+IJ0 91 TO 26 
-1 97 72 6.1 

♦JO 122 85 JO 1.4 
•1 ISl 114 21 
-1.10 8* JO 28.10 ... 
+4 09 SS 8.7 


SPAMlOd 14/PtS.) 





Lahmyr 

650 


arm 

630 23 . 




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+9 

a-m 

B60 1 7 „ 







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BW 1 J ._ 


-1 105 

74 . 


950 


410 

JU £3 .... 

44 70 

♦ 704900 35.30 1.3 


185X0 

-X02IBM 15750 

1*9 

+1 233 

141 25 

UlWl 

181 JO +150 

209 

ISl 1.4 _ 

10. JO 

+ 40 17 40 

un _. 

MAN 

415 

+2 

470 

378 1 7 „ 


kjt Jto 

SS 50 

+ 50 

60 

45 19 



520 

+10 

70S 

50= IJ 



139 

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100 0 7 


MetraA 

150 

+ 5 


1*0 19 


McffaB 

147 

+ 5 

250 

133 1.9 



225 

-3 

£50 

200 09 



223 

+5 

260 

190 OX 




*27 

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287 0 5 


OBmtv* 

104 


107 

69 .. 



72 

+4 

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kjTb 

71 50 

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101 

♦220 

120 84 JO 10 


aorne 

247 

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tmpea 

17.® 

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lMmet 

108 

♦ 4 

129 

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MWIPI J1S -3 367 MS 22 

Marram 407 +24*250 380 1.2 

MarmltV 630 ... 822 675 .. 

MURu 171 +9 2B0 101 4.T 

NLwflflfl 2900 +50 151 7 2.070 0.4 


PWA 235J0 -6 JO 282 210 

mKomm5Q3SO -.50 530 *03 
Per** 60S -2 9S0 622 

PnaoB 45S -150150 416 

RWE 407 *129052950 399 

RWEPt 378.50 +9JO 434 329 
«1W)E 1.340 -7 1 J20 1X30 

«*im* 284 +4 372 254 : 

BinmPt 213 -2 267 TOO 

RSUH 245 +3 313 235 

Sctirm IXOOXO +9X0 I.UUO 860 
5chLuO 382 +2 430 330 

Stave, 648 +27915061*50 


nUWX(0dU/Fl5.) 

ACP 219 -1.50 35B3B.10 ... 
ACCta 577 -9 766 567 4 2 

AVLU 737 -9 814 655 28 

Aleut 473 60 -4.40 913 454 4 8 
A*3 252 50 -190 330 217 117 
BIC 857 -12 718 570 4.6 

BNP 260 +50 3050 227 1.7 
Snear 530 -5 683448.10 ZJ 

Be r»»n 2003 +317501763 33 

Bvques 578 +18 767 S<6 19 

cap i.i70 . '/wo urn <i 

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Snare 1420 
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ToyofJI 628 
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+20 8460 7.430 
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-.. - KONG KONG (Oct 14 


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10.10 

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79 503 CANADA 

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AFRICA 

SOUTH AFBCA lOct 14/R3nd) 

+ |- H%H (M YW WE 


AUSTRALIA (Oct 14 /AuSIS) 


22.600 

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AtoSU 4.4ttrfl 
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— SWITZERLAND (Oct 14 / Fra.) 


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1,130 -301X40 622 0-6 

2.170 -40 £600 2.050 £9 ... 

10X00 +100 13400 9X80 .... — 

1X10 -40 1A701X10 £7 — 

990 -20 1X50 823 — — 

iX80 -roi.eeoixao — — 

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364 A *50 339 

-1 820 516 OX — 
_ 670 430 — — 

470 -10X970 2.430 — — 

577 -6 502 425 _ — 

1.160 *10 IJ10 1.140 ..- ._ 

KtMHur 484 .... 500 338 ... ._ 

KawKm 4)0 -2 419 271 _ 

KswS* *48 -4 45* 303 — — 


a - 


-3 372 264 
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-1 778 603 

— 3X40 2,410 
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-20 4,650 3X30 
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358 as — 
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630 74 — 
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£10 7.? 104 
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1X4 04 .... 

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101782 AMD 
73100 vr£*Q 
12241 ABCDt 
280181 A8JGE 
10000 MUMS 
<88780 AtCtlAJ 
811023 AmBm 
11000 Alcoa 
97145 Urn 
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33350 KT? 
353548 BCE 
1442 BCE MD 
2024 BERA 
77000 Bnmvk 
540030 SWAorrt 
452152 BtftovS 
33647 BauEk 
31781 BmbCffix 
■ TOKYO -MOST 


125 

^bsjs; 

23% -S, 626 25% 

15% *5% 15% 

11 +%S11% 11 

22% 522% 22% 

ACTTW STOCKS: 


17% — % *17% 17% 
*3 +% S48 47% 
14% -%SU%1*% 
16% +% *19% 19 

13*» *55 13% 

,{ SS + 6 ^^ 

450 -15 465 450 
42% ~ — 


OSSA 10 

AED 27.50 

ABM 

Amcool _ 2M 

AnflAm 237.25 

fljntjotd 450 

ArwW lg* 

Banov. 31.50 

BHVn ZT.fO 

8utW 52.50 

CNAGal 360 

DeSCen 101.50 

Deem 7.M 

DrtSfti 63.75 

Eroo 1140 

- q "" g sn 

. 19.75 

Fiegtf 70.50 

Dencor 1*X5 

QFSft 126 

knrnm ^,*2 

HrtbSt =3.75 

rtvedd OT50 

tSCOfl 4.73 


Kkmt 
KkrofG 68.50 
LJbLfa 0» 
MwMk 16.75 
Nadax 31.30 
PatabM 7140 
PremGo 5 40 
Rancrtn 49.75 
HmtwGp 3825 
RrntxCn 10 
RuMPI 113 
Somen 946m 
SmOiCG 15 
SABrew 64.75 
SAMnum &e 
SLKB 32.50 
SIM 132 
Tleflal 43.75 
Tnotrei 43.50 
mauls 429 
WAnt 74X5 
W Deep 222.50 
IMiMl 5640 


. . 10X5 £70 4J 
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-15 1350 £70 .... 

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+£5022150 151 24 
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11000 fretwim 
18700 AvOt 
2081 RtedSI 
141530 Ran Bi 
787711 nepap 
10000 Ftttjel 
23150 «o«0 


227710 RoytKC 
21734 HoyOjV. 
Friday. October 14. 


7% 57*4 / 

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FT FK EE ANNUAL REPORTS SERVICE 
You aoUUa Hr am* nUUrttn nan 8 nr 
WMr«nmw8®«W*ncHt 

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■nnuflU nr Ur 081 770 3B22 * rates mafttr te 
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Stocks dosbig Change 


Sumitomo MU hid 

Nippon Steel 

Pacific Metals 

Kfitsublshl Hvy 

Mitsubishi Elec 


Traded 

Prices 

on day 


Traded 

Price* 

on day 

11.6m 

356 

+6 

Kawasaki Steel - 

5.9m 

448 

-A 

11.0m 

388 

-7 

Mss/iln Stool 

5.4m 

4B5 

+10 

9.9m 

604 

+34 

Kawasaki Krssn 

5.1m 

410 

-3 

6.7m 

794 


Itochu — 

4.9m 

752 

+10 

6.2/7) 

729 

-1 

Mitsubishi Chetn 

4.7m 

583 

+7 


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US INDICES 


1991 — 

hflh 


1W 

Mpi Uw 


Since luipbScm 

Mga uw 


Arjmtaa 

Ci-wr) .JHiiTT, 


1J32044 25*10X0 1« 


% '>J.W',1-1 V- 1 * 

JVWO 

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rwc 

234OE0 32 

51,0.,+ ' ' ft i 

11*4 4 

HJjlJi 

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1130.10 IX 

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>.f' tt'.r'i Xi r ; :U. 

£»Jib 


T»43 

46106 tZ 


I.Xr j :.iy*-l 1 '}’• 


Brxi 

uviu X 1 "•'• ' 

C2BK3 

litlX ll :STV 


HR) 43 Ur..?E4 1H5J3 1222X5 1.7 


irilifi !S73rJ' IKU 154245 17 


1957.40 271 
90*40 3JS 


390X1 BIO 
1011X8 |«T. 


Modco 

EC (Nw 19761 

Nettmbnd 

CBS TWmGcnBid 831 
CSS P0 9r <Enl 831 
Nm Zaitand 
Cx. 40dT-T» 
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Mo SBrndWlTO 

mahrekre* 

Ltwa Ccmo <2/1/851 


Id 275S 61 274082 2581.17 8/2 


4300 4364 

2734 273.8 


*314 45490 3V1 

2714 28*40 3171 


40530 2UB 

3740 21/5 


iTLUO 2JW60 


rt' 5511000 118 


20SJ3 20*371 306.80 2*308* 35 


108389 107341 IC615* 1211.10 WZ 


2W893 299G75 237146 3306X7 4M 


2883 8 2587.1 26714 322&60 18X 


3911*7 3889 35 307515 3970X8 3S9335 3070X8 

0171) (4'*1 P 1/19*) 

08A5 91*7 96X1 10SJ1 95X1 109.77 

Cl/17 (7/10 oa/lDWl 

1491*8 148763 149119 1862X8 143840 18E2X8 

130 Knot G/2T4) 

182.6* 182.11 180X0 22746 17SS5 2S6AB 

pm ewa i3i/8/aa 


•real time share prices 
•updated financial reports 


•daily unit trust prices 
•personal portfolio facility 


CU Ind Dar'o hgh 3927 97 0944.12 , La« 3862.03 0678 18 | CTlwflreWJA) 
Ooy'o hQh 391249 (3927 63 l Low 387851 087115 | lAcUMA) 

Stamtaxd sad Poora 

CmpoitlP t 469.10 467.77 46547 48240 438 92 48240 


418699 Jllli) 4110 27 425049 100 


;.i-4»r.T,4 .M'Vl 

4.LV40 

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43.55(13 

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395090 2*B 

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575X5 

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4390 

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7):597 

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2182.69 1,2 

186148 28.6 










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I23D¥ 

23010 

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2534® 7)9 

1740® 14/2 

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257 ® 

257 A3 

256.35 

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5571® 14/10 

3991X0 4/4 

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6355 Of 

532J 0 

6261 J 

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544600 19/1 

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Ana *W m 

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45*57 

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34139 

MS 44 

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339.11 7/10 

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108166 

110337 14/10 

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AllJTanJ&n 1 IZ’TT) 

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1432 

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133*70 67 

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i»MJ !C> 4401 83 4997149 27.D 

'.IllJi C07 10 51’ AS 612X3 5.1 

I THIS 1X1 Co 1 SKI 55 2087.18 BJll 


74244 S/10 
£11130 5/10 
198158 7,10 


ICT-J Vttsi r_3! i!27? fXJr* CX572 971«! 


UP ‘‘4T2C* 1 .+!: 

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I“1C3 (K6K ! 1CIW60 171273 I£S 

rtiisf. r:si4o ^5401 2S4io 17 

1 1CO IS 111567 (1J700 13(4*6 -il 


58385 131 
3*400 UVl 

1736174 *'1 

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144SS7 4/1 
1873X3 XI 


Sreflariand 

Swa 6k mo (31/12/53) 120375 120036 1201X5 1«2£34 31/1 
SBC Cawal 11.-4871 KT.16 SG3-W 91455 1093X8 31/1 

Taiwan 

iRSjnBstfYfaiSW’ e67.T 662639 6*9178 7191.(3 309 

TMM 

BarrgWfc SET (304/751 1*98X5 1475.06 1*70 SO 175173 <*1 

Tuikay 

LTMM Cm£D2fi 133ET1 7TU633 267511 SB47.J 2888£80 13R 
WORLD 

WS Groa *2 (1/1-7TO 6311* 63*2 630? 6*440 2/9 

CROSS-BORDER 

Bnm* lOOtTblttW 1350.17 135110 1331B3 154119 31 fl 

£lffOlW-:i»'» l &W) 119135 1/96)6 1161.19 1311-01 2? 

JCapeDiorapriiWi m 33718 33151 S6.I9 S/1 

&mgs&n«5.f7. tra laaa 187.19 ibisi ibijb ass 

■ cac-40 stock twoex FUTuney (matifi 

Ooen SonPnce Cnargs HJgh Low 
Oc: 19*5.0 1967 0 - 1358.0 1930.0 

Non 1950.0 1375.0 - 1961.0 1952.5 

Dec 1965.5 1904.5 - 1975.0 1954.5 

Ocen nKeres! %turw to pte+ous On. 


1157X7 18/7 

38047 5/ID 


Dow Jones Ind Drv. Veld 


SIP Ind. Div. yield 
Si PM P/E ratio 


I1S39*) pt/llTTl 


Y oar a go 
244 

Year ago 

ZA7 

26.00 


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■ STANDARD AMP POORS 800 INDEX FUTURES S500 timea ***' 

Open Sett price Change High Low EaL voL Open ini. 
Dec 469.10 *71.25 +£.10 *71.36 467 00 87.490 Z16X07 

Mer 472.80 *74.45 +2.20 *74.60 47120 805 8.965 

Jun 475.00 478.15 +220 *7320 473.90 10 2,579 

Opan vnarere %un are for nMoia day. 


FINANCIAL TIMES 


iai*s sno 

1138X8 5/10 
290X8 Cl/3 
141JS 21/4 


Est voi. Opw im. 
19.400 27.071 

218 891 

71 S 25.883 


■ PKW YORK ACTIVE STOCKS ■ TRADING ACTIVITY 


Uco 
Wott 
A* Wan 

mu* 

Castech 

nun 

Fon) Moor 

BU 

TbIsj Dine 

MtKtssw 


Sous Ouse Change 

Baaed price on or, 

3461000 17% +1% 

1+96,500 3<h *1% 

2377.800 2PJ -Mr 

2. 507 .900 38% -% 

2.491000 1 5* +1 

£448000 19‘Y +5 

£3*5.700 SP-i 

2X31700 73 +*! 

L 841400 20ft -5* 

1,634.300 96’i -5% 


0 Vekune uninBI 

Oct 14 Oa 13 Oct 12 
New York SB 251697 337.90E 26*544 

Anub 19.386 19.381 15 128 

BSgfifi 66 346 303 305,755 

WSE 

saw irateo £851 £874 £853 

iflsa 1.020 W14 999 

Rtfs 1.C60 877 1.107 

Hwang*! 771 883 7*7 

New HiglB 38 7* M 

(*w Lows 6S 49 69 


MM 


Complete details below and send to: FT Cityline Irrtematipnal, 
Number One Southwark Bridge, London SE1 9HL. 


- £..■ Crc: F ’".•a.i.-. Va:0n:nJ F%;n o2‘4 JA; hew Cerp C» IW1 « BjEO i-JKjOT Of OB «W>«W 4tC ICO <*rc*(St fUBBO A* CrtJrrviy 
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Mof-ra * Ti»c ij ;..i 'Ml Un-n-.tiliBo I BiSTV Jlw-nous kiOei. 0« 1* - 2tl£53 .10 J) 


T Correcaan. ■ CteuWoO si 15.00 GMT. • EjdLOIng Mods, t brduaYW. pM* LHlihrw. Fmreu) jnd Ttamoonawsi. 

AlkUM. Man (treoreocil Cays taghs and lows on vie a w g aa « «» Wflnest ana tww ports nxchM (ho loy By «cn 
stwfc wnareas me aend cay's ngfti ana Iowa tajppM by TdaEurs) reoresa re me nghc-n ana toms vduss tta mo mdav nag Foamed 
dung me dav. iTtie tgivco in Bramets are previous day o). V SuBtrea w ottiefai wg atere 


Name:. 


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CURRENCIES AND MONEY 


_gOUNP SPOT FORWARD' AGAif 


Bump* 

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ss S S 3 a S:S “ ss t “ “! r 
£sr « ss s 

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Mfltfhflyrfdm? jc? -0.3085 259 • 1B4 50.0760 49.8070 46L8972 -QJ& 49 0022 QJ3 

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P^S ^22 JSs flf ■ “! la «W 10^501 105546 0.1 105579 -01 

SrJta J!S 842 ■ 095 249.633 247.808 240899 -04 260879 -78 


NST THF, PGUnD 


Owing Ctoje BUfeffer Day's Md 
ran*** on etey ap read «gh lew 


DOLLAR SPOT FORWARD AGAINST THE DOUA.R 



Ons month Tim months 
flare %PA Rata %FA 


Om JBor Bank of 
Rale WA Eng. tndea 


405872 08 

05374 -05 


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md-print 


Changa Bd/Wfer Day's mid On* month Threo months Om yosr JJ» Moran 
on Oay opread low Ram 54 RA Raw fcPA Rate 94PA Max 


Stvaoan ?®V£ " 1 - 458 m - 410 202-517 201.102 201841 -28 202826 -&1 

SwtewLnd £2 -A0445 387 - 575 118831 118154 11.8891 -22 11,7161 -28 

SwOWrind ©g 20121 -O0B06 lt» - 133 2.0281 28100 2809 18 2.0034 1.7 

SORT I QJ25532 '° QQn 703 * 718 13770 13703 13708 13708 M 

America* ~ ' " " 

aff" 3 P< S! J-S"! +0 - 0118 882 ■ «8 18832 1.5871 - - 

1™ _a0041 152 - 172 1-3223 18145 - - 

ttjnw p£2 = ]££ 530 * 843 31881 31482 31631 34 31322 33 

“» * New 34882 +08372 342 - 442 6.4478 5-4330 - - . 

R«*eA**«S EsSAhra 825 +0 ‘° 113 822 " 828 ***** 1 ' 6900 i-»» AS 15916 02 

AuBfr nUa (AS) 2.1946 -dam r<m _ ten - -o— ...» ... ... 


8-2476 aB 

28838 1.3 

18112 -0.1 

254082 -28 

498972 08 

28786 12 

108587 0.0 

205831 -20 
118041 -22 
18672 22 


Bff ppq 

Austria fScOJ 10.7000 

Setgkjm (BFr) 318200 

Danmark tDM 5.9610 

Finland (FM) 4.7017 

Franca (FF/J 52098 

Germany (D) 14201 

Grace (Dr) 233250 

Ireland 0£J 18770 

Italy (L) 155023 

Luxembourg (LFl) 318200 

Nttheriarefc (Rj 1.7027 

Ncmay (NKi) 68280 

Portugal {£&) 155.710 

Span (Pta) 126260 

Sweden (90} 73144 

Switsertmd (SFi) 12635 


P*esoj 18696 +08118 882 - 598 12832 1.5871 

M 13162 -8.0041 152 - 172 18223 13145 


UK 

Ecu 

SORT 

Americas 


(E) 12925 

- 12529 

- 1.46512 


(R»l 488907 +0382 433 - 781 SQ889Q anaiwn 

M -1-482 450 - 588 158^156440 

4.0792 +0.0133 776-808 48826 48723 


MBnnbuu. m n . ,j __ ‘--UJIO 4.CKMf -1JJ Z.I Jtff -18 

402865 +0211 419 - 360 408380 40.1365 - - 

|a«SAretta tSF® 58743 +0.0424 723 - 782 68875 59857 - - - 

tangapora (SS) 22614 +0.0078 501 - S2fi 22583 ?*ra» _ . 

1 JS?! 1 ' S 5 6888 403247 863 - 911 5.7129 58831 - - - - 

5 Mica (Raj (R) 62213 +0.0386 041 - 384 QMtq p B20S4 - - _ 

South Korea (Won) 127123 +6.04 137-249 127457 127026 - - - - 

TO 41,8647 40378 424 - 888 41.7470 412838 - - 

manand (BO 39.7807 +0.1887 672 - 041 398980 39.7340 - . 

S P F wld SF* tori* raw only the MW thm dttriwlplaw. Fowd am wane 
^51!!^.^^? 1 ^^- s «^IM«»e«ta*«tbyawBmfcc4&Veiig.8Msow»ii»19es«10att<t0ffw 

u» Dose GUM nme cMwa ton the WMreuras odsmq gfctr rates. Sene mum m nnM ty ** f.t. 


CROSS RATES AND DERIVATIVES 


. 

- 

- 

- 

. 

- 

- 

Aigertlna 

(Peso) 

09962 

+00003 

061 

- 982 

09082 

09978 

. 

_ 

_ 

_ 




- 

- 

- 

- 

- 

- 


Brajfl 

<«> 

Q526S 

-00065 

260 

- 270 

08290 

05260 

. 







2.1537 

04 

21522 

03 

21551 

-Ol 

87.1 

Canada 

(CS) 

16525 

+00051 

522 

- 527 

1.3&35 

1-3S05 

1.3524 

aa 

1.3528 

-ai 

1.3605 

-0.B 

844 

16919 

“ 

“ 

« 

- 

• 

- 

Mexico (Naw Peso) 

3.4155 

-0001 

130 

- 180 

341 BO 

34130 

34165 

-04 

34183 

-03 

3.4257 

-03 


05 

16916 

06 

1.6822 

0.6 

61.6 

USA (S 

Pacffic/Mddte Eaet/Afl-toa 

- 


- 

- 

- 

- 




95-8 

2.1647 

OO 

21661 

-06 

21843 

-09 

- 

Australia 

(AS) 

16594 

+0.0034 

589 

- 598 

16818 

1.3565 

1.3597 

-02 

13604 

-03 

13677 

-06 

BO£ 

126022 

04 

123011 

06 

123062 

0.0 

- 

Hong Kona 

(HKR 

7.7275 

+00003 

270 

- 260 

7.7280 

7.7270 

7.7273 

00 

7.728 

0.0 

7.743 

-02 


156,094 

“ 

“ 

“ 

“ 

“ 

- 

India 

Ps) 

316725 

+00037 

675 

-775 

316775 31 3576 

31457S 

-3-3 

31.6025 

-2.8 




£3 

165.134 

3.5 

150649 

4.0 

1808 

Japan 

(V) 

332850 

-1.63 

600 

- 100 

934100 68.2600 

BO OSS 

2.8 

97.475 

33 

94 26 

34 

1430 

26299 

" 

“ 

- 

" 

- 

- 

Malaysia 

(MS) 

25615 

-0.01 

610 

- 620 

25635 

2.5580 

25523 

43 

2.641 

33 

2.6145 

-31 


-16 

26377 

-1£ 

268 

-16 

- 

New Zealand 

(NZS) 

1.8490 

-00023 

483 

- 4B6 

1.6502 

1.8483 

1.65 

-0.7 

1.6518 

-07 

1.B571 

-05 


- 

“ 

- 

- 

- 

- 

- 

Phflfcjplrjes 

(Peso) 

25.5500 

-006 

000 

- 000 

25.6000 254000 

- 

re 





_ 

- 

- 

- 

- 

- 

• 

— 

Saudi Arabia 

(SR) 

3.7615 

-0.0002 

610 

- 520 

3.7520 

37510 

3.7528 

-04 

3.7569 

-06 

37755 

-OB 


- 

- 

- 

- 

- 

- 

- 

Singapore 

(SSI 

1.4785 

-0.0057 

780 

- 770 

14796 

14756 

14752 

1.1 

,4733 

0.9 

1.4866 

07 



“ 


- 

“ 

• 

- 

5 Africa [Com.) 

(H) 

33723 

-0.01 

715 

- 730 

35758 

36703 

35878 

-52 

3-6101 

-40 

36928 

-34 


“ 

- 

- 

- 

- 

- 

- 

S AfitoaCFIn.) 

IP) 

4 .0950 

-0005 

860 

- 050 

4.1200 

4.0860 

4.1287 

-9.9 

4.1875 

-9-0 

- 

- 

- 


* Asaty Qcnted to the marim 
•nd MU+me h bom Mi «id 


Won) 798.700 -086 500 

05) 23.1568 -08132 540 
(Bfl 24.9600 -086 700 


0.0 102998 
-02 3125 

-0.9 68751 

-02 4.699 

-04 52103 
02 1.5183 

-12 234.125 
08 12771 

-3.3 1562.75 
•02 3125 

-0.1 1.701 

-0.7 62495 

-52 157.61 

-2.7 127.125 
-24 78619 

1.4 18588 

02 T.591B 

AS 18519 


08 10625 17 

-04 31275 ai 
-as 6.0316 -18 
02 4.7092 -02 

aO 52128 -ai 
as 12099 a? 
-12 230,325 -12 
08 1284 as 

-32 1605.75 -32 
-0.4 31275 ai 

04 12829 06 

-1.3 6.703 -1.1 

-4.B 16186 -4.0 

-2.4 129178 -Z7 

-2.6 72269 -2.9 

12 12434 1.6 

02 12822 05 

03 12479 04 


MONEY RATES 

October 14 On 


Srigium 
week oqo 

week ago 
Ger ma ny 
week ago 
ketand 
week ago 
Baty 

weak ago 
Nriherinda 
week ago 
Swttzertand 
week ago 
US 

week ago 


424 486 

ZQ 3a 


Three 

rntts 

Six 

mtfts 

One 

year 

Lon*. 

intar. 

Dto. 

rate 

Rapa 

rate 

SV, 

64k 

6tt 

7,40 

450 


5*k 

6H 

Bft 

7.40 

450 


5% 

58 

8ft 

300 

_ 

375 

5% 

8 

evi 

500 

- 

375 

5.15 

530 

565 

300 

450 

4.85 

320 

330 

375 

0 00 

450 

4,88 

5H 

8ft 

7ft 

- 

- 

025 

6ft 

6ft 

74k 

- 

- 

325 

8* 

Blu 

10ft 

- 

750 

320 

8% 

Bft 

10ft 

- 

7.50 


5-1B 

6.32 

3TB 

— 

325 

_ 

524 

538 

5-84 

_ 

52S 

_ 

4S 

*4 

4ft 

8.625 

350 

- 

4U 

44k 

4* 

3825 

350 

- 

Sft 

Sfi 

6ft 

- 

4,00 

- 

S3 

s;. 

6ft 

- 

4.00 

- 

24k 

2Kr 

2 fl 

— 

1.75 

- 

VA 

2ft 

24k 

• 

1.75 

_ 

54k 

5% 

64k 




53 

SB 

Bft 

- 

- 

- 

527 

5£7 

013 

- 

- 

- 

5.40 

370 

027 

- 

- 

- 

3ft 

3% 

4 

» 

- 

— 

Sft 

3% 

4 

- 

- 

- 


weak ago 2 Vk 2W gy< 2 ^ 2H - 1.75 

■ S UBOR FT London 

hrtartai* Hring - i| S« M Ht 

week ago - 5; 5J 68 6i 

US Dollar COa - 4.89 587 527 213 

week ago - 4.89 5.40 5.70 627 

SDR Uhked Da - 3H 3fl 3%« 4 

week ago - 3% 31 31. 4 

RCU UiUd Dm oiM mac i iratr 5»* 3 IM» 5% 6 nan B4; 1 year Bfi. % UBOR kitartwnk lung 
raws an* oflaed aeaa tor 5i0m quotao to th» narkat fay bur ra btanca banka at nan aach «rtno 
day. The banka one Dan k a ra Tiuot Bank of Tokyo. Bwdaya and Naaonal Waamkuw. 

Md ntaa are shown lor tf>* Untioc Money Mas. US S CDs and SCR Unkad Dapoaka (Dot- 


EURO CURRENCY INTEREST RATES 

Oct 14 Shod 7 days One Three 


Three SU 
months months 


900 799800 796200 801.7 -42 8062 -03 823.7 -3.1 

595 26.1650 25.1540 26.1768 -09 268168 -0.9 - - 

800 26.0000 248700 25.0525 -3.5 26.18 -38 25.66 -2.7 

tSOR rats tor Oa BkaiMer apreodi to the am Spot table *how pity the bat tnrea dacknal plaoea. FdnMSd rwaa are not dkeedy re««w« to me market 
6u are mphsd by oarer* yrterew met. UK. Mand & ECU an ousted n us ajrrancy- JP. Metgan nominal todbaa Oct 13. Bme srerega iteO-TOO 


Belgian Franc 
Danish Krona 
D-Mark 
Dutcn Didder 
French Franc 
Poraigura Etc. 
SpMkh Peseta 


EXCHANGE CROSS RATES 

Oct 14 ffr DKr m 

MQtwn ©Ft) 100 19.04 1B2< 


France 

Germany 


Norway 

Portugal 

Sprin 

Sweden 

Switzerland 

UK 

Caneda 

US 

Japan 

Ecu 

Donah Kroner. 


©Ft) 100 
(DKr) 52.53 
<7=7(1 sail 
(DM) 20.81 
(U9 4038 
(U 2821 
0=0 18.40 
(NKi) 4787 
(Eri 20.12 
(Pta) 24.79 
(SKi) 4224 
(SFr) 24.79 
(0 4927 
(PS 23.16 
(Q 3121 
(Y) 3127 
3924 

FratKh Franc. Nnnaeg 


1624 42S3 

0739 2249 

10 2.917 

3.428 1 

6814 2286 

0236 O 098 
3.060 0293 

7264 2894 

3247 0976 

4-123 1803 

7.127 2278 

4.123 1803 

8898 2.420 

3253 1.124 

8808 1219 

5201 1246 

6227 1204 

and HmtMi Manor 


2225 4849 5^36 

1284 2600 2256 

1817 2975 3868 

0417 1020 1.120 

1 2444 2.664 

o.o4i ioa aiio 

0273 8104 1 

0257 2338 2270 

0407 995.6 1.094 

0602 1227 1247 

0868 2120 2229 

0502 1227 1247 

1.010 2468 2.711 

0469 1146 1859 

0634 1549 1.702 

0245 1577 1.732 

0795 1942 2.133 

par 10: Bdrfm Franc, Yen, & 


P-WAHK HITIWB (1MMJ DM 125.000 per DM 

Open Sea price Change High Low EaLtroi Open bit 
w 02523 02582 +00069 02694 06523 36246 79252 

ar 06566 06591 +00058 06806 0.6566 203 4.011 

n 0.6603 +02057 06SS5 - 1 611 


21.16 487.1 

11.11 261.1 
12-72 2962 

4260 1004 

1045 245.4 

0,427 1004 

3292 91.44 

10 2852 

4856 100. 

5844 1238 

9284 2132 

5844 1238 

1056 2472 

4200 115.1 

6223 155.0 

8.741 158.4 

8201 1952 

udrj. lk« and Paaata i 


■ Pound In Wee* Yeafc 
Oct 14 — Ckaa — 

E spot 1.5930 

1 aril 12943 

3rn» 12938 

\T 12834 


FT GOLD MINES INDEX 


% cfag %e> 

ON An Oct MktCap BeM 6ma> Ot S2 weak 
14 31/12/83 13 She Mma ytofct S Wsfa Lew 

fieri Rh Index (34) 222600 -03 234230 54.10 10000 123 236740 176202 


Swiss Franc 
Can Dollar 
US Doom 
ruffian Lira 
Yen 

Aston SSmg 
Shod tarm rtoaa I 


4}2 ■ 4ji 
S»* -Slj 
4fi-4» 
4i2 - 411 
Vt-&4 

9ft 

7?* - 7H 
5*3 • 5*2 
3^-3^ 
413 ‘44, 
4*-4Sa 
9 - 7U 
2^» '2& 
2-1% 

> cal tor the 


413-413 

4% -4% 
4» ■ 4» 
5,'.-5A 
9*2-9 
7A - 7*» 
5>a-S* 
3%-3li 
4*1 - 4i 
4H-4/3 
0*1 ■ 8*t 

2A - «* 
2-1^ 
US Od* an 


4S-4H 
5^ - 5% 
4H-4K 
4li-4H 

• SA 

g^ .gs, 
7ft - 7ft 
5*2 - Sft 
3H-3H 
St*. - 411 
5ft -4U 
8^ - 6‘+ 
2ft - 2 1 * 

Yen. otfiam; 


51, - 6la 
Ola-BL, 
5ft - 6ft 
5ft -6ft 
5*0 ■ 5*z 
10ft - 10ft 
7%-7S, 
5% -5* 
4*| - 4 
5*2-5* 
5*- 5* 
8»-6U 
2* - 2ft 
3*3* 
two dnw' no 


5* - 5*2 
7-6* 
5ft - 5ft 
5* -5* 

sa-sa 
10 * - 10 * 
9*-B* 
6ft • 6ft 
4* -4* 
8* -8 
5% -5* 
9ft -BA 

2>a - 2ft 
3*2 -aft 


s!l - sft 

5* - 5* 

6ft -81 
10* - 10* 
aft-eU 

7*- 7 
4* -4* 
611-611 
6* -6* 
10ft - 10ft 
212-2* 
4ft.au 


Africa (IQ 3533.13 +68 353670 18.17 3158 187 382126 2304^5 

Aatraeshm 285431 +7.4 276181 7 j02 1297 158 301158 2161.17 

Nortn America (IT) 1744.24 -S3 177731 2891 5144 077 203085 1488.11 

CopyraM, The Ftoencul Tknu Umttad IBM- 

Fkuea to bracket* ahow rhanbar * compwaee. Baato US DoSm. Bata Wduac 1000.00 31/12792. 
Preoece ek ar Bold Ptonea IretoK Oct. 14: 280 LJ. week's charge: -Id pokXK Y*er ago: 2117. 


m tor 

Wm MONTH EURODOLLAR (TMM) Sim points Ol 100% 




Open 

Sett price 

Change 

tflgn 

LOW 

EaL uoi 

Open fast. 

Dec 

94.07 

94.13 

+006 

94.16 

9440 

187,748 

447581 

M tr 

93.63 

9374 

+004 

9379 

9364 

172433 

394,138 

Jun 

9329 

9935 

+056 

9939 

9321 

76,963 

297591 


LONDON RECENT ISSUES.- EQUITIES 

Issue Amt MkL Close 

price paid op 1094 price 

p up (Em) Ugh Low Stock p 


■ US TREASURY MU. FUTURES (fMM) Sim per 100% 


price Net Div. 
p +/• dry. cov. 


Dk 

8445 

94.68 

+004 

84.73 

9458 

3,058 

16AQ0 

Mar 

94.19 

8426 

+0.04 

94.32 

94.19 

1.113 

8,992 

Jun 

93.86 

9347 

♦0.03 

9349 

9342 

780 

2.743 


— Awl trial 
13905 
13899 
13886 
15806 


FT GUIDE to WORLD CURRENCIES 

The FT Guide to World Currencies 
tatria can be tound on ihe Companies 
& Fktonce page ri today’s attboa 


§12S 

FJ». 

172 

130 

113 Compel 

113 

WN4.0 

2.T 

4.4 

109 

- 

FJ>. 

130 

1*2 

1 Conn Foods Wrts 

1l« 

- 

- 

- 


- 

FP. 

24.4 

66 

81 Emerging MKfa C 

61 

- 

* 

.re 

- 

03 

FP. 

12 2 

68 

65 Enrwmix 

87 

RND-71 

5*3 


8A 

115 

F.P. 

385 

125 

115 Games Mskahop 

124 

RN4.6 

Z2 

4^ 

11.7 

- 

F.P. 

31.0 

62 

GO Hantxos Sm Aatat 

82 

w 

- 

. 


- 

F.P. 

340 

30 

28 Do Warrants 

30 



_ 


iao 

FJ>. 

17.4 

185 

178 Mackta tod 

161 +1 

RN6 JO 

22 

4.1 

7 A 

180 

FP. 

447.1 

181 

170 Man ED & F 

174 

RN&6 

1^ 

52 

94 

• 

FJ>. 

1134 

378 

360 TenaiMM E New 

368 +2 





- 

FJ». 

114 

212 

188 DO.Vltoa.2004 

182 

OT 

_ 

_ 

_ 


FJ«. 

283 

360 

340 Wtaxfaem Water 

340 

re. 

_ 


_ 

" 

F.P. 

441 

330 

325 DO. NV 

825 

- 

- 

m 

- 


Ai Open Interest figs, am fer prautaw day 


4r-*. 

" T'O ' *" 

t .v A to* 

J-WVZ . 




* ' tiwugim v " ‘jj# . 


Dec 

07845 

07837 

+04082 

07847 

07845 

18463 

34,119 

Mar 

0.7B28 

07987 

+00092 

07975 

0.7925 

14 

948 

Jun 

" 

07998 

+00082 

08000 

07979 

1 

54 

■ JAPANESC YW RmiREB (1MM) Yen 124 per Yen 100 




Open 

Sett price 

Change 

High 

Low 

Gstvol 

Open tot 

Dec 

1 0099 

1.0236 

+00138 

14245 

1.009 S 

20924 

57521 

Mar 

1.0219 

1.0316 

+00140 

1.0320 

1.0219 

1457 

5452 

Jot 

- 

1.0410 

+00142 

- 

- 

23 

494 


RIGHTS OFFERS 

Issue Amount Latest 


UK INTEREST RATES 


LONDON MONEY RATES 

Oct 1* Over- 7 da> 

night notia 


7 days One Three Sbc 

notice month mantis months 


price 

P 

paid 

IV 

Rerun. 

data 

1994 

High Low 

Stock 

price 

P 

500 

HI 

18/10 

60pm 

24pm 

Recfatt ft Ootman 

SOpm 

245 

m 

9711 

30pm 

10 pm 

UniChem 

29pm 

75 

ra 

14711 

5pm 

3pm 

World erf leather 

3pm 


Closing +ar- 


54% of CMeT ExecuHvea ip Etaope’s htgaat compariea mad the FT* 
>m^SwtdnptoSo l ~T l *** lra,><>rtapt auSsnoa . «* deda l on makers 


Bna Flo hi Copanhatfait 

1bfc+4fi 33334441 
FKc«4SH8»W 


Khaty SwaalMi hi London 
Itfc +44 07L 8794923 
Ttoc +44 8718733884 


FT Surveys 


•atotKCMd Cwn aia 

BaoaiiM 


inmimsoMM) Esz^oopare 


Dk 

1.5880 

15930 

+0.0082 

15956 

15866 

10445 

42446 

Mar 

15900 

1.5916 

+04082 

159SQ 

15880 

7 

365 

Jot 

- 

1.5882 

+00082 

15900 

* 

1 

8 


f piace 
6 ... 


■ PWmpBjpHMk5««/t 0r n 09W e»1 250 hunts par potam 


SWvB 

Price 

OcJ 

- CALLS “ 
Nov 

Dk 

Oct 

— PUTS — 
Mtnr 

Dk 

1500 

944 

9.17 

0.17 

. 

- 

048 

1525 

B.79 

075 

8.9& 

- 

003 

028 

1550 

449 

443 

448 

- 

018 

040 

1575 

1.85 

250 

3.14 

- 

068 

1.42 

1.600 

0.02 

1.09 

157 

- 

1.74 

252 

1425 

- 

048 

099 

043 

3.45 

4.13 

ftoiriMW o*y'» wrf. 

Cnlta 108447 Pus 9,758 . Prev. darV spaa Mm Cal* 430209 Pus 947A78 


BANK RETURN 

BANKING DEPARTM04T 


UabSrtlM 

Capital 

PubDe deposlta 

Bankers deposits 

Reserve and other acctxtrrts 


Govumment secunOee 
Advance and other acccwntt 
Premise, etpipment and other i 
NOWS 


WartJOflk SJartnfl 5* - 3* 5* - 6 ft - 5* 5* - 5* 6,» ( - Bft 7* . 7 

Stsr«ng(2D* - . s& - ft SB - 6, 1 . - 6* 7ft - 7* 

Treasury 90s - • ft ■ 5ft 5* - 5ft 

8snk Bis - - SJi-ft H3-5Q Bft - 6ft 

Locsl authority dapa. ft - 6* 6* - 5* Sft - 5ft 5* - 5* Bft • Bft 7ft - 6lj 

Recount Marital daps ft - 5* 5* - ft 

UK criariro but*, beae taring rata 5* pet cant riant Septembe 12. 1994 

UP to 1 1-3 M 8-9 9-12 

month uerth iiarila it oric months 

Certs of Tax dgp. (EIOO^XXQ 1* 4 3* 3* 3* 

Carta of Tax dapL aider C100000 la 1*pc. Oapoato wctofaawn tor cadi Vpc. 

Are. tondbr ms o 7 dberart 5.42i4pc. ECGD bad rats Sag. E«pon Rrwnco. Make io day Stp 30. 
188*. Aeeed nee ta panod Oct 28. 1904 « Nov 25, 1694, Schemaa n L M T3>5pc. ntotrarce rata lor 
parted 8ap1. 1994 to Sap 30 189*. Schwnaa IV 4 V&TOSpc. Ftoanoa Houaa BaM Rtoe fipc bom Oct 


BANK OF ENGLAND TREASURY BILL TENDER 

Oct 14 Qd 7 Oct 14 Oct 7 

80s at (Ap ESOOto ESOOra Top accepted rate 54349% 5.4951% 

Tom ol a w d ea to f E2550R1 E2030m Aft raj of (Meant 5.4214% fi.4950% 

Tow OflOCaM ESOOs ESttn AMfige yield 5^957% 55713% 

tBv Bcoptiri Ud £98545 C99J30 Ofler at rad ureter ESOOra ESOOra 

Manns* atnta. tevd B0% 99% m. tea*. bU 182 days 


Wednesday 
October 12.1994 


£ 

14,653,000 

1^00094,125 

1^20^)80.157 

5^58.860,174 


8,707^93,456 

1,103^44.799 

7.151840656 

437.712/175 

12,128,494 

161.643 


deem —a tor weak 


£ 

-5,787,495 

+83A40266 

+1^01/150835 


+1^80116,605 

-23,184,128 

+1.407^20282 

-518.179 

+4J96J06 

SSI 7 B 


BASE LENDING RATES 


RepuUica Federal Iva do BrasO 
Ptasa In Sartoe U. tore April IS, 2004 

DaH Corraatalon Bond Sariae L 
due April 15. 2012 

Ma w McneyBariaetatodU 
doe Apr9 IS, 2009 

OtoCBUM Bond Sariaa B. tod TL 
duo April IS, 2024 

O Sarioa L Bond* ton April «, 2008 

FT* M taerew Rntod October 17 DM n 
Apr, re. raas nw nwnj Ran haw 
been oatamned v«n y+aresi panto* on no 
retortsi! mweto poymare CM*. ApM to. BBS 
aakAari. 
fflaum Series DL 

4 J4C479V par anraan. knwea arnom Ckia 

U5 S3138owU5.SI£MOa 

Dan Comma) Band SaraaL 

6.79% par ankn. Ware* araxn tow 

US SS** o«*US staoo 

Maw Monar Straw L and U 

S7S% par anrean. knaraw man dua 

US £3+ 3tporllS.il 000 

D eccva Bond Series a. and Yl 

SWS\ par errarn. kaarwU amova daa 




Sovereign (Forex) Ud. 

2Alir Foreign Exchange 


Mra tor ka« raskinaad hr Wa 
WHratfMaWMtoiotogaa 
aatoananl wancanataa 
kr BtoUM Wri WMre. 


Compattiva Prims 
Dc 3 y Fax Service 
1(4:071 -931 9188 
Fate 071-931 7114 


larahnSWlVVOOE 


To Advertise Your 

I 0,-10 1 Mr-it'ir-.oo 



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totoik Mtoalrltoi 
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MhHi CWMl DMWh 

&12 859 9199 

8JJ7 BJ8 ase 

013 an ora 

9.10 9£0 9.80 

UD Uf U8 

920 982 9.02 

9-70 159 8 L 99 

8.13 059 159 

113 189 159 

112 199 9 J 9 I 

840 1 S 5 130 

155 

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Aran & Company — 175 

ASad Trust Bank 5.75 

AB Bank A7S 

•Herey Anstacher 5.75 

BankoiBaroda 5.73 

Banco GBbao VhcayUUS 

BerlolOypnB -5.75 

Bu* of Mari -5.75 

Borttollndk 5.75 

Ehrit of Scotland SJS 

Bankas Bank -5.75 

BA Bk of Md Brit ..-.5.78 
•Bcmh Shipley & Co Lkt 175 
CLBcrkNaderiand ..5.75 

C88>to*NA- 175 

Ctydasdato Bonk SJS 

The Cocporath® Bank 3.75 

CouBa ft Co 6.75 

CnriUKirab 5.75 

Cypne Papular Bark . 5.75 


Duncan Lanrie 5.75 

Boar Bark Umhed ..-075 
RnencW fi Gan Bank -05 
•ftctwrt FtarklB&Co -5.75 

fflrohai* 075 

eoukraas Mahon 5.75 

Hat* Bar* AG Zurich 173 
eHantoraaBank — .-075 
Haraue&G9nfawBk.575 

e+ASwraieL.- 5.75 

CHoartSOd ...075 

Honghcrg 1 ShangML 5J5 
Julon HodgD Bank .... 5.75 
OUcpddJoaBphBLB ora SJS 

UoydsBank — 5.75 

MegtrefBarkUd £.75 

MUfandBank ..075 

* Mtxrt Bar+toQ 6 

NBWVaatmtora- £J6 

eReaBrothara £75 


* Rodu^w Bank LM b 
no tonoar oaherisad aa 
a banlvig InettuHoa 6 
Royal Bk erf Scoum. 073 
«6mfinaw«nwnSecs £75 

TS8. — £75 

•UrtodEk Of Kuw^_£l 75 
LMtyTitat Bank Pic ..£75 

WWBR1TM £.75 

WhteawayLariaw... £75 
Yorkshire Bar* £75 

■ Members o( Brittah 
Merchant Banking & 
Securities Houses 



Series CTVAS 20 ¥2^50 / 000/X)0 

Seoirad Hooting Rede Noias due 1995/9 


hriduAHdC/XUAIOdwim ITtanSMto Tmndw D- W.M.nnOAOnrkw )WB UmrMIMI 
IMrratoMSDjWtUWrkwira* UKWJII Irrealw 6 KSMPOCtOOO <U 1 99* umnftKt 
VretJwC VSSO.CCOiOO lk> 1977 lMBItiMS 

InteTast period on each Tranche A to E Notes will run from October 17, 
1994 to April 18, 1995. The Note* are denominated in Yen 
10.000.000. 



«r*% Anw 

taws nsec +f- fa 

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traifw;®'; n .5 1 S» MriSel S6.T1S4X 

117® 04 MM27(W7 2191269 

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last Qty 

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tk*n Mat +#- la daa 

rC fee 


- [I j 


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Tree* Bps anst* seA 

. T*pe»m»-13« 93* 

Ha** Wuc an r# — MBA 

RnUms»Yo» Qjs 3,060 IMB1B6 22.81284 BaM^e 8013-17, 131* 

J J "\m£ lW9"'"-‘ WA 88 My'StelS IZ4I2BB 

' gal} 06 1900 FrlDAulO 47 - 

106ft 05 1.79B 1SA1M 

OmiW*nlO*DC’ W9 - ^ is® BMtJefiaW 08 - 

1fte: M 3.171 £14Jyi4 761298 *a. 

Traas1»caW ”*£ o.7 4.406 MBMM *.71280 7* 

lOpcwn- - B ,toS %3 4J6B MUM 3M - £L^T?5r5~~“ 4 S 

7pcS00> 77 ■IS !6 8527 far Afl7 21J1349 E Bw3 ^*J 1 44 J 8 

*J*pc29E m TflSO JetOftrifl 45 - Tin* J k ‘68*1— — 35* 

BwSOOSft — *S ,2 2^ MM 281281 Cto*2*W 29* 

IObcOTS — '“iH o.7 1.C0 HH9S419 1561290 WShpc 29* 

aHT» to «n+esra» on «*— ■ ««■***. M B. MM (MM 

STOCK INDICES — 1994 “ ■ Hnraocp. 

w t 4 oa 13 OB 12 oa 11 Otf 70 WW lew Wtfi Low 


14 543 

1.1 *412 
i 2 asooi 
12 %ooo 
LI 4642 . 
18 22001 
12 3200 
L5 2600 
16 3,150 
12 7.197 
16 1250 I 
12 5621 r 


15 3,100 

15 4J50 
1A 5273 

16 MSI 
16 1600 1 
1J 3290 I 
22 800 
>6 7,160 
1.7 1600 . 


U BO 
U 1,909 
16 118 

1.4 58 

1.1 27G I 

2.4 475 
ii rfd-pttoei am 


761274 ta k a Uhta d (U 

; 1961348 2PC9B 07 3 7SBU 0.4 1200 UrlSSalB 1061313 

I 19+4+ec 4*PC‘98« (1356) 107*te 05 BOO *C70eZ7 206 - 

_ _ ftpem ou) t«u m i500 i«a(se24 i85iai6 

I 1501547 2*pc 03 (785) 181 H OA 1200 Hy20ta20 11413T7 

teaias 4*pcU4« — nSiejiDean 02 1600 Ap2i 0c2l 14.9 - 

,1 2pc'06 168ft 05 LffiO JilBJflS 1361314 

“ " 2*pcTB (7ft® 152ft 06 1650 UfiOKrtO 1141318 

,...2, a** 1 !! (7481 ICTft 05 2,100 H»«a 18.7 1318 I 

’rf!?® 2*© Hrere. 0921 130 0L7 Z30O FeiflAulfi 1I7I320 

J“"39 21^16 01 .S 138ft 07 0700 Ja28Jy26 2061321 | 

I 8261301 21a* 20 (B 132* 07 2750 AplBOclB 961322, 

I 861343 2*jx < 24$$ 07.7) 110ft 08 2.100 Jal7^l7 1001323 

VtXZD# 1135.1) 118ft 03 1500 Ja!B0722 156 - 

(W Fkyrras to pai en U wwa ahow BPi base tor mdextog Oe 8 ■ 
mamM prior to toaua) and haara bean adpHtsd to nflac. retraaing I 
oTIVf to 100 in January 1067. Conversion factor 6945. RP1 tor 
January 1984: 1416 and tor /top** 1994: 144.7. 

i 196 1336 
1M - 
1081245 
3061701 
481330 

MW Ftod 1nter0St 

1£L7Jfl® AslaaDlV 10*pcaXB — 111S 25 1© M24SeM 793 - 

«5 i+bd Bitea I1*fC2012 118* 22 45 UylStalE <<931837 

tahQBCnB*SClO 971, 18 303 fcflfe1 -H65 

flpe ftp 1996. 10D* 04 755 JaSOJyM - - 

15*17-? 108* 05 315 Apt Oel M3 1<2» 

Hidrbfatobae ISpczni - 14TB 26 40U|3iNi30 27.(0 - 

188*13*1*2000 127* 72 40 ftri Se9 3533146 

_ Cl -~ U«i*(l3*«*reit — 37 1A SUafeMc 6^3 - 

ICCapBWSfL 32* 15 xurasaor 653 - 

yBiratan^saw- 11 ft 12 ? wsoos tassm 

IMWi.^C'B- a 15 25 MnSei 6533361 

161324 HTd* Am* 3* pc 2021. 132 15 GO JaSOJiB 1533® 

16 1238 ft pc L 2024 - 127 17 50 793 - 

S81315 UrfiiBSrailBbfEBn 138* 15 50 Mrt Eel 853 - 

1 powfa. Wbatoy pamamga ehanpaa we cakaAtod on a Fndoy la Fratey baate 


ua r+ w — — — - — — - — — 

— ~«7 3(416 31005 30700.30323 BSU 2S7H6 36205 9809 

Ff-SE ion tyT, 25340 353 SJ 3506.9 9«8U 4UE6 33034 41526 13794 

FT SE M« 2S0 Sft 1 35305 3501.7 34700 <1007 33B24 4ML7 13703 

ll-SE |W 25® 81 " a S72J 1554.1 15407 15205 17705 74613 77713 8545 

FT-SE-A 360 1^.13 1797.73 ,791.14 178163 17702920BUB 177764299*66135079 

fT-SF ScoKSP 7^62178456 178082 17SftSB17A36B JOBOJl 174188 298072 138379 

FT S£ Strife* ex ITS 153072 1SOT3 1S09.« 1704.71 1«565 T7M.TJ ©32 

FUSE-* AMW 


— 1994— Stec* 

Oct 1< on 13 Qtt IS Oct 11 Oct 1P W» law 

FT-SE Bltaacfcloo 138017 135LU 133333133045 731739 1540791280© 16401?" 
FT-SE Emonck 200 MW6S 141235 138270 138460 137044 1807.10 133096 1607.10 
FT (May 23 916 24122 23820 23576 23366 27155 77 5^ 5 27135 

FT Govt Sum* 91-8B 91.73 3154 9068 9086 10764 B054 12740 

FT Had lmr«t 106.5S 1 0522 107.78 10760 107.42 76357 10650 13367 

FT Gcid IfiMB 222560 22<-30 226236 224168 224363 28614 178202 23BJ AO 

PredacraorficklMkas 2800 2844 2812 2815 353.7 2935 1856 7347 


® CHINA MERCHANTS 

CHINA DIRECT INVESTMENTS LIMITED 
Net Asset Value 

China Merchants China Direct Investments Limited announces that as at 
30th September 1994. the unaudhsd consolidated net asset value per stare 
of the Company was US5 1.035. 

CMNA MERCHANTS CHINA DIRECT INVESTMENTS LIMITED 

(tnoorporatad wtto Hmhad Bafanty to Hang Kong) 

12th October. 1994 


BIOTECHNOLOGY 


Thtt essential 
twice-monthly, • 

global update on the UElliC 

bfotechnology industry 

B iotechnology Business News provides regular. 

Buthoriiative reports of industry news, and identifies 
and comments on emerging (rends. Drawing on the 
worldwide resources of (he Financial Times and with 
correspondents in every significant business centre of the 
world. Biotechnology Business News can be relied upon as 
the definitive business analysis for (his burgeoning new 
industry. 

For a free sample copy, contact: 

The Marketing Depanmem 
Financial Times Newsletters 
P.O. Box 3651 
London SWI2 8PH 
Telephone: 08 1 673 6666 FINANCIAL TIMES 

Fax: 081 673 1335 Nevsleuers 




Banco de la Nacion Argentina 

U.s. $ 195 , 000,000 

Floating Rate Notes due 1994-1997 
For the period 

17th October, 1994 to 18th April 1995 

In accordance with the provisions of the Notes, notice 
is hereby given that the rate of interest has been fixed 
at 8.625 per cent, per annum, and that the interest 
payable on the relevant interest payment date. 
18th April 1996 against Coupon No. 15 will be 
U.S. $1,262.89 per U.S. $50,000 Note. 

The Industrial Bank of Japan, Limited 
Agent Bank 















































































































































































- * 


financial times 


MONDAY 


OCTOBER 


17 1994 



LONDON SHARE SERVICE 



BANKS 


ANZAS . 


17« 


CHEMICALS 

On, (TK4 » 0“ ^ 

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34 


MONDAY 


OCTOBER 


17 1994 


4 pm dose October 14 


NEW YORK STOCK EXCHANGE COMPOSITE PRICES 



Hh 

lew Suck 
17? 1Z\| AW 
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78% 57% AW 
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ChantoDww 14 15 3$ 3$ 3$ 
CHpa&Te 10 1423 5% 5% 5% -% 
Chinn Gp 60 4712 62% 62 62% +% 

Om Fte 1X6 12 106 53% 52% 53% +% 
CkttaCp 017 32 613 34% 33% 33% +ft 
Oratgc 30 6752 26% 27$ 28% 
QSTedi 118 831 2% 2ft 2% -ft 
CfaraSys 15261Z1 28% 27% 27% +% 
CtzBttCp 1X6 16 3 29 29 29 

Clean HOT 21 161 6% 6** 6% -% 
CBttDf 38 3 10% tfl 0% 10% -% 

Ctedmeoa 7 318 4% 4% 4% •+% 
CecaCbtaG 1X0 >7 054 29ft 27% 27% 

137 421 7 6% 8$ 

a » 11% 11% 11% -% 

31 464 19% 19 19% 

136 8001115% 15 15 -% 

18 74 14% 14% 14% +% 

040 90 184 23% 22% 22*2 -1% 
126 14 17 21*2 20% 21% +% 

060 13 965 37 X 35% -1% 

024 15 3S8S 22% 21% 22% +% 
009 a IOCS 17% 16% 17% 
CocMASp 009 448348 17% 16% 17% +% 
ComntttaOXB TO 178 &% a 29*2 
CbanC QJO 09 16 18 17 17 

CornnaiC 16 545 25% 24$ 24$ •% 
CoteprLata 2862697 9% d8% 
ftwtara 54 TO 12 11% 12 
CwMoeW 34 1322 3ft 02$ 3,V 
CORFU ia 34 8 48% 49% 49% 

5 128 5% 5% 5% -ft 
59 234 a 23% 23% 

6 1952 6% d6% 8% +ft 
CDnraA 050 191029 17$ 1717% -% 

OUltote 34 381 4$ 4% 4$ -% 

OontoOp 26 4939 60% 59% 60 -% 

CWPOIA 47 699 17*2 17 17% 

QatfarB 0X2X1379 23 22% 22% -% 
OnqCanp 1 ESI 1% 1% 1% 

Qmutae ® 328 5% 5% 5% -% 

Cytogm 2 512 4 3% 3‘| 


CmtflW 
Gil Corp 

Gwnayo 


0 335 *2 % Ji 

13351 3% 2$ 2$ 
662 34 13% 12*2 13% 
IS 368 16% 17% 17% 
5 480 9% 9% 9% 


+ft 

-% 


- H - 

HBdhQA 65 24 7% 7% 7% 

HBriwyM 068 9 39 23% 23% 23% 
HteperGp 020 12 18 13% 13% 13% 
HenBOmp 3474 18% 12% 15% 
HB08rCa 016 8 2510 33% 33 33% +% 

HMUhCte U 4260 28% 27% 27% -1% 
Hstacro 0X6 20 52 12% 12% 12% 
Haakhdyn 12 231 B% e*a fl% 

Hetaiga 016 72 539 13% 13% 13% -% 
tatof 740 « 9% 9% 

HetenTmy 10 690 18% 17% 17% -% 
Herblf 088 122003 18% 17% 18% ■+% 
ttepaiSys 015 17 642 6% «S% 5$ -% 
twogk 75 8a 16*2 16% 16% *% 
Horae Baal 0X0 8 4 20% 20% 20% 

Hon hds 044 191383 27% 25% 27% +1)3 
Hurtimck 14 264 13% 13% 13% 
HomeftRw 044331 92 Wt 5% 5ft 
Hunt JB 020 17 429 17% 10% 17 

HwtaOto 080 72104 18% 1818% 

Hurto Co 008 1 288 3% 3% 3% 


- N - 

incite ate ia 2 » s 24 % 24 % -% 

NetflFnch 072 11 167 18% IG 16ft -ft 

Net (tempi 038116 115 14% 14 14% 

Site 020 TO 544 14% 13% 13% -% 

MO 5 *50 14$ 14% 14% -% 

«C 043109 3 63% 63% 63% -% 

192267 30*4 29% 30 -% 

*»»* Gen Z72118 » 18% 19% -% 

NsttalS 66 3549 6$ 6% 6% 

Netragen to 60 7 8% 7 

HawEBia 0X0 19 75 18 17% 17% -% 

Newtonga 78 470 6% 6% 6ft -ft 

72 1414 30*2 »% 30 

Hematite 0X4 a 148 6 7% 7% 

NobtoOrt 21 9920 7% 8% 8$ -% 

tomtom 056 2S 135 56 55 56 ♦% 

tobtra 040 a 4327 45% 44% 45% +% 

I 15 7100 19% 19% 19% 

4 44 5% 6% 5% 


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T-Ce65c 5 244 3% 2$ 3 

fJOwaPy 0L52 TO 746 33 32% 32% 

[ TBC(te 13 147 10% 9$ 10% 


NStartte 

NorttnTM 0X8 12 1670 38% 37% 38% 
MWflr 


192251 18% 18*a 18% 
80062500 16% 15% 16 •% 

Nonfts 408963 48 43ft 44*2 .1 

»CA » 6 % 6 % 8 % +ft 

NSC Corp 7 20 2$ 2$ 2$ 


HuKflTaMl 

HyrarBto 


159 368 29% 28% 28% 
18 157 4$ 4% 4% 


-ft 

-% 

-% 

+% 

+% 


- i - 

ffRSy* 53 10 8% 7% B% +% 

DBOonre a 2556 9 8% 8$ 

RMM 3 348 3% 3% 3% +ft 

tmaRor S 62 6% 6 8 -ft 

teamragan 1 294 3$ 3*2 3% -% 

Imped 9c 0L4O 31 74 10% 10% 16% -% 

Mbs 034182 15 I2%dl2% 12% 

WHO 15 7168 12% 11% 12% -% 

Manta 32 650* 27% a% 27% +$ 

topOMU 0X6 15 48 11% 11% 11% -% 

htEfpOtt 24 8984 20% 2D 2D\ V. 

htgMSys 34 77 14% 13% 14% -% 

fetokWH 7 a 3 2% 2% -ft 

ha 024 11491 S8 59 57% 56% -% 

teteB 7 90 2 1% 2 

teBgrtB 0X0 27 1385 15$ 15% 15% +% 

Mat Tel 16 655 8*2 8% 8% -ft 

btortxA 024 17 654 13% 13 13% +% 

Intggh 21611 8% d7% 7% -% 

heart at 4 s«3 4% 4% 4% -% 

hferMW 6 3780 17 15ft 18% -% 

tatandc 25 1138 14% 14% 14% ■% 

htQakyOA 14 1138 17 16% 16$ -% 

htflaa 0X2 17 121 2$ 2% 2% -** 

tet Tata 275 19 5% 5% 5% 

htattra 0X5 18 143 »% 27% 27% -% 

tomoBatte 22455 3$ 3% 3% -% 

tomato 17 184 19 18 18% -% 

tt ftm dn 1X9 39 7215%215%215% +$ 


- D - 

use On 20B830 31% 30 31 -% 
DstGnn OUST 7 85 81 81 

DaSStach 12 124 2% 2% 2% +% 

DMOto » 101 9% 8% 8% -% 

DatettOpe 15 775 16 15% IB +% 

OattataDp 0X2 Tl 353 S 24*4 24$ -% 

Ota Shop* oa 15 12 5% 5% G% 

DafMteBi 032 24 24 10% 16 K 

IMtabCe 0X0 44 8 29% 29% 29% +-1% 

DeUsmpa 044 B Z7 lB%tfl8% 18% -% 


- J - 

14 31 12% 12% 12% 


J8J9MS 

JB3DRK 026 13 23 B% 8% 9 -% 

JLGM 010 34 7 40*2 29 38% % 

Jctcsod W 61 306 25 W% aft -ft 

MM II 560 14$ 14% 14% -% 

Jones Med oio 12 380 8% 7$ r$ 

JaMynQp 120 12 72 28% 26% 

JSSFto 060 15 8» 25ft 25 25 ■% 

JusLte 028 16 1834 19 18% 18% 

Jam 01B 10 1748 13% 13 13 -% 


-O- 

□Chaieyi 16 139 12 11% 12 +% 

Dta Com 16 420 21% 20% 21% +% 

OdWcaA 19 38 7% 8% 8% -% 

OfhrtBLfl 13 281 13% 13% 13% -% 

OgtettayN 1X0 10 400 M% 30% 30% +$ 

CHcOs 1.48 6 232 U% »% 30% +% 

OdKM 1.16 10 243 34 33% 33ft -ft 

OMNaS 082 16 28 37 36% 38*2 

Ortmn ca p 1X0 6 483 28% 27% 27% -1% 

OdePrto 8 531 11% 11 11% +% 

OpbcalR 22 713 1124 23% 23)2 

OndaS 650639 44)2 44% 44% +% 

QTOScnca U 4482 15% 15 15% -% 

Ortmacb 0X9 27 Zl 9% 9% 9ft -ft 

OrtadSn® 6 12 10* 4 6% 9% 

OregonMet 031 11 529 6% 8% 8% +% 

Otaap 15 161 2$ 2% 2% 

OattSA 041350 415 14% 14 14 

OtataMiT 050 11 511 11% 10$ 10$ -% 

aserrsfl 172 is a 33% 33% 33% -% 


■ P-Q- 

Wccar l® 11 1139 45 43% 43% -% 

P*Xwtop 062 11 31S 12 11% uH -ft 

proem 1X2 IS a 24% 23% 23% -% 
PatoClB 31 187 76% 74% 74% ■! 

Paramm 41 5058 36 34% 35% -% 

Psych® OJB 48 427 38% 36% 38% -% 
Payaftn 21 14 a** 8% 8% 

Paatas 050 61 167 15% 14% 14% -% 
PenoTity 9 6 16% 15% 15% 

Pare Wry 1X0 24 38 35 33 33% +% 

Pent* 072 19 7401143% 42% 43% +% 
Padrekl 13 338 5 4$ 5 •+% 

Permw L 020 28 123 25 23% 23% -% 

PectattH 032 14 438 14$ 14% 14% -% 
Wnitax 1.12 16 36 31% 30% 30% 
Phoirecy 38 17lui2% 12% 12% -$ 
PlKWttTdi 29 518 >£% 5$ S$ -*a 
Pas* 048 3 9 8% 8% 8% 

Pfcjurata 35 812 17 15% 18% +% 

PMvtUi 42 10 16% 16*2 18% 
Htmertte 0X4 31 2 45% 45% 45% +% 

Ptarwedfi 068 222908 32 31% 32 +% 

(taneoSt 0.12 10 278 1T% 17% 17g vft 
PtonFad S *100 8% 8% 8% •% 
«»** 15 47 5$ 5% 5% 

Proa Life 0iB 3 173 6$ 6*g 6$ 
Prase* 155 806 42% 41 42 +% 

PlrtteSl 255044 1G% 16 16% +% 
ftWRet 381057 5% 4$ 5 4% 

PlMTOrt 38 235 21% 20% 21% +% 
Prod Ops* 024 23 238 25% 25% 25% -ft 
FUttBBO 012 131518164*] 24 24% 

pyramid 6 688 0 8$ 8$ +% 

10 80 6X6 6% 6X5 


♦% 
+% 
+% 

TCACatto 044 28 204 23$ 23*2 23$ +% 

I TacbOata 11 523 18% 17% 18 % 

080 12 2 48% 48 48 +% 

Tttttac 7 333 17% 17% 17% ♦% 

Tta»9ya 101472 14% 14 14$ +$ 

TMCmA 178 6846 23% 22% 23% 

62703 5*4 4$ 5% +% 

I Ttaaba 353832 40% 48 48% +% 

TtaenCp 001 81 950 15% 14% 14% +% 
retro Tec 68 199 8% 7$ 8% -% 
TewPhABB OTO 282224 28 27% 27$ -$ 

Three Com 776766 3^} 38% 39$ -$ 

l™ *1 S% 5$ 5% 

TJM 022 26 966 18% 17% 17$ +% 
n*ai Ued 5 1965 7$ 6$ 7 -$ 

Tokyo Mar 034 34 170 58% 57$ 57% +% 

Tom Brawi 64 232 12$ 12$ 12% 


TopDtOlX 028306 2043 

6% 

6$ 6% 

♦% 

TPI Enter 

8 576 

6 

5% 6 


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IS 12$ 

12 12$ 


Trentar* 

TXO 10 Z100 

38 

38 38 

+% 

Tricare 

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2% 

2$ 2% 

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Trimble 

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14 14% 

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HI 19% 19% 

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020 12 826 

7 

9$ 7 

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24 23$ 23$ 

♦A 


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0X4 181 1926 47% 46 46$ 

•% 

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2 1323 3% 44$ *$ 

-ft 

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1X0 13 

201 10% 16 16% 


US Tat ( 

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*% 

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040 8 202 10% 10 10 

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18 17% 17% 17% 

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9 47% 46% 46% 

ft 

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1X0 101188 25$ 25$ 25ft 

-ft 

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11 

40 4% 4*0 4*j 

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UST Coro 

1.12 a 

80 11$ 11% 11$ 


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15 

712 9% 9 9 

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VngrtOta 

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to 

topftal 

Vtofetfc 

VIS Tech 

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030 35 64 16% 15% 16 -% 

1041206 27% 27 27% 

25 1562 23 21% 22% ft 

40 739 26% 25% 26 -*« 

10 27 17% 1S% 17 
23 575 20% 16% 19% -% 
256064 12 11% 11$ -$ 

017 18 227 19$ 19% 19$ -% 


- w- 

Wamw En xOM 19 240 24% 24% 24% -1 

IMI TOO 799 6ft 5$ 8 +% 

WtaMMSBOTO 71280 19% 19% 19$ -ft 
tofeflSLtaM 8 282 16% 19$ 1^1 +ft 
WMbtedA 022 10 1127 26% 25% 20*4 «% 
tool PK 024 15 775 24 23% 23% -ft 

no-4011 240 IB 98 42% 41$ 41$ -% 

Wekak 7 45 4% 4ft 4% -% 

ItetOna 0.72 11 885 28$ 28% 28$ -% 
WsomBne 068 28 2! 32 31% 31% -% 

WAib 1! 181 13$ 13% 13$ +% 
IhOfiA 1 355 14% 13% 14% +% 

"WS0EW 9 47 3ft 3 3ft 
h 0X6 24 1885 49% 48 48% 
WnsSunon 74 2170 34% 32% 32% -1$ 
total L 028 16 517 18% 17% 18% +% 
i 0.40 202894023*2 72% 23% +% 
WPGmw 0X3 21 237 3% 3ft 3ft ft 
Wean-On 04Q 1 324 B% S% 6% *% 


-X-Y-Z- 

Uta 350268 56% 56% 55$ -$ 

»»aC«p 2 B5 3% 3% 3*2 +ft 
YB9W 094 92 91B 19$ 19% 19$ -% 
VMkRstt 84 582 3% 3% 3% +ft 
ZkmtalMi 120 9 219 38 37 37% -1% 


jr 




36 




FINANCIAL TIMES MONDAY OCTOBER 17 1994 


FT GUIDE T O THE WEEK 


MONDAY 

Compensation on Kuwait 

The United Nations Compensation 
Commission meets in Genera to con- 
sider claims relating to Iraq's 1990 inva- 
sion of Kuwait (to Oct 21). The Commis- 
sion. which is sifting through more 
than 2m claims totalling nearly $16Qbn, 
will focus on damage to individual 
property and compensation for those 
forced to flee Kuwait Most claimants 
will have to wait for their money until 
the UN lifts its ban on Iraqi oil sales. 

Russian economy: An International 
Monetary Fund mission starts talks in 
Moscow on Russian economic reform, 
the government's budget and possible 
financial assistance for a stabilisation 
programme. 

World trade: Trade ministers, 
officials and business executives begin 
a week in Colombus, Ohio, to discuss 
cutting tide costs of doing business 
abroad. The United Nations Conference 
on Trade and Development, the meet- 
ing's organiser, believes streamlining 
procedures and paperless trading could 
save companies and governments 
worldwide SlOObn a year. 

Infrastructure In Asia: Indonesia 
hosts the World Infrastructure Forum 
(to Oct 21). The conference brings pub- 
lic and private sector together to dis- 
cuss co-operation in regional infrastruc- 
ture development 

Environmental groups are due to sue 
President Suharto of Indonesia for 
diverting to a state-owned aircraft 
maker $i85m intended for replanting 
rainforests. 

Middle East peace: Jordan-Israel 
peace negotiations resume in Aqaba, on 
the Jordanian Red Sea coast (to Oct 20). 
Last week saw an agreement to link 
electricity supplies between Aqaba and 
the IsraeLi resort of Eilat Outstanding 
issues are water and security. 

Women’s economic and social 
advancement, including equality at 
work and political representation, are 
the concern of a United Nations-spon- 
sored meeting in Vienna being attended 
by some 50 European nations. The five- 
day meeting is part of preparations for 
the Fourth World Conference on 
Women in Beijing next September. 

UK politics: The House of Commons 
returns from its summer recess. 

Eurotunnel, operator of the Channel 
tunnel announces its 1994 first-half 
results. It will be its first opportunity to 
report on actual performance as 
opposed to making forecasts, though 
the results of just over a month of 
freight operations will not be very sig- 
nificant 

At the same time, the start date and 
fere tariff for the intercity Eurostar 
trains will be unveiled. Services 
between London, Paris and Brussels 
are expected to begin in mid-November. 

FT Surveys: Business Schools: An 
A-Z Guide and International Telecom- 
munications. 


Other economic news 

Tuesday: The UK’s budget 
deficit has been falling, with 
economists predicting a 1994-95 
shortfall of £3Qbn-£34bn, below 
the Treasury's forecast of 
£36bn. September figures, pub- 
lished today, are expected to 
show a borrowing requirement 
of £4^bn. 

The Confederation or Britisb 
Industry's distributive trades 
survey will provide the week’s 
first clue as to activity on the 
UK high street in September. 

Wednesday: UK retail sales 
volumes are expected to have 
rebounded after a weak August 
performance. But the picture 
has been confused by signs of 
weak personal income growth 
and buoyant MO figures. The 
consensus forecast is for 
monthly growth of 0.3 per cent 

Thursday: Britain’s broad 
money supply growth has been 
weak during the recovery and 
September's annual growth 
rate in M4 is forecast at 4.8 per 
cent, near the bottom of the 3-9 
per cent monitoring range. 

Friday: Analysts expect a 
slight widening in the UK’s 
trade deficit with non-Euro- 
pean Union countries to £320m 
in September, from £262m in 
August. But this small deterio- 
ration should not alter the 
underlying trend of an improv- 
ing UK trade position. 





TUESDAY 


WEDNESDAY 


Turkic states hold summit Black Sea energy plans 


Leaders of Turkey and the five Turkic 
states of the former Soviet Union meet 
in Istanbul for their second summit (to 
Oct 191. The group was set up in 1992 at 
Turkey’s instig ation, to draw together 
Azerbaijan, Kyrgyzstan, Turkmenistan, 
Kazakhstan and Uzbekistan. 

The two-day meeting is likely to be 
dominated by the crisis in Bosnia, the 
Middle East peace process and unrest 
in the Caucasus, especially the conflict 
between Azerbaijan and Armenia. 

Turkey's grandiose aim of creating a 
Turkic federation, floated at the inau- 
gural conference two years ago. has 
fbded. Russia's continued strong pres- 
ence in the region overshadows all talk 
of unity. 

Asylum in the UK: Amnesty 
International's British section 
publishes its study Prisoners Without a 
Voice: Asylum-Seekers Detained in the 
United Kingdom, showing that Home 
Office procedures violate international 
human rights Law. 



Simultaneously, the London-based 
Medical Foundation for the Care of 
Victims of Torture is due to issue a 
report saying that torture survivors 
seeking asylum in the UK are being 
detained for periods ranging from two 
to 17 months. 

Saleroom: The largest emerald-cut 
blue diamond ever to be offered at 
auction is expected to raise S8m at a 
jewellery sale at Sotheby’s in New 
York. Of an intense powder-blue, the 
20.17 carat diamond is also favoured 
with good clarity and perfect propor- 
tions. 

Lost art: The Musde d'Orsay in Paris 
opens an exhibition of works by artists 
including Monet. Renoir and Gauguin, 
in the hope of discovering their owners. 
The collection of 21 paintings and draw- 
ings was part of a hoard taken from 
France by the Nazis during the second 
world war. 

The works resurfaced in East Berlin 
in tire 1970s and spent 20 years hanging 
in the National Gallery there. They 
were returned recently in the wake of 
German reunification. 

Phone-cars: Ford Is to offer free 
mobile telephones and connections to 
the Cellnet system on nearly all its 
vehicles sold in the UK from today in 
an attempt to improve new car sales. 
The company expects at least 100,000 
buyers a year to choose the option. 

Holidays: Sri Lanka. 

FT Survey: Hie Prevention and 
Detection of Fraud. 


Energy officials 

€ Sea Economic 

countries meet 
at the Bulgar- 

Vama for the 

first working 

Black Sea and 

paikan regional energy centre, which is 
supported by the European Union. Most 
of the members have been moving from 
socialist-era p lanning to a market econ- 
omy and face energy problems. They 
plan to coordinate strategies, by agree- 
ing. for example, on the best routes for 
oil and gas pipelines. 

Dynamic economics: The 

Organisation for Economic Coopera- 
tion and Development is to hold a 
high-level informal meeting for partici- 
pants from OECD member countries 
and nine Dynamic Non-Member Econo- 
mies (DNMEs) at a hotel in Tokyo. The 
emphasis will be “forward-looking” - 
bow can the OECD enhance the capac- 
ity of member countries and the 
DNMEs to address their common 
domestic and international economic 
problems in the coining year? 

Ukraine’s parliament plans to vote 
on President Leonid Kuchma's reform 
programme, unveiled last week. The 
resolution is non-binding but will 
gauge the mood of the communist- 
d ominated chamber towards Ukraine’s 
first si gnifican t attempt at economic 
reform. The chamber may also this 
week set a date for an awaited vote on 
Ukraine’s accession to the Nuclear 
Non-Proliferation Treaty. 

Saleroom: The Lau Collection of 
early Chinese and Japanese photo- 
graphs comes under the hammer at 
Christie's in London. Highlights 
include prints of foe Imperial Summer 
Palace in Peking taken in 1860 immedi- 
ately before its destruction, and the 
hand-tinted albumen prints of foe Ital- 
ian Felice Bealo recording foe people, 
costumes and landscape of old Japan. 
The photograph below comes from an 
album of 69 prints of Chinese subjects 
estimated at £4,000 ($6,300) to £6.000. 


mm 


1* F y 









Britain's Queen Scabeth begins a state visit to Russia today, accompanied by the Duke of Edinburgh and 


THURSDAY 


FRIDAY 


Vietnam focuses on deficit Confidence vote in Russia 

Vietnam’s National Assembly is due to The Russian Duma has called a vote of 
begin a landmar k month-long session. confidence in the government following 

Diplomats say the rubber-stamp Iegisia- last week's wild fluctuations of the rou- 
tive body is convening about a month ble. President Boris Yeltsin moved 
earlier than usual because foe commu- quickly to repair the political damage 
nist leadership wants to tackle eco- by sacking the actin g fina nce minister, 

nnmir issues such as inflation and the Sergei Dubinin, and urging Victor 

growing budget deficit before the year Gerashchenko, head of foe Central 
is out Bank, to quit But many deputies 

remain furious about the whole affair 
Tirade negotiators meet in Geneva amj m ay bring the vote forward to ear- 

for two days in a bid to thrash out a ^g r ^ ^ w eek. 



FT Surveys: Luxembourg and North 
American Business Locations. 


ECONOMIC DIARY 


Stati s tics to be released tins week 


Vietnam's National Assembly is due to 
begin a landmar k month-long session. 
Diplomats say the rubber-stamp legisla- 
tive body is convening about a month 
earlier than usual because the commu- 
nist leadership wants to tackle eco- 
nomic issues such as inflation and the 
growing budget deficit before the year 
is out 

Tirade negotiators meet in Geneva 
for two days in a bid to thrash out a 
new Gatt code of fair trade practice for 
civil aircraft. With the US and the 
European Union for apart, hopes are 
dimming that a deal can be reached by 
foe year-end deadline. 

Iran's President Ha&hemi Rafsanjani 
visits India - a few weeks after Iran 
received Farooq Ahmad Leghari, presi- 
dent of Its ally Pakistan. Iran hopes to 
build a gas pipeline through Pakistan 
to India, but Rafsanjani has said eco- 
nomic co-operation between the three 
states is being held up by tension 
between India and Pakistan. Iran is 
positioning itself as “honest broker” to 
| resolve differences between the two 
over such issues as Kashmir. 

Hungarian debt: International 
Monetary Fund managing director 
Michel Camdessus visits Hungary. The 
IMF is urging the Socialist-led govern- 
ment to cut spending to prevent the 
country's high debt rising further. 

FT Survey: The New UK Gas Market 

Holidays: Kenya. 


CIS summit Leaders of the 
Commonwealth of Independent States 
are due to meet in Moscow to debate 
economic union - formally agreed last 
month but not yet in place. Russian- 
Ukraiman relations will come up again; 
resolution of such thorny issues as the 
Black Sea Fleet and Ukraine's debts to 
Russia is still distant 

German M3: The September figures 
for the erratic M3 broad measure of the 
money supply are due for release. The 
expectation is that it will continue its 
decline, falling from &2% to 7.5%, but 
still above the 6% upper limit desired 
by the Bundesbank. 

UK economy: There have been 
tentative signs, notably the August fall 
in manufacturing output, that the pace 
of UK economic growth slowed in the 
third quarter. Today's first estimate of 
gross domestic product growth is expec- 
ted to reveal a 0.6 per cent quarter-on- 
quarter rise, down from 1.1 per cent in 
foe previous three months. 



Economic 

Aug bu sfnesa investment 

Sep trade balance, custom drd 
Sep Tokyo dept store sales** 

Aug Industrial produettont 
Aug srilprwntst 

Oct wholesale price fndx. 10 days 
Sep pubte sector borrow req 
Sep leading endicatorf 
Aug manufacturing new orders*' 
Aug manufacturing shipments* 

Aug trade, goods and sendees 
Aug merch trade, bal of payment 
Aug merchandise trade, census 
Aug merchandise exports, census 
Aug merchandise Imports, census 
July and Aug Indust proof 
July mamifacturing prodt* 

Sep ratal sates* 

Sept retail sales" 

Aug merch a ndise exportst 
Aug merchandise impoctst 
Aug retail safest 
Oct Philadelphia Pad index 

Sepbulkflng permits 

Sep housing starts 


pay. . . 
RaiMMri Country 


PrevJous 
Aetna} . 


Oct 21 Japan 
Japan 


-SlI.Qbn 


-$13.Sbn 


During the week... 
Japan 
Germany 
Germany 
Germany 
Germany 

Germany 

Germany 

•month on month, “year 


Economic 

stwtfantc 

Sep money supp, M2, cash dap 

Sep broad ttquhffly** . 

Aug trade bsdancet 

SepM4* 

SepM4~ 

Sep M4 tending 

Sep bold soc. net new commit 
Aug wholesale trader 
Aug overall pen consvn nqad** 
Aug pers conaun expci, workers" 
Aug income, workers** 

Sep final consumer price Index* 
Sep final consumer p rice ind ex" 
Sep trade. ex-EC 
Third quarter gross dom prod" ' 
Third quarter gross dom prod 


Oct trade balance, fast 1G days - $3.7bn 

Sep producer price Index* 0-2% * 02% 

Sep producer price Index" 0-9% 0.7% 

Sep M3 7.5% &2% 

Sep priv sector lending, sbe mths 9-3% 9.6% 

Aug trade balance DMSJbn DM3-3XI 

Aug current account -DMafftyi -DM13.3bn 

on year, tseasonalfy adjusted Statistics, courtesy MMS tntsm a tio n aL 



The Central Asian republic of 
Kyrgyzstan holds a referendum on 
Saturday on the future shape of the 
Kyrgyz parliament The former parlia- 
ment, a hangover from the Soviet 
period, dissolved itself last month. 

President Askar Akayev has called 
the referendum with the aim of 
achieving public support for a sm a l l e r 
two-chamber parliament more repre- 
sentative of the population and of the 
country's regions. 

Apec meeting: The Asia Pacific 
•fiimnnmir Cooperation forum starts a 
two-day ministerial meeting in Osaka 
on Saturday dedicated to nurturing 
meriiiy n an fl s mall enterprises. 

UK motor show opens to the public 
on Saturday in Birmingham (to Oct 30). 

Spain's Basque country stages 
regional elections on Sunday. The 
moderate PNV nationalist party, a 
m emb er of the governing coalition, is 
expected to emerge as the strongest sin- 
gle party. 

Redo on tim streets: The 

Communist Party of the US celebrates 
its 75th anniversary on Sunday, with 
demonstrations planned in 75 dries and 
a rally in Chicago. 

Clocks go back one hour in the UK 
and Ireland. They go forward one hour 
inBraziL 

Compiled by Patrick Stiles. 

Fax: (+44) ( 0)171 873 3194. 


National Service 


At Erdman Lewis we do things differently. 

Determined to build bridges not barriers, 
we developed a national network of local 
offices. A genuine network. Each with its 
own identity yet working as an integral 
part of the whole. Offering the some 
range of services, the same expertise, the 
some understanding of the local market. 
And providing continuity and stability 
through the same local contacts. Whatever 
your needs, now and in the future, we 
make it our business to anticipate the 
changes in yours. 


Local Heroes 


-DM13-3brr 


ACROSS 

1 What has eight legs and Dies? 
( 6 » 

4 Maintain firm is ahead of Sev- 
ern development (8) 

10 When to leave port worker to 
attacker (9i 

U Expel crooked vice-treasurer 
initially i5) 

12 Try and go <41 

13 Standing by opening in 
one-man church CLOT 

15 Airline employee set about 
taking charts; (7> 

16 Green turned and said why 
with rigour lfi> 

19 Bunt end of Soger in water 
vapour (61 

21 Use cerise liquid around civic 
centre (71 

23 If some turn round it’s trou- 
ble! (10) 

25 Found in the approved pile N) 

27 She's a nun (hat is non-U (5) 

23 With skill I retard growth or 
plant (9) 

29 in time it's their turn for a 
number f8) 

30 Poles on lakes first dropped 
by treacherous people (6) 


DOWN 

1 With sting is going to hospital 
quickly (8) 

2 Ruins poor man in revolt (9» 

3 Impressive city area, very 
good centre (-11 

5 Not allowed to show conclu- 
sion (7* 

£ One loved foe unusual thea- 
tres we entered (10) 

7 Controller containing string. 
as a rule (5) 

6 Judge encounters sweetheart 
when climbing (6) 

9 Stuffed sheep seemed to look 

away (6) 

14 Spiteful man and one less vio- 
lent (10) 

17 Helps tourists to reserve seats 
behind pilot (9) 

18 Not so much after assistance 
as Incompetent (8) 

30 Men hate messing with gas (7) 

21 Nurse brewed tea for legisla- 
tive body (6) 

22 Result of a crash course? (6) 

24 Where Ian is standing (5) 

26 Carefully examine sulphur tin 
(4) 



MONDAY PRIZE CROSSWORD 

No. 8, 586 Set by GRIFFIN 

A prize of a PefOran New Classic 390 fountain pen for the first correct 
solution opened and five runner-up prizes of £35 Petikan vouchers will be 
awarded. Solutions by Thursday October 27, merited Monday Crossword 
8,536 on the envelope, to the Financial Times, 1 Southwark Bridge, London 
SEl 9HL. Solution on Monday October 31. 


Address. — 



Winners 8,574 

Mrs J. Harris, Sydling-St- 
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BJL Candy, Maidenhead, Berk- 
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Ann Cursley, Halstead, Essex 
P. Hebington. Portsmouth, 
Hants 

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ter 

J.C. Williams, London W9 


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FINANCIAL TIMES SURVEY 


International Telecommunications 


Despite the excitement over telecom 
‘superhighways,’ most of the world’s 
population does not yet have access to a 
basic phone line, writes Andrew Adonis 

It is time to 
cut through 
the hype 

Tlie linking of the world’s people to a vast exchange of 
information and ideas is a dream that technology is set to 
deliver. It will bring economic progress, strong 
democracies, better enviro n m en tal management, 
improved healthcare and a greater sense of shared 
stewardship of our small planet.' 

- US vice-president Ai Gore, writing In the FT last month 
about his ambitions for a Global Information Infrastructure 
(Gil), based on international fibre-optic telecommunications. 


I t is a noble goal. Mr Gore's 
vision also sounds plausible, 
so successful has been the 
“superhighways hype" indus- 
try. Tor many FT readers, sit 
ting in nfflcwa crammed with 
phones, PC screens, on-line 
information services, with a 
mobile handset in the brief- 
case, much of it has already 
been accomplished. 

But it is time for serious 
observers to cut the hype and 
take a sober look at reality. 
The fact is that technology is 
not about to “deliver" the GS, 
and with it a paradise of uni- 
versal democracy, peace, 
greenery and long life. 

Most of the world's popula- 
tion does not even have access 
to a basic phone line; and that 
is the best that technology, 
plus huge investment, is likely 
to deliver to even a small 
minority of people within the 
foreseeable fixture. Mr Gore 
does not pretend otherwise. 

In 1966, the Maitland Com- 
mission noted: In most devel- 
oping countries, the telecom- 
munications system is not 
adequate even to sustain essen- 
tial services.’ 7 Now, a- decade* 
on, networks remain grossly 
inadequate. Barely a fifth of 
105 countries surveyed by the 
International Telecommunica- 
tions Union boast more than 25 
phone lines per 100 people, 
with most developing countries 
providing fewer than 5 per 100 
('see charts, overleaf). 

A ccording to a recent 
study* developing coun- 
tries have 75 per cent of 
the world's population and 16 
per cent of its product, but 
only 12 per cent of its tele- 
phone lines. As for the GD, the 
typical Spaniard will this year 
be on the phone to someone 
abroad for a mere 20 minutes, 
but that compares with a few 
seconds for the typical Tanza- 
nian. 

Telecoms development Is 
critical to economic growth: a 
study by the International 
Telecommunications Union 
plotting gross domestic prod- 
uct per capita against “tele- 
density” (telephone lines per 
100 people) suggests that for 
every extra $1,000 of GDP a 
country will have an extra 124 
phone lines per person. 

The foremost challenge - in 
telecom terms - for the devel- 
oping world is the provision of 
more basic phone lines. The 
private sector in the developed 
world - banks, equipment sup- 
pliers and operators - is set to 


play a critical role in meeting 
it According to a recent World 
Bank presentation, about 
$55bn a year for the next six 
years win be required to build 
up basic networks in develop- 
ing countries and the former 
eastern Europe bloc. Whereas 
in the 1980s barely a fifth of 
telecoms investment in the 
developing world came from 
. the private sector, about half of 
the $55bn will have to come 
from that source. 

In the World Bank's view, 
the only way to achieve that 
goal is for governments to 
embark on radical liberalise- J 
tion and privatisation pro- 
grammes. They are starting to 
do so, albeit in a halting man- 
ner. 

India, which has barely eight 
telephone lines per 1,000 peo- 
ple, is a classic study of fixe 
forces at work. Western opera- 
tors, eyeing the lucrative 
opportunities for satisfying 
unmet demand,' have been 
flooding the Indian govern- 
ment with proposals for fran- 
chised networks and compet- 
ing operations. Hie country’s 
-state telecoms commission 
gave them strong support, but 
the government, besieged by 
trade unions and worried 
about losing control dithered 
about abolition of the state 
monopoly. 

Finally, last month the gov- 
ernment decided to allow pri- 
vate operators to bid for 
regional licences to operate 
networks in competition with 
the state monopoly - a signifi- 
cant concession, although less 
than the private groups 
wanted - but at the same time 
moved the strongly pro-reform 
chairman of the telecoms com- 
mission to another job. 

It is a similar story in China, 
the world’s biggest telecoms 
growth market, where the 
country’s ministry of posts and 
telecommunica ttcras (MPT) has 
fought tooth and nail against 
any weakening of its position. 
The MPT this year lost the bat- 
tle to prevent other state min- 
istries setting up their own 
telecams division, and It is set 
to face further deregulation of 
the market as Beijing seeks to 
attract foreign capital to help 
meet its target of increasing 
China’s number of phone lines 
from the present 30m to 110m 
by 2000. Only in the developed 
world are “superhighways” - 
the upgrading of telecom net- 
works to take fibre-optic 

Continued on page two 


New worlds 

Privatisation and Bbe«dihJ«»k»n ; TO opening, up 'new ' yiy 
worlds for Europe’s former posferf mja telccom V ‘ ?j J 0y 
monopolies (PTTs), arm to 

to sunflvaiand are w Wgar ^lilly. ^ ' r. ••• 

ministerial dictates J^AfaEe-. 

Worldwide demand for mobile Tv-' 1 , 

dose to 50 mWon-usery already 4 _ ■ 

Equiptnerttsapplfat pfolite 6 tonaMt v ...« ,n 

US ntonopofiaa under attack 

New business service? Intfie • 

Japan: further turbulence ahead 
Superhighways: the debate 

(tkSk the target is 10m new fate* fiutdeteya, ■ ; v ' 
have hindered the race to catch up 

Canada: a handmade rating : 9 -'- 

Satellites w» provide' 

everywhere - but you can atewi f* «***» off'^ PAGE 10.. 
Multimedia: despite the l»yp* titere are map*; .: ,« ; 

bridges stffl to cross- #&■ 

International aBiances transfpnp.fto fl- 

Austrafeon telecom battle beghw — ■ ^ netfav unnw .It *.J 

Mexico: maWng up for tost time •.FAGE12] 

Sweden: market 

Ufraless mes saging: Ih-th® HrtwBflM ■ PAw)?- 

Equipment: more power for the ute^ :, -.^iiw..' , W0?i5' 
Value added services: new cot'siborattoiw »**»» «P AQE *15 
Telecom reforms; lesgcm s fromexperfwra^ . 

EDITORIAL PRODUCTION: MICHAEL WllTSfife '- -: • * . F; 


Monday October 17 1994 


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The groat chafimge In world telecoms is the provision of basic 
telephone Snea. In Indta, the eon Is to install 10m new Ones - see report, 
page nine. Pictured left, a cater uses a pubfic phone ki Bombay. In 
Mrica, above, a BT engineer shows a swi t chboard system to young 
cMdren. Meanwhile, bi China, which already has 17m phone fines, the 
new target is lOOrn Tkies operating by the yam* 2000. The business cater, 
right. Is using GPTft teJepoint mobte phone service. 











r-T, ? 4 ■. -• ,{* v 



.* % 


C-'vL 


The best choice, 
a domestic operator 
with international 
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We could connect your offices, 
from Monmouth to Marseille, 
from Falkirk to Frankfurt, from Manchester 
to Malmo and back again. 

You deal with a single supplier • 
and get one quarterly bill. 

This offer is available in the UK through 
France Telecom Network Services as part 
of the European service platform based on 
Transpac's integrated data transmission network. 
We guarantee you the qualify 
and development potential 
only a major operator can offer. 

Your sates contact Is on 071 379 47 47 
or fax 071 379 88 24. • 





0 France Telecom 
Network Services 


imm 



- • 4 


II 


FINANCIAL TIMES MONDAY OCTOBER 17 1994 


INTERNATIONAL TELECOMMUNICATIONS 2 



A long road yet to 
‘superhighways’ 


The information rich and the information poor 


Telodensity and wealth 

Tetedenafty (percentage of population wWJ 9 phone, 105 countries. 


Continued from page one: 

cables to the kerb or even into 
the home - an Immediate con- 
cern. Most of the main oper- 
ators have built trunk fibre 
networks and are starting to 
extend fibre into the local loop; 
they are also at various stages 
In trials of inter-active busi- 
ness and residential services, 
from networked personal com- 
puters to home shopping and 
video-on-demand. 

Again, a dose of caution is 
needed. Very few inter-active 
services are currently avail- 
able. Most national networks 
are not yet up to it; and where 
they are. the pricing of services 
such as video-on-demand is 
highly problematic, particu- 
larly where existing alterna- 
tives - in that case renting 
videos from the local store - 
are cheap and well-established. 

The ‘'global village" is simi- 
larly inhibited by high cross- 
border telecoms rates. Sus- 
tained by the cartel of national 
operators which fixes the tar- 
iffs. international telecoms 
prices remain far higher than 


costs. The cartel is beginning 
to crumble in the face of liber- 
alisation, the rise of new forms 
of competition, and the forma- 
tion of global alliances of large 
telecoms operators aiming to 
offer “one-stop" services to 
multinationals. But until cross- 
border prices come down to the 
level of national tariffs, Mr 
Gore's Gil will encompass a 
folrly select band. 

One of the most effective 
remedies for monopoly pricing 
is, of course, to abolish the 
monopoly. Across the devel- 
oped world monopolies are in 
the process of being abolished. 
The UK. Sweden and New Zea- 
land now have almost unres- 
trained telecoms competition: 
new operators are able to gain 
licences quickly and they are 
allowed to build their own 
infrastructure. 

Elsewhere, liberalisation Is 
proving a fraught endeavour, 
although the trend is unambig- 
uous, In the US, Congress 
foiled this year to reform the 
country's antiquated telecoms 
laws. The proposed legislation 
would have broken down the 



43U 


WORLD | 7-3MHt per inhabitant par year • 




50 


Botswana 

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' Swaziland ■ 

40 

_ -nr-,. - 

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: Tanzania jo.1 •- 

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Soirow nu Telecom MOW BmKaaa 

barriers between “local" and 
“long-distance” networks, 
extending competition in one 
step and avoiding the heavy 
litigation which looks set to 
continue to be the prime 
vehicle for reshaping the US 
regulatory maze. 

In Europe, where monopoly 
remains the rule for basic 
voice traffic, an orderly march 
to full competition is in prog- 
ress. The ElTs 12 members 
have agreed to allow full com- 
petition in voice services by 
January 1998, and are close to 
agreeing to open up infrastruc- 
ture within a similar timescale. 

Across most of the developed 


world, competition is already 
entrenched in the fast-growing 
mobile communications sector, 
with the cellular phone on the 
threshold of becoming a mass 
consumer good. As it does so, 
operators are increasingly 
focusing on the potential for 
radio systems to replace 
“fixed” networks in the local 
loop. Such “fixed cellular” 
systems are set to provide low- 
cost local networks, dramatic- 
ally cutting the investment 
required to provide networks 
in competition with those of 
existing fixed- wire operators 
and offering new prospects for 
telecoms growth in the devel- 


oping world. Some believe that 
in the developed world the 
prospect of serious competition 
with radio operators for voice 
telephony traffic will drive 
existing fixed-wire operators to 
develop superhighway services 
fast, since the greater band- 
width of fibre-optics will pro- 
vide their main competitive 
edge over radio. Mr Jozef 
Cornu, technical director at 
Alcatel, the French equipment 
supplier, says: “In the battle 
between operators, those that 
go via radio will lack band- 
width, so those with fixed net- 
works will be obliged to 
develop multimedia services.” 


Saw* k nmSms Onion 

It is a plausible scenario, and 
farther support for the “Negra- 
ponte switch" - the notion 
developed by Mr Nicholas 
Negraponte. director of the 
media laboratory at the Massa- 
chusetts Institute of Technol- 
ogy. that services traditionally 
delivered by radio are set to 
switch to cable and vice versa. 
But once again, it does not 
describe the telecoms world 
this year or next 

*R.J. Saunders, J.J.Warford, 
B.Wellenius , ‘Telecommunica- 
tions and Economic Develop- 
ment," (second edition), Johns 
Hopkins University Press. 


GDP per capita (USSI 


Low leledensity’ of 
poorer countries 

The chart (above, right) plots 
GPP per capita against the 
number of telephone lines 
per 100 people (‘teledensrty’) 
for 105 countries, surveyed 
by the International Telecoms 
Union. Each square on the 
chart represents a country. 
The overwhelming concent- 
ration In the bottom left-hand 
comer reflects the very low 
tetedensrty in poorer 


countries. Although the 
relationship between wealth 
and teledensity is drawn as a 
straight line, in fact it appears 
easier to increase teledensity 
for low Income countries. 
According to the ITU, this 
suggests “that telecoms 
investment brings higher 
social and economic rewards 
in low income countries than 
in high income countries, at 
least in terms of benefits per 
extra dollar spent" 


3 


European progress towards privatisation of telecoms 


Liberalisation is bound to accelerate the pace 



hi Britain, OfM, the telecoms regulator, has forced BT to reduce call charges. Pictured here Is 
BTs worldwide n etwork man a gemen t centra where problems can be pin-pointed around the dock 


Privatisation and liberalisation 
are opening up new worlds for 
Europe’s former postal and 
telecom monopolies (PTTs), one 
where they have to compete to 
survive and are no longer tightly 
constrained by ministerial 
dictates, writes Andrew Adonis 


O nly a few years ago. three assump- 
tions governed the provision of 
telecommunications worldwide: 
that it was a natural monopoly, that it was 
a national utility, and that therefore it was 
best managed within the public sector. 

Accordingly, state-owned PTTs were the 
norm. Almost all of them were monopo- 
lies, many of them an integral part of their 
government's minis try of posts, and often 
managed in tandem with the national 
postal service. In the mid-1980s, the US 
and the UK struck out in a different direc- 
tion. The break-up of AT&T in 1984 
unleashed serious competition in the US 
long-distance market, while Margaret 
Thatcher’s government in the UK sold off 
a minority stake In British Telecommuni- 
cations in the same year, exposing BT to a 
long-distance competitor, Mercury, which 
built its own network. 

But the US and UK had few interna- 
tional imitators, and none of note in 
Europe. The US telecoms industry struc- 
ture. with its divorce between local and 
long-distance carriers, was regarded as 
alien on the other side of the Atlantic; 
while Mrs Thatcher’s passion for privatis- 


atation was equally alien to her fellow 
European government leaders. And in the 
early years after BTs privatisation there 
was little to suggest that many people 
besides the company's shareholders, who 
benefited from an underpriced flotation, 
had gained much from the exercise. 

A decade later, the pictu re is trans- 
formed. Most of Europe's PTTs are at some 
stage on the privatisation road. Each coun- 
try is following its own distinctive path 
and some have as yet barely embarked on 
the course. But the following milestones 
are frequently encountered: 

□ De-merger of the posts ministry and 
the FIT: This step has taken plaire in 
almost every European country. Posts and 
telecoms operations have invariably been 
transferred to a state agency with a man- 
agement board separate from, though 
appointed by. the sponsoring ministry. 

□ De-merger of posts and telecoms: 
This has taken place across most of west- 
ern Europe. The rationale is two-fold: that 
posts and telecoms are now fundamentally 
different businesses, employing radically 
different technologies; and that telecoms Is 
more suitable than posts for commercialis- 
ation and privatisation. 

The Netherlands Is a striking exception. 
KPN, the national operator, has retained 
posts and telecoms - and was privatised in 
that condition earlier this year. Some ana- 
lysts say KPN is the exception which 
proves the rule, since the Dutch postal 
service is one of the tew In Europe to run 
at a profit (one of the others is the UK’s 
Royal Mail, which is also a candidate for 
privatisation). However, most analysts 
believe the two postal services to be profit- 
able in large part because they are com- 
mercial. KPN’s postal division, in particu- 


lar, has a Europe-wide reputation for its 
success in exploiting the potential for com- 
petition in international mail delivery. 
Across the rest of Europe postal services 
are highly regulated, and face little exter- 
nal competition or pressure for reform. 
Whereas the EU is pressing hard on the 
liberalisation of telecoms, it has moved 
more slowly on the postal side. 

□ Commercialisation: The next step 
after de-merger is generally the setting of 
commercial targets for the new state- 
owned telecoms company, and the grant- 
ing of a degree of commercial freedom. 
Such freedom typically includes the right 
to form International alliances, plan 


investments and manage resources with- 
out close ministerial supervision (in the- 
ory at least). In the case of Sweden, which 
has opened its telecoms market to foil 
competition while leaving the state opera- 
tor, Telia, in the public sector, the upshot 
is a company which in most respects 
except ownership resembles a private sec- 
tor concern. 

Is commercialisation an unstable half- 
way house between state monopoly and 
foil privatisation with competition? 

Many British and American industrial 
economists believe so; and their verdict 
appears to be confirmed by European 
experience. The governments of France. 


Germany and Italy all view their “com- 
mercial" telecoms companies as ripe for 
privatisation, and only fear of a serious 
trade union backlash haw led the Bahadur 
government to refrain from moving to pri- 
vatisation at the same time as Germany 
and Italy do so. 

The proposition is for from proven. Swe- 
den's experience, in particular, suggests 
that the “dynamic" effects of privatisation 
can be secured by rigorous commercialis- 
ation. while continued state ownership is 
not an inherent barrier to competition. 

Telia is also a leading member of Uni- 
source, one of the three new European 
telecoms alliances. However, were Uni- 
source to wish to integrate its operations 
more fully by some form of cross-owner- 
ship between its members, partial privati- 
sation of Telia would be unavoidable. 

□ Partial privatisation: In most coun- 
tries with a privatised former PTT, the 
company is the largest on the local stock 
exchange. That fact alone explains why 
virtually aQ telecoms privatisations have 
been phased, although political factors 
have also weighed heavily. 

AH the EU telecoms privatisation car- 
ried through to date (UK, Denmark. 
Netherlands) have been - or are being - 
carried through in stages. Typically, an 
Initial sale of SO per cent is followed by the 
disposal of two further tranches. 

In the UK, the process took nine years to 
complete. A similar course is planned with 
the largest of the forthcoming flotations, 
that of Deutsche Telekom, which is sched- 
uled for 199$. Some of Europe's smaller 
PTTs, with less advanced networks, are 
considering the sale of strategic stakes to 
overseas partners as part of a partial pri- 
vatisation. In January, Latvia sold such a 


stake in its PTT to Cable & Wireless, the 
privatised UK international operator: in 
return for a guaranteed $I60m of invest- 
ment over three years, a consortium 
headed by C&W will take a 49 per cent 
stake in the company. 

Greece and Belgium are considering 
strategic partnerships. Telecom Eireann, 
the Irish PTT. is looking for a strategic 
partner without privatisation, but analysts 
expect that any deal might pave the way 
to an eventual sell-off. 

□ Liberalisation: Privatisation does not 
necessitate immediate liberalisation, as 
the experience of Singapore, Denmark and 
the Netherlands shows. But liberalisation 
tends to follow fairly soon, if not at the 
outset, for two reasons: 

First, because governments, once they 
are regulators rather than providers of 
telecoms, become more consumer-oriented. 

Second, because of political concerns 
about the straight conversion of a public 
monopoly into a private monopoly. 

In Europe another force Is at work - the 
ELTs 1998 deadline for the opening up of 
voice services to competition. The immi- 
nence of liberalisation is bound to acceler- 
ate the pace of progress towards privatisa- 
tion , where it has not already happened. 

□ Restructuring: Privatisation and lib- 
eralisation open up a new world for the 
former PTT, one where they have to com- 
pete to survive and are no longer tightly 
constrained by ministerial dictates. 

Internal restructuring, including severe 
cost-cutting programmes, almost inevita- 
bly follow, although they are also taking 
place within state-owned PTTs. The degree 
of change depends largely upon the degree 
to which commercialisation had previ- 
ously been taken. 


Fresh calls for a market-driven revolution* in voice telephony services 

European Union horizons draw closer 


The sceptics over 
European liberalisation 
are now in fast retreat, 
reports Andrew Adonis 


W hen, after much 
anguish, the Euro- 
pean Union's telecom- 
munications ministers finally 
agreed in June 1993 to liberal- 
ise the EU's voice telephony 
market, full competition in 
Europe's telecommunications 
services market still seemed a 

distant prospect. 

The date agreed by the min- 
isters for the liberalisation of 
basic voice services - January 
1 1998 - was still nearly five 
years away. Five of the EU’s 12 
member-states gained exemp- 
tions allowing them to keep 
out competition for longer still 
- Greece. Spain, Portugal and 
Ireland until 2003. and Luxem- 
bourg until 2000. And. with 
regulatory structures and 
inter-connection regimes non- 
existent across most of the EU. 
many believed that a few years 
could be added to those dates 
before effective competition 
would be a reality. 

The sceptics and far-distance 
gazers are now in fast retreat 


Although little has formally 
changed since the ministerial 
agreement, it appears increas- 
ingly likely that liberalisation 
will come sooner rather than 
later and that effective compe- 
tition will follow hard on its 
heels. 

It is not just the passage of 
time which has changed per- 
ceptions. Other forces are serv- 
ing to accelerate the pace of 
litwralisation and intensify the 
commitment of EU member 
governments to the cause of 
early competition in telecoms 
services. 

The three strongest forces 
are the European Commission, 
the impact of existing liberalis- 
ation on unliberalised sectors, 
and the rise of international 
alliances between telecoms 
operators. The three are com- 
plementary and mutually rein- 
forcing. 

The commission has been 
forcefully promoting telecoms 
liberalisation - in public and 


by stealth. Trans-European 
networks featured prominently 
in the Maastricht Treaty. And 
from Jacques Delors down- 
wards. the commission has 
spent the last few years warn- 
ing of the damage to European 
competitiveness if Europe foils 
to construct telecoms “super- 
highways" to match those 
being developed in the US and 
Japan. 

Initially, such rhetoric was 
often accompanied by sugges- 
tions that significant public 
investment - either by the EU 
or member-states - should be 
devoted to upgrading telecoms 
networks. The commission 
soon saw that such a statist 
approach was neither neces- 
sary nor desirable. It was 
unnecessary because the tele- 
coms industry is itself awash 
with funds to devote to com- 
mercial projects; and undesir- 
able because leading analysts 
and some operators - notably 
the main US telecoms opera- 


tors and British Telecommuni- 
cations, the privatised UK 
operator - convinced policy- 
makers that a far better way of 
boosting the development and 
take-up of new sendees was to 
abolish monopolies and allow 
competition to exert strong 
downward pressure on prices. 

A mature statement of this 
new approach is encap- 
sulated in the “global 
information society” report of 
the EU-wide industry group 
chaired by Mr Martin Bange- 
m nnn, the industry commis- 
sioner. 

Published in May, and 
broadly endorsed by EU heads 
of government shortly after- 
wards, the Bangemann report 
put superhighways at the heart 
of Europe's future competitive- 
ness. It called for a "market- 
driven revolution" to make 
them a reality; and to precipi- 
tate the revolution it recom- 
mended that EU governments 


“accelerate the ongoing pro- 
cess of telecoms liberalisation". 

The Bangemann report high- 
lighted telecoms infrastruc- 
ture, not just services, as ripe 
for liberalisation, citing such 
liberalisation as part of the 
"urgent action” needed to 
reduce high cross-border tar- 
iffs. 

With a bead of steam behind 
the Bangemann report, the 
commission has lost no time in 
pressing forward. In July it 
published an “action plan". 
The title of the first chapter - 
“Towards a Competitive Envi- 
ronment” - sums up the action 
envisaged. The rest of the 
paper listed the regulatory and 
legal obstacles remaining to be 
overcome, and a framework for 
addressing them. 

The next key stage is a 
Green Paper on infrastructure 
competition, expected next 
month, which appears likely to 
recommend liberalisation on a 
rolling basis so that competing 


systems can be opened at the 
same time as the services to be 
carried over them are opened 
to competition. In practice, this 
means infrastructure competi- 
tion across most of the sector 
by 1998, with investments tar- 
geted at private corporate net- 
works permissible at once. 

The commission is also draft- 
ing a directive on inter-connec- 
tion, likely to be published 
early next year, and is putting 
its weight behind other practi- 
cal initiatives such as a “one- 
stop shop" for companies seek- 
ing operating licences across 
the EU. 

It will not be a smooth tran- 
sition. Just as they opposed 
services liberalisation, several 
EU governments - notably 
Spain’s - are fighting hard to 
delay infrastructure liberalisa- 
tion. Their only plausible argu- 
ment is that decisions on infra- 
structure should not be taken 
before Ute prerise terms of ser- 
vices competition are agreed. 


But even that line has infuri- 
ated Mr Karel Van Miert, EU 
commissioner responsible for 
competition policy, who has 
hinted darkly about using 
“special powers" to promote 
infrastructure competition if 
agreement is not reached at 
the telecoms ministers' council 
in November. 

By stealth, the Commission 
has been doing its best to 
broaden the scope of competi- 
tion allowed within existing 
rules. For instance, it has 
given strong encouragement to 
the EVUA, a grouping of more 
than 30 multinationals which 
Is contracting jointly for a 
Europe-wide “private" network 
to secure cheaper prices and 
enhanced functionality. 

Some operators question 
whether the EVUA network 
counts as “private", but the 
Commission has voiced no 
doubts. Most of the leading 
telecoms European operators 
bid for the contract, and the 


EVUA estimates that the trial 
contracts awarded so far could 
offer savings of up to 40 per 
cent on existing pan-European 
tariffs. 

The EU’s operators are fast 
waking up to the implications. 
Although most of them remain 
state-owned monopolies, they 
realise that they must either 
adapt to competition or lose 
significant segments of their 
business within a short period. 
Their experience in the cellular 
mobile field, where competet- 
ing providers are now 
entrenched over much of the 
EU, has been a salutary warn- 
ing to them. 

The prospect of privatisation, 
now sweeping across the conti- 
nent, is underlining it. As the 
more reflective of the PTT 
chiefs realise, privatisation is a 
body blow to monopoly. The 
government immediately 
switches from being owner to 
being regulator, radically 
c h a ngi n g its relationship with 
the PTT; and since private 
monopolies are harder to 
defend than public monopolies, 
it also increases the pressure 
for rapid liberalisation in the 
run-up to any sell-off, or in the 
wake of it. In the Netherlands, 


Continued on page four 





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FINANCIAL TO® MONDAY OCTOBER 17 


Insight 








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"Any equity analyst 
can say "buy' or 
"sell . but smart 
investors need more 

Recommendations 

alone don’t spark 
ideas. It’s the 
analysis behind 
them that does.” 


... - 



i; 


iS'.-'i* 


At J.R Morgan Securities Inc 
when we analyze a company 
we go far beyond a chat 
with the CFO. We tear apart 
balance sheets. Ferret out 
hidden risks and opportu- 
nities. Talk with employees, 
customers, suppliers, 
distributors. And tie the facts 
into a long-term industry 
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financial times 


MONDAY OCTOBER 


17 1994 


INTERNATIONAL TELECOMMUNICATIONS 4 


Worldwide demand for cellular mobile communications 

Close to 50 million users already 


In Europe, the Global 
System for Mobile 
Communications - GSM 
for short - has become 
the driving force behind 
the growth of cellular 
subscriptions worldwide, 
reports Mark Newman 


E urope tends to borrow 
most of its ideas about 
telecommunications 
products and services from 
North America. 

But in mobile communica- 
tions, Europe has seized the 
initiative and US companies 
are doing the unthinkable - 
they are giving some serious 
thought to importing a Europe- 
an-developed technology. 

The pan-European GSM digi- 
tal cellular telephone standard 
has been adopted by every 
country in western Europe. 
GSM is likely to be used across 
the whole of eastern Europe 
and is already emerging as the 
dominant technology in Asia 
and North Africa. 

Since the first GSM tele- 
phones were produced in the 
summer of 1992, more than 
three million people, most of 
them in western Europe, have 
signed up to GSM services. 

There are almost twice as 
many cellular telephone sub- 
scribers in the US as in the 
whole of western Europe. If 
current growth levels are 
maintained, there will be 22m 
US cellular subscribers and 
13m European subscribers by 
the end or this year. The world- 
wide cellular population will 
be close to 50m. 

But while more than half of 
the European growth this year 
will be derived from new con- 
nections to GSM digital cellu- 


lar systems, US growth is 
accounted for almost exclu- 
sively by connections to anal- 
ogue Amps networks which 
are close to reaching full 
capacity. 

A number of operators have 
upgraded their networks to 
offer digital services, but there 
is little or no customer interest 
because telephones are more 
expensive and coverage levels 
are inferior. 

US cellular operators will 
face competition in 1955 or 1996 
from personal communications 
service (PCS) companies. They 
will use high frequencies at a 
similar part of the spectrum to 
those allocated to the UK cellu- 
lar operators. Mercury One-2- 
One and Orange, and E-Plus in 
Germany. But they have to 
decide whether to use the same 
standard as the European oper- 
ators, or a standard that is 
developed in the US. 

There is every chanc e that 
they will choose the European 
standard - which is based on 
GSM - because it is a proven 
technology, and because manu- 
facturers can guarantee 
prompt delivery and are begin- 
ning to derive the economies of 
scale to makg PUS handsets 
cheap enough to compete with 
the analogue networks. 

"There is an awful lot of 
interest in DCS 1800." acknowl- 
edges Dale Hatfied, the manag- 
ing director of US telecommu- 
nications consultancy Hatfield 
Associates. 

There will be three PCS 
licensees in each region and 
DCS 1800 would be an attrac- 
tive choice of technology 
because it gives an operator 
the opportunity to beat its 
competitors to the market - 
“with all the PCS licences that 
are being issued, there is a big 
advantage in being first to the 
market,” says the consultancy. 


It believes that, in the longer 
term, spread spectrum technol- 
ogy. developed by US company 
Qualcomm, could emerge as 
the optimal digital cellular 
standard. But the handset tech- 
nology Is still under develop- 
ment, and a PCS operator 
which chooses spread spec- 
trum technology risks being 
left behind in the race to build 
new networks. 

While the whole of Europe is 

mi g r ating from analogue cellu- 
lar to digital GSM over a 
period of two to three years, 
the US cellular industry is pull- 
ing in a number of different 
directions and away from a 
standardised technical 
approach - “we have chaos 

US cellular operators 
may well choose the 
European standard - 
which is based chi GSM 
- because it has a 
proven technology 
record 

over here in the US." observes 
Hatfield. 

But Europe has not always 
acted in such a unified man- 
ner. before GSM. cellular tele- 
phone networks in Europe 
operated to a number of differ- 
ent standards. Germany and 
France, for example, chose 
technologies which were 
unique to their markets. 

It was this disharmony and 
the licensing of competing 
operators - rather than the 
merits of the GSM standard - 
which has helped to make GSM 
such a si gnifican t success for 
Europe. 

When the two German GSM 
networks, Dl and D2, launched 
in June 1992. the old Deutsche 
Telekom C-Netz analogue net- 
work was creaking under the 


weight of new subscriptions. 
The quality of the service was 
very low by US standards and 
handsets were even more 
expensive than the new GSM 
telephones. 

Germany, therefore, became 
the focus of attention for GSM 
equipment manufacturers. If 
Ge rman y had not provided the 
impetus to get GSM off the 
ground, Europe could have 
experienced the same sort of 
difficulties in engineering the 
market to upgrade to digital 
services as the US. 

GSM also owes its success to 
the opening up of European 
markets to competition. Most 
countries in Europe retained 
monopolies until the GSM 
standard was developed. The 
licensing of competitors co- 
incided with the arrival of 
GSM, resulting in a massive 
surge in danmnd for cellular 
telephones. 

The number of neilular sub- 
scribers in western Europe, 
which had grown by roughly a 
third in each of the two previ- 
ous years, increased by 47 per 
cent in 1993. 

The successful launch in 
Europe helped GSM to make 
the transition from a European 
to a global standard. Asia, in 
particular, has turned to GSM 
as a successor to analogue net- 
works. many of which are 
close to full capacity. 

In Hong Kong, GSM is now 
capturing the majority of new 
subscriptions, largely because 
GSM handsets are 25 per cent 
cheaper than analogue models. 

GSM services have also been 
launched, or networks are 
being built, in Australia, 
China, Indonesia. Malaysia, the 
Philippines and Cambodia. 

GSM is also emerging as the 
favoured standard in Africa 
where many countries have no 
previous experience of cellular 


networks. Two new operators, 
Mobile Telephone Network and 
Vodacom, launched GSM ser- 
vices in South Africa in June 
and already share more than 
100,000 subscribers. The whole 
of North Africa Is also adopt- 
ing GSM. 

A rapid fall in the price of 
cellular telephones has been a 
big factor in the success of 
GSM. When services were first 
launched in northern Europe 
in 1992, the wholesale price of 
telephone was between £600 
and £1,000. This did not matter 
in Germany, where telephones 
for the old C-Nets service were 
even more expensive. 

But in the UK, where retail- 
ers were already selling hand- 
portable telephones for the 
Tacs analogue networks for 
less than £ioo, GSM could not 
compete. 

But since 1992, the wholesale 
price of GSM telephones has 
fallen to £250 for a bottom-of- 
the-range model, to around 
£500 for a pocket telephone. 
Dealers heavily discount the 
price of telephones because 
they receive cash bonuses for 
each new subscriber they con- 
nect to their network, in Ger- 
many and the UK, these 
bonuses are so large that some 
dealers are giving away tele- 
phones provided that the sub- 
scriber signs up to a service for 

a minimum period. 

GSM is proving a remarkable 
success for the western Euro- 
pean telecommunications sec- 
tor. It has become the driving 
force, behind the growth of cel- 
lular subscriptions worldwide 
and is now threatening to 
make an impact in the US, the 
world’s biggest cellular mar- 
ket. 

□ Mark Newman writes for 
Communications Week Interna- 
tional, based in Paris 


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We can help with hardware, too, 
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provides advanced customer operations 
facilities in both the UK and the USA. 

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motor cycle messenger in Macau, near Hona Kong, pauses to phone Ns office. picm« e«* m™, 

Supplier profile: Siemens faces a challenge as rivals 
move ahead on prices and technology 

German telecoms giant 
roused by call of the new 


T he German industrial 
group Siemens is facing 
challenges in one of Us 
strongest areas: 
telecommunications. It 
remains one of the world’s 
telecoms leaders, with 
equipment ranging from 
multi-million-dollar telephone 
switching systems to mobile 
phones representing nearly a 
quarter of its DM81.6bn sales 
last year. Bnt there are threats 
to the group from three 
sources: privatisation, 
recession and technology. 

Until about four years ago, 
Germany’s state-owned 
telecoms monopoly, Deutsche 
Telekom, bought much of its 
switching and transmission 
equipment from Siemens and 
did not drive too hard a 
bargain over price - “it was a 
cosy arrangement between 
PTT and domestic supplier,” 
says Mr Jeremy Ledger, 
telecoms analyst at Dataquest 
But it was an arrangement 
that could not last, as the 
experience of other countries 
proved. 

By the late 1980s, British 
Telecommunications, the 
privatised UK operator, was 
adopting more open 
procurement policies, as were 
Vodafone and Mercury, 
newly-licensed competitors in 
the UK mobile and 
long-distance sectors 
respectively. 

Siemens was not a spectator 
on the UK scene: in 1989 it 
bought a 40 per cent stake in 
GPT, the GEC telecoms 
equipment subsidiary and one 
ofBrs principal suppliers. 

But it was not under the same 
pressure at home. Indeed, the 
fall of the Berlin Wall in 
November 1989 led to an 
Indian summer for the old 
regime in the form of a 
DM60bn Deutsche Telekom 
programme to upgrade eastern 
Germany’s antiquated phone 
system. 

Dr Erwin Hardt, head of 
Siemens’ public 
communication networks 
group, rejects accusations by 
North American suppliers that 
Deutsche Telekom pays - or 
paid - up to four times the 
going international Tate for its 
network equipment - “they 
are not comparing like with 
like,” he insists. “Our prices 
typically include associated 
software, while US operators 
pay for software on top. Take 
the two together, and our 
prices are about the same.” 
However, Dr Hardt admits 


that the Indian summer is 
over. 

The European recession was 
intensified for Siemens by a 
drop in orders from eastern 
Germany and by the growing 
impact of privatisation as 
operators far beyond Britain 
began putting unprecedented 
price pressure on their 
suppliers. 

Deutsche Telekom was one 
of them. Again, the figures are 
in dispute. Dr Hardt says that 
prices for transmission and 
switching equipment have 
fallen, in real terms, by about 



Heinrich von PJerer, chairman of 
Siemens: a strong commitment to 
research and development 

7 per cent in each of the last 
three years, and “somewhat 
more” in Germany. 
Dataqnesfs Mr Jeremy Ledger 
says that prices for key 
transmission products have 
fallen in Germany by as much 
as 20 per cent over the past 
year as Deutsche Telekom has 
awarded large orders abroad. 

Either way, the trend is 
alarming for Siemens. Last 
year it reported a fall in new 
orders and looks on nervously 
as Alcatel of France - which 
has a substantial German 
telecoms business - repeatedly 
downgrades its profit 
forecasts. Few question the 
strength of many of Siemens' 
product ranges, notably its 
EWSD switching system, or its 
commitment to research and 
development, which accounts 
for some 15 per cent of sales in 
the communications divisions. 
But alone they are not enough 
to sustain margins and 
guarantee market share. 

Then there is the question of 
new technology, notably the 
burgeoning demand for mobile 
communications. Both Alcatel 


and Siemens have been 
dramatically outclassed In the 
market for cellular 
i n fr astr u c ture and handsets by 
two smaller European 
suppliers, Ericsson of Sweden 
and Nokia of Finland. 

Motorola, the US electronics 
gr oup , also has a significant 
European presence in the 
mobile sector, where it is a 
leading handset supplier. 

Dr Hardt claims that the 
Scandinavian suppliers were 
“lucky” that the cellular boom 
started in the Nordic states 
“where an those isolated 
summer homes created an 
instant demand.” He is 
convinced that Semens' 

“greater and superior” R&D, 
particularly in the switching 
technologies where a number 
of cellular suppliers are 
“weak,” will triumph 
“ultimately.” 

Yet Dr Dietrich Botsch, of 
Siemens’ private 
communications systems 
group, recognises the scale of 
tile task facing the group if it 
is to establish itself as a 
leading mobile 
communications force: “We 
missed out on the analogue 
developments in the cellular 
field, but are concentrating 
our resources on new digital 
GSM systems. We believe we 
can generate the volumes that 
will make us a serious 
contender.” 

Siemens is also attacking its 
high cost base. It has just 
opened a software bouse in 
India, where overheads axe 
significantly lower, and plans 
to employ 1,000 programmers 
within three years. Within 
Germany, moves are afoot to 
introduce seven-day working: 
“Our unions now realise Hiat q 
such steps are important to 
productivity,” says Dr Botsch. 

Then there is marketing. 

Like the rest of the telecoms 
industry, Siemens has bad 
marketing thrust upon it The 
telecoms divisions now employ 
more than 300 marketing staff 
where five years ago there 
were 25. Although two-thirds 
are engineers by training, 
their career development and 
skills are fundamentally 
different from the 
mono-engineers of old. 

“It used to take two years to 

get from a first idea to a 

finished telephone,” says Dr 
Botscb. “Now it takes six 
months. Two years is the 
entire life-cycle.” 

Andrew Adonis 


European liberalisation trends 


Continued from page two: 

the privatisation of KPN, the 
state operator, earlier this year 
appears set to be followed by 
the licensing of a competitor 
long before the EITs 1998 dead- 
line. 

Furthermore, "private” con- 
tracts such as that placed by 
the EVUA, and the rise of big 
transatlantic alliances between 
telecoms operators, hav e 
alerted most of Europe's PITs 
to the dangers of isolation. The 
larger PTTs have all signed up 
to one or other of the three 
emerging alliances, while the 
sm a ller PTTs are scrambling to 
get on board. 

The alliances do not In them- 


selves necessitate domestic lib- 
eralisation : but since their rai- 
son d'etre is to compete In 
other markets, they increase 
the pressure on operators and 
their governments to concede 
open access at home. 

Telefonica, the Spanish semi- 
state operator, is an object les- 
son in this regard. Barely a 
year ago the company was 
fighting tooth and nail a gained 
any EU deadline obliging it to 
face competition in the Span- 
ish public voice market. Then 
Banco Santander, one of the 
largest Spanish banks, signed a 
deal with British Telecom to 
develop a national private net- 
work selling private and val- 
irendded services to the Span- 


ish corporate sector. And Tele- 
fonica suddenly realised it was 
the largest of the ElFs opera- 
tors to be outside one of the 
emerging international alii* 
ances. 

Telefonica is now a full mem* 
ber of Unisource, the alliance 
of the Dutch. Swiss and Swed- 
ish operators, which has also ■ 
linked up with AT&T of the * 
US. And the Spanish govern* 
J&ent, with Telefonica’s acqui- 
escence, has agreed to forego 
its five-year extension to the 
1998 competition deadline- It is 
not the last such volte face W8 
are likely to see before 1998. 

Battle for liberalisation in the 
US: see page six 


I 1 



Now that we’ve reinvented ourselves, allow us to reintroduce ourselves. 

Edward E. Whitacre, Chairman and CEO 



We’ve Taken Your Name 

SBC is the ticker symbol for Southwestern Bell Corporation on the New York Stock 
Exchange. And because we’ve set the record among Bell companies for total shareholder 
return — 683 percent* since divestiture in 1984 — it’s a name many industry watchers 
already know well. 

So we decided to adopt the name for our corporation many people already use. 

We believe SBC Communications Inc. more accurately reflects the breadth of our 
business, both in terms of international reach and industry diversification. 

With annual revenues over $10 billion, a subsidiary that ranks among the 
top wireless players, and major business interests in Mexico, Australia, Israel, the 
United Kingdom and other foreign markets, we have become one of the world’s leading 
telecommunications concerns. 

1 

I 

We’ve set our sights on ambitious goals through our subsidiaries, which will ] 

continue to be known as Southwestern Bell Telephone Co., Southwestern Bell 

j 

Mobile Systems, Southwestern Bell Yellow Pages, Southwestern Bell Telecom I 

i 

and SBC International. j 

| 

If you’d like to learn more about us, call us. We may have your name, but you j 

still have our number: 1-800-351-7221. j 

I 

SBC Communications Inc. 

I 

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’ Total shareholder return as of June 30, 1994. Total return equals pice appreciation phis reinvested dividends. 



FIN ANCIAL TIMES 


MONDAY OCTOBER 17 1994 


"ony Jackson on the bottlenecks facing legislation on deregulation 


JS monopolies under attack 


T he liberalisation of US 
telecoms is a war con- 
ducted on a number of 
fronts: in Congress, in the 
courts, in state legislatures and 
in regulatory agencies. The sig- 
nificance of the bill which col- 
lapsed last month in the US 
Senate lay in its attempt to 
draw the various strands 
together. Its failure means 
that, for the time being, the 
deregulation process reverts to 
a state of apparent chaos. 

However, there are certain 
basic principles at work. The 
regulatory harriers at issue are 
simple enough: long-distance 
telephone companies may not 
operate in local markets, and 
vice versa; telephone compa- 
nies may not operate cable net- 
works; and regional telephone 
companies may not manufac- 
ture telephone equipment. 
There is general agreement 
that the first two. at least, 
should be scrapped or modi- 
fied. The argument is over the 
terms. 

For the government, this 
involves a familiar type of 
tradc-ofl. The Clinton adminis- 
tration -gives a high priority to 
the construction of a digital 
super-highway, capable of 
delivering voice, image and 
data m homes and businesses 
throughout the US. This can 
only be none with private sec- 
tor money. But. as long as 
companies are barred by regu- 
lation fmm roaming the super- 
highway at will, they will be 
the less ready to invest. 

Before setting all companies 
free to compete across the net- 
work. however, the govern- 
ment is obliged in fairness to 
ensure they compete on equal 
terras. The snag is that while 
long distance telephone compa- 
nies compete with each other, 
as do cable companies, 
regional telephone companies 
- the so-called “Baby Bells" - 
do uot. They are still safe, 
immensely profitable monopo- 
lies: and as such they form the 
chief bottleneck in the deregu- 
lation process. 

In tackling this problem, the 
authorities face another famil- 
iar trade-off. As in other coun- 
tries. the regional companies 
are obliged by statute to pro- 
vide a universal service to the 



INTERNATIONAL TELECOMMUNICATIONS 6 


Call charges fall for fixed and mobile communications 


New services abound for 
businesses in the UK 


Sfi* - JF 


The new customer service centre of US West at Phoenix, Arizona 


public. Their quid pro quo for 
this is the monopoly; for if 
competitors were given free 
access to the market, their nat- 
ural inclination would be to 
poach business in lucrative 
urban areas and leave the orig- 
inal companies to lose money 
supplying telephone services to 
remote towns and villages. 

Various schemes have been 
proposed to get round this, the 
most popular being a "play or 
pay" system whereby all com- 
petitors in a local market 
would contribute to a central 
fund from which loss-making 
services could be funded. In 
the meantime, however, the 
local monopolies remain 
hugely profitable. As a result, 
it looks as if the regional com- 
panies will not surrender their 
monopoly status until they are 
forced to. 

This point was brought home 
by the collapse of the telecoms 
bill last month. The regional 
companies were offered access 
to the long-distance market in 
exchange for loosening their 
local monopolies. According to 
Mr Royce Holland, president of 
MFS Communications and a 
vocal critic of the regionals. 
this ultimately led them to kill 
the bilL 

"Some of them were more in 
favour of the bill than others," 
he says. “But it came down to 
an issue of whether they would 


try to hold on to their monopo- 
lies for another year, or try to 
get into long distance. It looks 
like in the last few weeks the 
monopolists won.” 

But the monopolies are 
under attack, anyway. MFS 
Communications is a case in 
point. One of a new breed of 
companies known as competi- 
tive access providers, MFS 
takes advantage of gaps in the 
legislation to provide high-tech 
telephone, video and data ser- 
vices to big business and gov- 
ernment customers, in compe- 
tition with the local telephone 
company. Set up in 1987, MFS 
now has a stock market value 
of around S2bn. 


F or Mr Holland, the point 
of the telecoms bill was 
simply that it would 
have speeded up his company's 
development - “our approach 
is basically state by state," he 
says. “Big states, like New 
York. Illinois and Massachu- 
setts. are moving towards com- 
petition. anyway. But in a state 
like Georgia, where we have a 
significant position in Atlanta, 
it will probably be five years 
before we get proper competi- 
tion. If we'd got a bill, it would 
have accelerated the move 
towards competition across the 
country." 

Another threat to the local 
monopolies became real last 


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month with the finalisation of 
the AT&T-McCaw metier. The 
combination of America's big- 
gest long-distance phone com- 
pany and its biggest mobile 
phone operator means the old 
nation-wide phone system is 
recreated at the cellular level 
The deal has, of course, been 
bitterly opposed by the 
regional companies, but their 
chances of blocking it in the 
courts seem slim. 

To add to their problems, the 
government has decided that 
the present system of cellular 
licences - whereby the 
regional companies plus one 
competitor apiece are allowed 
to run regional duopolies - is 
not competitive enough. 
Towards the end of the year a 
clutch of broad-spectrum 
licences known as personal 
communication services (PCS) 
licences will be auctioned off to 
the highest bidder. There is 
already speculation that the 
bidding process wQl force alli- 
ances throughout the industry, 
the result being further pres- 
sure on the regional incum- 
bents. 

Not that the regional compa- 
nies are incapable of looking 
after themselves in other 
respects. Most of them are con- 
ducting court cases to overturn 
the ban on them owning cable 
companies, and the industry 
gives them a reasonable 
chance of success. More specu- 
latively. they are bringing a 
collective action seeking to 
overturn the ban on them 
entering the long-distance mar- 
ket. If this comes to anything - 
which seems on balance 
unlikely - it will take 18 
months to come to fruition. 

By that time, the odds are 
that this year's failed telecoms 
bill will have been revived. The 
regional companies are under 
fire for having blocked it. and 
a number of influential sena- 
tors are reportedly very cross. 
Informed observers who had 
bet against the bill going 
through this year are now bet- 
ting on its p ggsage nevt time. 
But, whatever form the legisla- 
tion finally takes, its task will 
merely be to tidy thing s up and 
hurry them along. The momen- 
tum for change in the industry 
will carry on regardless. 


It could be argued that 
the success of 
competition in the UK 
has strengthened the 
case for telecoms 
liberalisation across 
Europe, writes 
Paul Taylor 


C ompetition and new 
technologies have trans- 
formed the shape of 
telecommunications in Britain 
in the ten years since British 
Telecommunications was pri- 
vatised. New network opera- 
tors and service providers have 
entered the market and prices 
for both fixed and mobile ser- 
vices are tumbling. 

Oftel, the UK telecoms regu- 
lator, has forced BT to bring its 
call charges down sharply to 
reflect the falling cost of deliv- 
ering calls as new technology 
cuts overheads. The latest 
price reductions announced by 
BT early last month mean that, 
in real terms. UK long-distance 
calls are barely a third of the 
cost a decade ago. 

Meanwhile, a new band of 
telecom companies have 
appeared providing specialist 
value added network services 
(Vans) such as electronic digi- 
tal interchange (EDD and elec- 
tronic mail Others, many of 
them with foreign parents, are 
building advanced digital net- 
works. including some dedi- 
cated to mobile data. As basic 
voice telephony services 
become more of a commodity 
item, “re- sellers" leasing spare 
capacity and repackaging it at 
knock-down prices, have begun 
to appear. 

In cellular mobile telecom- 
munications. consumers in 
some parts of Britain can now 
choose from an array of com- 
peting tariff structures offered 
by four competing network 
operators on four digital and 
two older analogue networks. 
Other competitors offer mobile 
services over public access 



And Now, A Few 
Statements From 
The World's Leading 
Communicators. 


Some things speak for themselves, 
such as CS First Boston’s record of 
global performance in telecommuni- 
cations. With 35 offices in 21 coun- 
tries, we’ve raised over S40 billion 
in new capita) for the industry in the 
past five years. But the most powerful 
statement about our global reach and 
experience is that leading telecommu- 
nications companies have selected 
us to be their advisor. 


The (ioi eminent of 
The f IcIIcmc Republic 

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< -cUiiLir 1 .u/eiiNCN hi ( i reeve 


Philippine I ,iing Distance 

Telephone ( Company 

$51 6.250.(11 H) 

Lum crriblo J 'referred Share* 


33 CS First Boston 



wi 


Mercury has captured about a quarter of the large business market and 
two-thirds of the City of London’s outgoing traffic pum*. Trevor rwnpnu» 


mobile radio and satellite- 
based networks. All this has 
been achieved against the 
backdrop of government policy 
which has turned the UK into 
the most liberalised telecoms 
regime in Europe and in some 
areas - for example, cable tele- 
phony - made Britain a test- 
bed for the world. 

The privatisation of BT and 
the licensing of Mercury Com- 
munications. a subsidiary of 
Cable Wireless in 1984 to build 
a competing national network, 
heralded a period of unprece- 
dented change In the UK tele- 
coms industry. 

Ten years later. BT still 
boasts a 90 per share of the 
total market for telecoms ser- 
vices in the UK, and according 
to most projections, will only 
loosen its grip by a few per- 
centage points a year. Never- 
theless. business customers in 
particular can now select an 
ever-wider range of telecom- 
munications services from a 
growing number of vendors. 

Mercury has captured about 
3 quarter of the large business 
market and about two-thirds of 
the City of London’s outgoing 
traffic. Mercury - which ini- 
tially competed primarily on 
price - is. however, now facing 
tougher competition from a 
leaner, more aggressive BT, 
and from new entrants pursu- 
ing the lucrative business mar- 
ket 

These new competitors have 
sprung up In the past three 
years since the government 
decided to end the BT/Mercury 
long distance duopoly and 
announced its willingness to 
license new public operators, 
either building their own net- 
works or reselling services pro- 
vided over existing networks. 

At the same time, the gov- 
ernment went one step further 
and became the first country 
in the world to allow cable 
companies with franchises in 
urban areas, to build combined 
TV and telephony networks - 
thus providing direct competi- 
tion in the “local loop." 

In order to give the cable ' 
network builders a head start, 
BT was banned from offering 
entertainment services over its I 
telecoms network for a decade. ! 
As a result cable companies - I 
many US-owned - have piled 
into the UK market attracted 
by the prospect of a double 
income stream. Where new 
cable network operators have 
offered telephony services, the 
take-up in some areas has been 
running at more than 50 per 
cent 


C able franchises have so 
far installed over 500,000 
telephone lines in more 
than 30 areas and the Cable 
Television Association has 
forecast that exchange line 
connections will rise to more 
than 700.000 by the end of this 
year. Although this still only 
represents a small dent in BTs 
dominance of the residential 
market. BT has nevertheless 
felt the need to counter-attack 
by sending “win-back" teams 
into areas targeted by the 
cable companies. 

Nevertheless. Dataquest, the 
market research organisation, 
forecasts that business and res- 
idential customers for cable 
telephony will be renting 1.5m 
telephone lines out of a total of 
2S.3m on the public switched 
telephone network in 1997. rep- 
resenting five per cent of the 
market 

By the turn of the century, 
Barclay’s de Zoete Wedd ana- 
lysts suggest cable could be 
costing BT up to £lbn a year in 
lost revenues. BT is expected 
to recoup some of that lost rev- 
enue in charges for linking 
cable systems into its trank 
network, but it will be compet- 
ing for business with Mercury 
and other new long-distance 
telephone companies. 

Since 1991, more than 40 new 
operators have been licensed to 
provide telecoms services in 
the UK. Most of the licenses 
are for specialised or regional 
services but some, including a 
license awarded to Energis, a 


subsidiary of the National 
Grid, are for national net- 
works. 

Energis. which began 
operations in June, has built a 
3,500km nationwide optical-fi- 
bre network using National 
Grid's pylons. Last month, 
Energis announced that it was 
teaming up with Colt, which 
provides local network services 
in London, to proride seamless 
national telecom services. Colt 
has 55km of fibre network 
installed around the City of 
London, serving nearly 170 
buildings and has also 
extended its network into 
Westminster and Docklands. 

Colt is one of three new oper- 
ators now building their own 
infrastructure in the City spe- 
cifically to serve the corporate 
sector. Another. MFS which 
was launched in March this 
year, offers free line-rental to 
customers with bills or £600 or 
more per line per year. Its fibre 
network covers most of the 
City and Docklands and Is 
being extended to Southwark 
and Westminster. 


T he City has also attracted 
a growing array of re-sell- 
ers - operators leasing 
capacity from others and re- 
selling it at a discount to stan- 
dard tariffs, often providing 
their own switching facilities 
and direct links to customer 
premises. Three US groups. 
Worldcom, Sprint, and ACC 
and Esprit, a private UK-based 
operator, are the among the 
most prominent re-sellers. 

The re-sellers concentrate on 
international traffic, but most 
also offer a re-sale service 
within the UK. WorldCom, 
which set up in London in 1991 
and aims to undercut Mercury 
business prices by between 10 
and 15 per cent, now has more 
than 250 business customers 
and claims to have cornered 
nearly three per cent of the 
UK's outgoing international 
telecoms traffic. 

Competition is not. however. 


limited to fixed-line services. 
Britain’s cellular telephone 
industry is amongst the most 
developed and competitive in 
Europe. 

In the UK, the government 
seized upon the advent of cellu- 
lar telephony in five early 1980s 
to further foster competition. 
From the outset, two cellular 
operators were licensed and BT 
was only allowed to take a 60 
per cent stake in one of them. 

The government's aggressive 
policy towards competition has 
not always worked, however - 
Tefepoint services such as 
Hutchison Telecom's ill-fated 
Rabbit network, based on digi- 
tal cordless te)epbonj\ proved 
to be a business flop in the 
early 1990s despite the finan- 
cial backing of international 
consortia. 

Similarly, only two Personal 
Communications Networks 
(PCN) systems have been built 
although four licenses were 
originally awarded. Neverthe- 
less. most analysts agree that 
the UK's cellular mobile tele- 
phone network strategy has 
been effective in stimulating 
subscriber growth and effec- 
tive price competition. 

The UK now has four cellu- 
lar network operators with 
2.6m subscribers between 
them; Vodafone, launched as a 
subsidiary of Racal Electronics 
but de-merged in 1991: Cellnet, 
a joint venture between BT 
and Securicon Mercury One-2- 
One. a joint venture between 
Mercury and US West, one of 
the US regional Bell compa- 
nies; and Orange, whose larg- 
est shareholder is Hutchison 
Whampoa, the Hong Kong con- 
glomerate. 

Vodafone and Cellnet, the 
original competitors, both have 
analogue and digital GSM net- 
works, while One-2-One. 
launched last year, and 
Orange, which was launched 
earlier this year, were the first 
PCN networks in the world. 

Fueled by falling handset 
prices, aggressive marketing 
and tumbling tariffs, these cel- 
lular services have proved 
increasingly popular with net 
new connections to mobile net- 
works overtaking fixed net- 
work connections to BT and 
the cable TV companies for the 
first time last December. 

One-2-One has been particu- 
larly bold, offering residential 
customers free off-peak calls in 
an effort to broaden the base of 
mobile subscribers, while 
Orange’s strategy has been 
directed more towards busi- 
ness customers. 

As with fixed telecoms, there 
is little doubt that competition 
between cellular operators has 
helped bring prices down for 
the first time, broadened the 
range of services on offer and 
helped encourage subscriber 
growth. Perhaps, more conten- 
tiously, the success of competi- 
tion in the UK. has strength- 
ened the case for telecoms 
liberalisation across Europe. 








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VIII 


FINANCIAL TIMES MONDAY OCTOBER 17 »»94 


INTERNATIONAL TELECOMMUNICATIONS 8 


The deadline is 
approaching for Tokyo 
to make a long-term 
decision on the future 
of telecommunications 
in Japan, reports 
Michiyo Nakamoto 


T he past few years have 
been a tumultuous time 
For the more than "10.000 
employees of NTT. Japan's 
huge telecommunications com- 
pany. 

Just under a decade since it 
was privatised. NTT has had to 
embark on a wide-ranging 
restructuring effort, fight a 
fierce battle against newcom- 
ers in the profitable 
long-distance market and ven- 
ture for the first time in its 
history outside the domestic 
telecommunications business 
into the 'unknown world’ of 
multimedia. 

But if the past few years of 
frenetic activity' at NTT have 
unsettled its employees, more 
accustomed to the bureau- 
cratic ways of the former 
monopoly, the years ahead 
promise to be even more turbu- 
lent. 

Next year, the Japanese gov- 
ernment is expected to make a 
long-overdue decision on the 
future of NTT. which is still 
over 65 per cent owned by the 
finance ministry. They are 
scheduled to conduct a tele- 
coms review which will hav e 
implications far beyond NTT’s 
own operations and is likely to 
change the shape of Japan's 
telecommunications Industry 
in the years to come. 

A s in many other indus- 
trialised countries, the 
Japanese government 
races a pressing need to review 
the regulatory environment 
surrounding its telecoms sec- 
tor and to draw up a vision of 
what the industry should look 
like in the 21st century. 

Although Japan was rela- 
tively early in deregulating its 
telecoms industry with the pri- 


JAPAN 

Further turbulence ahead 



T*tocein equipment 




Cyclical economic changes outside of the US are accelerating change# hi the 
informational «Hrmxrucatiooa technology, according to reports by the European 

Observatory. These changes include the maturation of the murti-syatems maricet, the *££**•" 

computers, and the shift from budding budgets around new hardware to focusing on software and services. 


vattsation of NTT in 1985, the 
measures it adopted back then 
were half-baked. Rather than 
break up the former telecoms 
monopoly into separate 
regional or business entities, 
the Japanese authorities pre- 
served NTT as a dominant 
operator with national cover- 
age and introduced competi- 
tion only into the domestic 
long-distance and cellular mar- 
kets. NTT was kept in control 
of the crucial local network. 

While the Ministry of Posts 
and Telecommunications made 
it known on reviewing NTT’s 
status in 1990 that it favours 
breaking up NTT, the decision 
was deferred for five years. 

The result of the authorities' 
decision to allow only partial 
deregulation of the telecoms 
sector so far has been that 
almost ten years after NTT 
was privatised, the Japanese 
market suffers from the 
adverse effects of a lack of 
competition. 

The price of telecom services 
in Japan, from simple phone 
calls to more value-added ser- 
vices. Is still relatively high, 
particularly for long-distance 
calls, compared with what is 
charged in more liberalised 
markets. 

The tight regulatory environ- 
ment and the Lack of competi- 
tion has stunted the develop- 
ment of new services, which 
are expected to play an impor- 
tant role in stimulating future 
economic development 

The experience in the cellu- 
lar market has been somewhat 
different with a second phase 
of liberalisation in April this 
year stimulating greater com- 
petition and rapid growth. 
However, even in the relatively 
open cellular market penetra- 
tion is low compared with 
many countries in the west 



Japan's business community now 
demands Increasingly advanced 
telecom services, but a 
tradHtonsIty tight regulatory 
environment has held back the 
development of new services 

due to high user charges. 

Tokyo's telecommunications 
authorities have indicated 
recently that they are in 
favour of further deregulation 
of the market in preparation 
for the much more expanded 
information industry extend- 
ing from telecoms to computer 
communications and broad- 
casting that is expected to 
emerge within the next decade 
or so. ' 

As the deadline approaches 
for the Japanese authorities to 
make a long-term decision on 
NTT and the future of telecom- 
munications in Japan, and as it 
has become increasingly evi- 
dent that the US is leading the 
way in building an advanced 
information society, the MPT 
has appeared increasingly 
favourable towards changes in 


the industry, not only to catch 
up with the US but to ensure 
the country’s future economic 
and social well-being. 

Mr Shun Oide, Japan’s Min- 
ister of Posts and Telecommu- 
nications, emphasised the 
importance that telecoms is 
expected to play in the coun- 
try's future development in 
addressing a gathering of inter- 
national telecoms ministers in 
Kyoto last month. 

Japan faces various difficult 
issues, such as dealing with 
the unprecedented ageing of its 
society, rectifying the exces- 
sive centralisation upon 
Tokyo, converting the frame- 
work of industry and employ- 
ment to create products and 
services with high added value 
through effective use of know- 
ledge a nd smi- and realising 
life-styles for our citizens 
which bring both comfort and 
an enhanced spiritual quality 
of life. Mr Oide says. 

These issues “can no longer 
be solved with the conven- 
tional methods of industria- 
lised society,” he notes. 
“Instead, we believe that an 
approach through information 
networks, allowing the best 
use of information and exper- 
tise, is essential* 

Telecommunications, 
together with other forms of 
information transmission, and 
the future multimedia services 
they will provide, are also 
expected to become a key 
source of economic activity. 

The MPT estimates that with 
an advanced telecommunica- 
tions infrastructure in place, 
the multimedia market will 
grow to a leading industry 
with a value of Y123 trillion 
yen and creating 2.43m new 
jobs by 2010. 

Such considerations will 
form the basis for the authori- 


ties' decision next year an the 
fate of NTT and the future of 
Japan's telecoms industry. 

It has become increasingly 
clear to the authorities that 
deregulation and greater com- 
petition are crucial in prepar- 
ing the Japanese telecoms 
industry for future growth. In 
recent statements, the MPT 
has indicated that it is looking 
to the CATV companies to pro- 
vide further competition to 
telecom operators. 

“It is important to establish 
the fibre-optic network effi- 
ciently through the competi- 
tion of private companies. The 
telecommunications carriers 
and CATV operators are expec- 
ted to build networks competi- 
tively.’’ a recent MPT report 
states. 

However, the need to nur- 
ture a strong information 
industry in many ways compli- 
cates matters. 

If greater competition In the 
market were the only goal, 
there would be a strong case 
for breaking up NTT, a step 
the teleco mmunica tions minis- 
try has long favoured. 

W hile competition on 
some vital intra-city 
lines has been heated, 
with three new common carri- 
ers taking over 50 per cent of 
traffic on the important Tokyo- 
Osaka line, the three 
long-distance carriers' share of 
the mtra-prefcctural market 
last year was just 29 per cent 
NTT has been able to keep a 
tight grip on the long-distance 
market through its monopoly 
on local lines which, in effect 
has allowed it to control access 

Charges and gain information 

on its competitors' costs. 

“The minimum pre-requisite 
for the three new common car- 
riers’ entry into the 


long-distance market was the 
breaking up of NTT into 
long-distance and local busi- 
nesses,” said Mr Kazuo Ina- 
mori, president of Kyocera and 
.-haiTT pa n of DDL, in a recent 
interview. However, plans to 
build an advanced information 
industry have brought other 
considerations into the picture. 

While competition is impor- 
tant in stimulating new devel- 
opments, the huge investment 
required and wide-ranging 
business territory to be cov- 
ered by communications opera- 
tors calls for large, integrated 
companies to support the infor- 
mation industry. 

As Mr Masashi Kojima, presi- 
dent of NTT, argues: “Telecom- 
munications companies from 
now on will provide a full 
range of services from tele- 
phone and fox to personal com- 
puter communications and 
cable television. Competition 
in future will be between large 
companies and there will be 
very little room for companies 


than can only compete in parts 
of the market” 

Rather than breaking up 
NTT - a move that would cre- 
ate smaller companies which 
would be less competitive in 
the glo bal multimedia race - 
the authorities should work 
towards integrating smaller 
companies into a larger com- 
pany that can offer a foil range 
of services. Mr Kojima asserts. 

NTT, which has already con- 
verted trunk lines to optic 
fibre, also believes it is the 
only company that is capable 
of building Japan’s super high- 
way infrastructure single hand- 
edly. Breaking the company 
up. as the MPT envisions, 
would weaken its ability to do 
so, the company argues. 

The growing view among 
industry watchers is that 
despite arguments against 
divestiture, there is a strong 
chance the MPT will in the end 
follow its initial instincts and 
break up NTT at least into sep- 
arate long-distance and local 


businesses. The impact of such 
a move, combined with deregu- 
lation of the CATV industry 
announced this year, is expec- 
ted to stimulate the develop- 
ment of Japan’s telecom and 
cable industries into the infor- 
mation industry of the future. 

Increased competition from 
cable operators provided an 
incentive for the US Regional 
Bell Operating Companies to 
modernise their networks to 
provide advanced communica- 
tions capabilities, which in 
turn, helped them to improve 
profit margins, notes Mr Dar- 
gan at S.G. Warburg. 

Greater competition upon 
divestiture could also encour- 
age the MPT to relax rules 
which currently restrict NTT 
from offering cable TV and 
other services, Mr Dargan 
points out. 

When that happens. Japan 
will move one step closer to 
the US in building companies 
that can offer the public a full 
range of multimedia services. 


f 


INFORMATION ‘SUPERHIGHWAYS’ 


The debate intensifies 


Superhighways are 
flavour of the month 
with politicians and 
techno-buffs alike. But 
while they attract public 
attention with promises 
of science fiction-type 
services, they are also 
a target for cynics who 
question their 
commercial viability, 
writes Monica Horten 


T he debate is hotting up 
over new superhighways - 
telecommunications net- 
works that will carry multi-me- 
dia senices to homes and busi- 
nesses. Tlie issues are whether 
or not these superhighways 
should be laid automatically in 
every town, village and street, 
whether or not there is a 
return on the investment - or 
whether they should only go 
where thev are profitable. 

The telephone companies 
want to be free to develop the 
superhighway according to 
commercial demand. But politi- 
cally. they are under pressure 
:o ensure that all members of 
the population, rich and poor, 
rural and urban, have equal 
opportunity to access it. Infor- 
mation is a now a commodity, 
and people would be disadvan- 
taged by not having access to 
it. 

In the UK. the Liberal Demo- 
crat leader Paddy Ashdown 
said recently that he feared a 
society of "information haves 
and have uois.“ The informa- 
tion super-highway could be 
used to widen the gap between 
rich and poor, between the 
affluent urban areas and 
remote village communities. 
And US vice president Ai Gore 
laid down in his original pro- 
posal for the National Informa- 
tion Infrastructure ithc official 
name for the US superhigh- 
way! that the Information 
superhighway must be accessi- 
ble to all people everywhere. 

The superhighways will he 
constructed from Fibre optic 
cable because fibre has the 
necessary capacity for trans- 
mitting multimedia services. 
Fibre can carry data at speeds 
up to 2 gigabits per second. Old 
fashioned copper is limited to 
& kilobits per second. 

But a fibre optic network is 
expensive, especially if the 
fibre is to replace all of the 
existing copper lines Into indi- 
vidual premises - known as 
the local loop. BT, for example, 
estimates £i5bn to Lake fibre to 
the majority of UK population, 
rising to EWm to reach the 
most remote parts of the coun- 
try - - The phone companies are 
concerned about getting a 
return on that investment. 
Operating the superhighway 
profitably will not be as easy 
as on the existing copper net- 
works - and for that reason, 
the phone companies are reluc- 
tant to invest in the fibre infra- 


structure until they are sure of 
getting a return. 

Industry experts argue that 
the present method of charging 
for calls - where prices are 
determined by the distance of 
the call and the capacity of the 
line - cannot be sustained on a 
fibre network 7 “when you 
have fibre in the local loop, 
you have an infinite supply of 
capacity. For anyone to sell 
that on a bandwidth related 
tariff is a nonsense.’' says Mal- 
colm Matson, chairman of 
National Telecable. 

BT is exploring new ways of 
tariffing as part of a trial of 
multimedia services in Ips- 
wich, Suffolk. John Drew, of 
BT’s corporate strategy depart- 
ment. recognises that changes 
will he needed - “we don’t 
want to be constrained by 80 
years of existing tariff struc- 
tures.” Hepoints out that the 
information superhighway is 
not the same as the phone ser- 
vice as we know it today. The 



AI Gore: ‘Superhighways must be 
widely accessible' 


difference lies in who provides 
the content - “in voice tele- 
phony, it's simple: the users 
generate the content. In multi- 
media, the users do not gener- 
ate the content. They access it 
on a service.” 

In commercial terms, the 
cost of providing voice tele- 
phony is the cost of the line. 
On a superhighway, the pro- 
viders of the service want pay- 
ment, and therefore the cost of 
the service embraces the con- 
tent as well as the line. 

Mr Matson believes the solu- 
tion is to separate the owner- 
ship of the fibre infrastructure 
from the service provision. 
Such a structure, not unlike 
the current set-up for mobile 
communications in the UK. 
would provide more flexibility 
for service pricing, 

“The separation of Infra- 
structure from service provi- 
sion is certainly where the 
industry is going to end up. 
But it is not something the 
telephone companies will do 
voluntarily,” comments 
Andrew Ent whistle of the 
Cambridge-based telecoms con- 
sultancy. Analyses. 

Demand for multimedia ser- 
vices is another concern. In the 


long term, new services - rang- 
ing from dial-up books and 
compact disks, to interactive 
education could be made avail- 
able. But in the immediate 
future, the main demand is 
seen to be entertainment - 
movies and computer games. 
The BT trial will concentrate 
on a video on demand service, 
as will a similar trial by Time 
Warner in Orlando. Florida. 

The theory of video-on-de- 
mand is that there is an exist- 
ing market for video rental, 
which would be largely 
replaced by an on-line market 
But Mr Entwhistle casts doubt 
on its potential size: “There is 
a major threshold determining 
how much people will spend to 
get more than cable TV. The 
initial hypothesis that people 
would double their expenditure 
to get interactive TV has been 
exploded. There’s not much 
evidence that people will do 
that." 

John Drew believes that 
superhighways will actually 
need to begin with a much 
more familiar service: broad- 
cast entertainment It would be 
a more obvious wedge to put in 
the consumer’s door, and one 
from which to introduce the 
new multimedia services in a 
gradual way. This is why BT. 
for example, insists it wants its 
licence altered to permit it to 
carry broadcast entertainment 
before it will install fibre to 
every’ home. The phone compa- 
nies therefore question the 
political assumption about peo- 
ple's right to have access to the 
superhighway - especially if 
the phone companies, not 
national governments, are to 
foot the bill: “What service do 
people have a right to?” asks 
Mr Drew. 

The idea that everyone has a 
right to phone services stems 
from the days when the phone 
network was in its infancy. 
The telephone gave people a 
facility to communicate with 
others. The super-highway, 
however, looks like being pri- 
marily a medium of entertain- 
ment : thus, there is a case that 
the commercial market should 
dictate who gets it. Put in sim- 
ple terms, people do not have 
the automatic right to dial-up 
Madonna movies. And if people 
do not have a right to it, and 
there is no clear profit in it, 
they won’t get it 

In the UK. the Telecommuni- 
cations Users Association is 
pessimistic about the chances 
of fibre connections to every 
home - "realistically, it will 
never happen." says John 
Skarratt. TUA director. 

However, the phone compa- 
nies are pursuing a technical 
alternative to fibre, which may 
provide a commercially expedi- 
ent solution. Known as ADSL 
(asymetric digital subscriber 
loop), the new technology oper- 
ates at up to 6 megabits over 
an existing copper phone line, 
it is nowhere near the speed of 
fibre, but could be sufficient 
for the entertainment and 
other consumer-oriented ser- 
vices. 


We call it the Global Digital Highway.™ 


It will improve your business communication worldwide. 


It will improve your business worldwide. 








financial TI MES 


MONDAY OCTOBER 17 1994 


IX 


INTERNATIONAL TELECOMMUNICATIONS 9 


INDIA: confusion and delays have hindered the race to catch up 

The target is 1 0m new lines 


India has one of the 
least developed 
telephone networks in 
the world - only 
140,000 of its 576,000 
villages have phones, 
reports Stefan Wagstyf 


T hree years after the start 
or the economic liberalis- 
ation programme by 
India's prime minister, Mr PV 
Narasimha Rao, the nation’s 
telephone networks are being 
opened to private investment 
Albeit with many important 
issues left unsettled, govern- 
ment officials are ending the 
state’s monopoly of basic tele- 
phone services and inviting 
bids from private companies, 
including foreign groups, to 
help transform one of the 
% world’s least developed net- 
works. 

The conditions under which 
private investment will be per- 
mitted were published only 
last month, so few would-be 
bidders have had time to study 
the fine print Moreover, the 
precise relationship between 
the private operator and the 
state network has yet to be 
decided, including crucial mat- 
ters such as pricing and reve- 
nue-sharing. 

Nevertheless, the prospect of 
winning even a small share of 
the undeveloped Indian mar- 
ket, with its population of 
890m people, has drawn expres- 
sions of interest from all over 
the world. The telecommunica- 
tions ministry says that 100 
groups have filed outline pro- 
posals. 

With only eight lines per 
thousand people, India has one 
of the least developed tele- 
phone networks in the world. 



Une checks: children watch a telephone engineer imto repairs In Catctitta 


China has 17; and Malaysia. 
130. Only 140,000 of India's 
576,000 villages have tele- 
phones. The country needs 
telephones not only to fulfil its 

Bity of inrreflging nTtemotrmj al 

trade and investment but also 
to provide a basic communica- 
tions network for its people. 

Until this year, the govern- 
ment’s aim was to increase 
from the number of Hnes from 
5.8m in early 1992 by 7.5m to 
13 -3m by the end of the current 
five-year plan in March 1907. 
But this would have left some 
ZJ5m people still on the waiting 
list So, the target was raised 
in May to 10m new lines. 

With its own funds squeezed 
by the need to control public 
spending, the government is 
relying an private companies 
to raise much of the extra 
Rs230bn it needs on top of 
Rs330hn it had previously ear- 
marked from public funds far 
1992-97. 

Big though it is, the total 
may not be unreachable. Even 
before the government 
announced its new twiPTmTunw . 
ideations policy, permitting 


private investment, in May, 
private groups, including for- 
eign companies, h ad submitted 
to the government 22 plans 
together worth $4bn (£L5bn) 
for telephone networks. 
Among the foreign companies 
are industry leaders such as 
US West, AT&T, and Motorola 
of the US, Siemens of Ger- 
many, and Japan’s Fujitsn. 

But it will be difficult to 
meet the government’s 
demanding time-table, given 
the department’s past record in 
accommodating the private 
sector. With 46 trade unions, 
representing 470,000 workers, 
the dfjpartmmf. haw lffflg been 
suspicious of changes which 
curb its influence. Since 1992, 
when value-added services 

SUCh as Mllnlar tftfo ph p n es 

voice mail were liberalised, the 
department ha$ been entrusted 
with handling potential com- 
petitors from the private sec- 
tor. The result has been confu- 
sion and delay. Cellular 
telephones contract awards 
made in October 1992 were 
f.haiimg pd in court by unsuc- 
cessful bidders in a case which 


went to the Supreme Court, 
which th^n ordered the minis- 
try to reconsider the bids. A 
new award was expected in 
early October. 

The acrimonious debate 
innidA thfr department which 
hac flreww panted the la unch of 
the new policy for basic ser- 
vices does not bode well for its 
smooth implementation, Mr 
Nagarajan Vittal, the former 
telecoms secretary, who was 
transferred out of the ministry 
a month ago, lost his job 
because he became Involved in 
a public row with his minister, 
Mr Sukh Ram. 

Mr Vittal, brought into the 
ministry last year to spearhead 
pro-market reforms, fought 
hard to make the new policy as 
liberal as possible. Mr Sukh 
flam, supported by the depart- 
ment’s trade imimc adopted a 
more cautious approach. Mr 
Narasimha Rao felt he had no 
choice but to move Mr Vittal 
for abusing his position as a 
civil servant in speaking too 
publicly. 

Mr Vtttal’s departure was fol- 
lowed by the annramreTnpnt of 


details off the new policy, 
which include a 49 per cent cap 
on foreign investment in any 
private earner. Private compa- 
nies will also be limited to pro- 
viding local networks - they 
will he barred from operating 
the much more lucrative 
long dist a nc e and International 
services. 

Companies will be free to bid 
for licences in 18 regions, 
which roughly correspond Tilth 
India's states. Only one private 
carrier will he permitted to 
operate in each region - but 
wOl face competition from the 
existing state-owned senrfee. 

Licence-holders will be 
required to offer fines in rural 
districts as well as the far 
more lucrative towns and 
dries. The licences will run for 
15 years and there will be no 
restriction on the number of 
licences awarded to any one 
company. Mr RnVh Ram bag 
said he hopes the first private 
carrier would start operating 
in 1995. 

There will also be a new reg- 
ulatory body - the Telecom 
Regulatory Authority of India, 
which will oversee the private 
operators. It wifi not have a 
separate statutory existence 
from the telecommunications 
department. 

The guidelines have pro- 
voked a mixed response from 
industry. There is relief that 
Mr Vittal "s departure has not 
fart her delayed thy, progress of 
the new policy. But there is 
aiwft concern the arrange- 
ments for pricing and revenue- 
sharing have not been 
announced. The published pol- 
icy leaves the telecommunica- 
tions department with ill-de- 
fined powers to control the 
negotiations with bidders, 
creating great scope for delays 
and for corruption. 

However, some executives 
argue that the l ack of clarity is 
the price companies will have 
to pay for investing in the mar- 
ket at the beginning of its 
development They believe that 
the ultimate prizes will justify 
the cost gnd risk of eatep n g - 
the industry early. 



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CABLE E WIRELESS 

AN MilANCE OF THE WORLD'S 

host Maine 
rrniirinrmn nnwrwi 



In Canada, b usin e ss users enjoy one of (he world’s most efficient phone systems. Pictured above are money 
traders at the CanatSm imperial Bank of Commerce In Toronto Picrra mmsum. n*nr 


CANADA 


Landmark rulings 


New national policies 
in Canada will bring 
vigorous competition 
between the telephone 
companies and cable-TV 
operators, reports 
Bernard Simon in 
Toronto 


C anada has moved more 
cautiously than many 
other Industrial coun- 
tries to lift the regulatory bar- 
riers which have long stifled 
c om pe ti tion in the telecommu- 
nications market The slow 
pace of change has given con- 
sinners fewer qfr n fa ** and haa 
arguably held back technologi- 
cal innovation. 

On the other hand, Cana- 
dians continue to enjoy one of 
the world’s most efficient 

phm y* gy g to ma i $mH am/mg the 

lowest charges for basic ser- 
vice. However, the winds of 
change are likely to blow more 
strongly in the wake of a series 
of landmark rulings in mid- 
September by the Canadian 
Radio-television and Telecom- 
munications Commission 
(GRTQ. 

The CRTC’s new policy, 
which is expected to form the 
regulatory framework for the 
next 10 to 20 years, opens the 
way for much more vigorous 
competition between the estab- 
lished provincial phone compa- 
nies, cable-TV operators and 
the plethora of resellers which 
have recently gained a toe-hold 
in the long-distance market. 
(Resellers offer discount prices 
by leasing lines at bulk rates 
from the phone companies). 

“The Commission has deter- 
mined that barriers to entry, as 
well as rest ri ctio n s on the par- 
ticipation of teleph one compa- 
nies in emerging information 
and transactional telecommu- 
nications service markets, 
should be removed," concludes 
the CRTC in its 165-page 
report 

Under the ruling, the hefty 
cross-subsidy between 
long-distance and local calls 
will be significantly reduced by 
allowing local phone compa- 
nies to push up their charges 
by as much as 40 per cent over 
the next three years. 

At the same time, the CRTC 
will relax price regulation 
replacing a rate-of-retum yard- 
stick with a more market-ori- 
ented system of price caps - 
“this should lead to price sta- 
bility for consumers and and 
greater Cexadhty for telephone 


companies to invest in a more 
modern infrastructure and to 
introduce new services,’* says 
the CRTC. 

These reforms are likely to 
encourage newcomers to enter 
tiie local market in competi- 
tion with the provincial phone 
companies, such as Bell Can- 
ada (Ontario and Quebec). BC 
Telecom (British Columbia) 
and AGT (Alberta), which pres- 
ently have a monopoly on local 
services. But the telcos will 
also be free to spread their 
wings, both as carriers and 
content providers. 

Although they will not for 
the time being be granted 
broadcast licences, they will be 
able to provide distribution 
facilities for broadcasters, 

imlniUng Cable flwipnwli^ , 

Analysts at Nesbitt Borns, a 
Toronto securities firm, predict 
that the ruling will benefit 
almost every sector of the tele- 
communications industry. 

The big phone companies 
“asked for a more freely com- 
petitive market where they 
would have the flexibility to 
use their experience, expertise 
and considerable reach to offer 
a broad range of services to 
customers," Nesbitt Burns says 
in a report “rills decision goes 
a very long way in that direc- 
tion.” 

R esellers are likely to 
reap the benefit of tower 
charges for access to the 
telcos' switching facilities - 
“in the medium-term, the 
advent of local competition 
could i«»d to some profitable 

H paiMdivn o ppo rt unities ,” adds 
Nesbitt Bums. 

Cable-TV operators will also 
be able to broaden their hori- 
zons, without any significant 
erosion of their existing busi- 
nesses. Within each sector 
however, there are bound to be 
winners and losers. 

Judging by recent experience 
in the long-distance market, 
where competition began in 
1992, same surprises are also in 
store. The telephone compa- 
nies, which have long had a 
reputation as slow-moving 
behemoths, have turned out to 
be unexpectedly agile. Bell 
Canada has cut its 
long-distance charges by an 
average of 30 pc since 1987, and 
by up to 80 pc for high-volume 
users. 

Productivity improvements, 
including the elimination of 
5,000 jobs, have shaved 11 per 
cent off Bell's operating costs 
per access fine over the past 
five years. 

By contrast, business has 


been unexpectedly tough for 
the plethora of newcomers in 
the long-distance market Uni- 
te!, which pioneered competi- 
tive long-distance services, lost 
C$82m in 1992 and another 
C$525m last year. 

Most reseller do not expect 
to be in the black until 1996 at 
the earliest STN, one of the 
most aggressive resellers, 
recently announced a thorough 
restructuring, including the 
departure of its chief execu- 
tive. after seeing its share price 
tumble from a peak of C$7.63 
in the second half of last year, 
to little more than C$2 in mid- 
September. 

Even before the recent CRTC 
decision, the phone companies 
bad begun to secure their posi- 
tion in the converging worlds 
of telephony, broadcasting, 
computers and consumer elec- 
tronics. 

Stentor, which is the 
long-distance consortium of 
provincial telcos, unveiled 
plans Mfiiw ♦his year for an 
open-access, interactive broad- 
band network. 

The coast-to-coast project - 
known as the Beacon iniative 
- involves an investment of 
about C$8bn, and aims to reach 
80-90 per cent of Canadian 
homes and businesses within 
tiie next decade. Stentor is also 
in the process of setting up a 
multimedia company to 
develop suitable content for 
the system. 

The cable-TV industry is 
smaller and more fragmented 
than the phone business. But 
cable companies have the 
advantage that more than four 
in every five Canadian homes 
have access to cable, one of the 
highest penetrations in the 
world. Their ability to offer 
competitive focal phone service 
is growing with the gradual 
installation of fibreoptic net- 
works equipped with two-way 
switches. 

By far the best-placed cable 
company is Rogers Communi- 
cations of Toronto. Rogers, 
whose interests include a stake 
in Unitel, the long-distance 
Operator, struck a deal earlier 
this year to buy Maclean 
Hunter, the third biggest cable 
operator. 

Once the purchase is finali- 
sed, Rogers will have a 31 per 
cent share of Canada's cable 
market. The Rogers-Maclean 
Hunter deal could be the start 
of a period of consolidation, 
which would put the cable 
industry in a better position 
either to forge alliances with 
the phone companies, or to 

Chane n gft them h ead OH. 


New equipment application: sonar modems 

Farewell to underwater phones 


S onar mncUmc that trans- 
mit text and graphics 
underwater are speabng 
up the work of divers. Since 
July, US defence agencies 
have been testing “wet" porta- 
ble computers that use sonar 
to maintain continuous con- 
tact with the surface. 

The hand-held computers 
mean that divers can dispense 
with a lot of their conven- 
tional clutter such as plastic 
writing slates, depth, gauges 
and ropes. The built-in sonar 
modem allows the surface 
crew to monitor the progress 
of the dive, to receive data 
from the diver and to relay 
messages that increase the 
diver's safety. 

“Underwater telephones can 
distort your speech and be 
hard to understand." says 
Marco Flagg, whose Desert 
Star Systems, California, 
designed the DiveTracker 
computer. “They can also 
need extra cables. Our system 
overcomes these problems 
and it can also stare all the 
data from a dive, including 
togging the diver's move- 
ments." 

The DiveTracker is a bora 
little larger than a mobile 
phime, machined out of porta- 
ble aluminium to withstand 
tiie pressure 1,000 feet down. 
It includes the standard depth 
and tank pressure gauges 
which are integrated with the 
com pu t er- It has a micro con- 


troller with 538 kilobytes of 
memory holding the operating 
system and bespoke applica- 
tions software. There Is a 
back-lit graphic LCD display 
of 64 by 128 pixels and a 
solid-state 16-key pad operated 
with a magnetic pointer. 

It is powered by an internal 
rechargeable nickel-cadmium 
battery that is said to last up 
to eight hours if the modem is 
used only ’moderately.’ If 
used continuously, the bat- 
tery runs flat in two hours. 
Once back on board ship, 
there is an RS-232C serial port 
for downloading data to an 
IBM-compatible personal com- 
puter. 

Software for DiveTracker is 
written in the “CT program- 
ming language and (he first 
package covers the three 
main needs of a diver - dive 
status/decompression display, 
communication and naviga- 
tion. 

E ach function has its own 
display screen. Besides a 
graphic dive profile it 
also shows the present depth, 
tank pressure, water tempera- 
ture, time elapsed, air con- 
sumption and remain ing air 
time. The modem has a range 
of 300 feet in ‘noisy’ waters, 
where the sounds from crea- 
tures such as dolphins disrupt 
the signal, up to 3,000 feet in 
tranquil lakes. 

DiveTracker models cost 


between $1,600 and $3,000. It is 
being used across a range of 
military applications. These 
include the enigmatic cate- 
gory of “special warfare” and 
the less mysterious disposal 
of explosives, as well as posi- 
tioning divers on underwater 
structures for ship repairs. 

'Hie system should slot into 
the military's fthain of com- 
mand easily - “the precise 
navigation capability — accu- 
rate to within six inches - 
along with the system’s com- 
munication capabilities allow 
more efficient mission control 
to military users,” says Marco 
Flagg, in other words, even 
captains in their cabins win 
be able to know exactly what 
their divers are doing; 1,000 ft 

below. 

There Is a software package 
that is targeted for divers that 
need to follow precise search 
patterns under water, such as 
in explosive ordnance dis- 


In tiie scientific field, there 
has been an taterest to use 
DiveTracker for data record- 
ing as well as a sensor data 
acquisition device. 

One group may also use it 
to track scientists performing 
their underwater experi- 
ments: safety regulations call 
for surface team members to 
be aware of scientist-diver 
locations. 

Max Giaskin 





financial 


TIMES MONDAY OCTOBER 17 !994 


Satellites will provide mobile phone links - everywhere 


INTERNATIONAL TELECOMMUNICATIONS IQ 

— : 1 MULTIMEDIA 


You can always switch off Many bridges to be crossed 


A portable phone that 
works anywhere 
worldwide is no longer 
science fiction, 
according to satellite 
operators. Serious 
investment lies behind 
their dreams of global 
telecoms, reports 
Andrew Emmerson 


L ess than ten years ago. 
when cellular radio 
opened in London, hand- 
held mobile phones were a 
novelty. They cost a king's 
ransom and had most of the 
characteristics of a brick 
(including the nickname), but 
they represented a genuine 
breakthrough. 

For the first time anyone 
with the money could make 
phone calls from more or less 
anywhere - at least, any- 
where in range of a base sta- 
tion anyway. Now another 
communications break- 
through is about to move 
those base stations into the 
sky so that portable phone 
users will always be in touch, 
no matter where they are 
throughout the world. 

Purists will no doubt argue 
that luggable mobile tele- 
phones existed before cellular 
and that you can already 
make phone calls by satellite 
worldwide if you are prepared 
to carry around a terminal the 
size of a briefcase. 

Neither of these solutions 
were mass-market products, 
whereas the new generation of 
portable phones are intended 
for a wide user-base, even if 
the cost restricts take-up in 
the early stages. 

Charges, in fact, should not 
be a big hindrance among 
potential users: according to 
Iridium, front-runner among 
the satellite phone consortia, 
dual-mbde handsets will allow 
users to switch to cheaper 
land-based services when pos- 
sible. 

iridium customers can 
expect to pay S3 f£1.80> a min- 
ute for calls, whilst their 
rivals intend to undercut this 
figure. Vodafone, a member of 
Globalstar, another consor- 


tium, says typical charges will 
represent only a modest pre- 
mium to egistj pg cellular tar- 
iffs. Indeed, in the US. Global- 
star has announced prices as 
low as 65 cents - just under £1 
- a minute. 

Six competing consortia 
have announced plans to offer 
global telephone services by 
means of satellites in low 
earth orbit (“Leo" satellites) 
and a seventh is expected 
shortly. Iridium, led by Moto- 
rola, was the pioneer scheme 
and has been joined by con- 
tenders Globalstar. TRW. Tele- 
desic, Constellation Communi- 
cations and Ellipsat. 

Rather than compete with 
established cellular radio 
operators, the sky-based 
systems will collaborate with 
them, offering them fran- 
chises. The UK’s Vodafone 
group has. for instance, 
acquired the franchises for 
Globalstar in the territories 
where it is already involved in 
operating cellular networks. 
These include Australia. 
South Africa, Hong Kong, 
Sweden. Denmark, Sweden. 
Malta, Greece and. of course, 
the UK. 

Gerry Whent. Vodafone 
chief executive, explains the 
rationale for this: “We’ve 
always been at the leading 
edge of mobile telecoms tech- 
nology and we regard the 
Globalstar service as being 
complementary to the terres- 
trial cellular networks that we 
already operate in a number 
of countries. 

“It will enhance the poten- 
tial coverage to subscribers in 
more remote areas who win 
use dual-mode handsets capa- 
ble of using either terrestrial 
GSM networks dr Globalstar 
when out of local cellular cov- 
erage areas." 

In terms of technology and 
service offering there are gen- 
eral similarities between the 
plans announced so far. Glob- 
alstar and Iridium will both 
open commercially in 1998 and 
each will also allow their sub- 
scribers to use land-based 
GSM cellular systems wher- 
ever available (and inciden- 
tally, confirming GSM as the 
de fado global standard for 
mobile phones). 

Iridium services will include 


voice, data, facsimile and pag- 
ing. Iridium will employ a 
‘constellation’ of 66 Leo satel- 
lites, whilst Globalstar is 
' based on a constellation of 48 
- whereas Iridium plans links 
to pass international calls 
between satellites, Globalstar 
does not, and will rely, on 
long-distance terrestrial net- 
works. 

The scale of investment 
required - Iridium will cost 
$3.2bn to build - means that 
costs must be shared between 
constructors and network 
operators. The consortium 
announced this month that 
Germany's Vebacom would 
take a 10 per cent stake and 
invest at least $140m to 
acquire in return the northern 
and western European gate- 
way territories. 



Sateffites: helping to keep the 
whole world In touch 


In Globalstar, Vodafone has 
joined nine other interna- 
tional companies and will con- 
tribute S37.5m in 1994-95 for a 
stake of around 10 per cent in 
the consortium. 

Not all potential global sat- 
ellite operators are newcom- 
ers, however. BT and other 
partners in Inmarsat, the 
international consortium pro- 
viding satcomms to shipping 
and airlines, have announced 
their own hand-held satellite 
phone called Inmarsat-P and 
targeted for introduction by 
1998-2000. 

Whether all these plans will 
come to fruition is anyone’s 
guess: some observers are 
chary whether the total busi- 
ness to be had can support 
such grandiose plans - and 


they fear charges may need to 
be raised to protect terrestrial 
networks, especially in devel- 
oping countries. Some nations 
may demand a high premium 
for the tight to establish earth 
stations, forcing up charges 
further. 

Some European telecom 
operators are also privately 
critical of what they see as US 
aims of global domination in 
satellite communications, as 
well as “bad faith." Because 
satellites ignore national 
boundaries, any service 
authorised in the US has, in 
effect, a world-wide operating 
licence, and as long as cus- 
tomers are happy to deal with 
an operator in America, they 
can use their phones wherever 
they choose. This, they say, 
gives the US an unfair advan- 
tage. 

There is also disagreement 
over frequency allocations: 
channels or frequencies for 
radio communication are at a 
premium; a world conference 
in 1992 set aside radio spec- 
trum in all countries for a 
new, third-generation terres- 
trial mobile phone system. 

However, in the US, part of 
this spectrum has now been 
allocated to Iridium and other 
Leo satellite systems, pre- 
empting its use for other ser- 
vices. 

Whilst this may be expedi- 
ent now, it could also cause 
problems for the future devel- 
opment of the terrestrial ser- 
vice. Official talk of a rift is 
discounted, however, by David 
Court, head of the European 
Radio Communications Office 
in Copenhagen: “We would 
merely point to a difference in 
emphasis between the US and 
Europe; America is clearly 
focusing on satellite services, 
whereas Europe is more con- 
cerned with terrestrial ser- . 
vices," he says. 

The vision of the phone that 1 
works everywhere is now i 
within reach, which must | 
assure the future of personal 
satellite communication 
systems. Coupled with a per- 
sonal follow-me phone num- 
ber, the user will stay in 
touch with the world wher- 
ever he or she roams. Thank- 
fully an on/off switch is also a 
standard fitting. 



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Multimedia has been the victim of its own promotion, but that’s no reason 

write it off entirely, reports Andrew Emmerson BT>5 

ynical fags, “vapourware" and promotes multimedia for its own sake is sounds ^Pici 0 }^ with 

soon now" are commonly asset heading for trouble." _ and mov- 

d more with computing than To date, he says, the most successful which proved 


T he cynical tags, “vapourware” and 
"real soon now" are commonly asso- 
ciated more with computing than 
telecommunications, but multimedia could 
change this. Vendors who traditionally 
shunned the hyping of products seem to 
have lost their inhibitions with multime- 
dia, even though its most dynamic aspect 
appears to be the extravagance of the 
rlafms 

For many observers, despair and disin- 
terest have replaced early enthusiasm, as 
the multimedia concept is successively 
redefined and relaunched. 

On the other hand, according to the 
“real soon now” merchants, the promises 
and predictions for multimedia are, after 
an agonising wait, starting to turn into 
products. 

Indeed, multimedia communication is 
believed by industry pundits to be the 
growth market of the 1990s and is set to 
repeat for manufacturers the commercial 
bonanza of the tax revolution of the eight- 
ies. 

Multimedia is defined as the integration 
of a variety of audio-visual presentation 
methods Into a single framework, using a 
personal computer as the “platform" or 
basis. The technique is well established as 
a presentation medium and is now being 
advocated as the universal answer to busi- 
ness communications, as well. The prob- 
lem is that multimedia may be adopted for 
the wrong reasons. 

“The corporate world always has a ten- 
dency to grasp at the newest advance in 
technology as a panacea for all their prob- 
lems,” comments Judy Roland, director of 
Mouse Power Presentations, a multimedia 
creative studio based in Box, Wiltshire. 

“like any other communications tool, 
multimedia is appropriate for achieving 
some business objectives - but not all” 
she asserts. “We have a major education 
problem, not to get management to accept 
multimedia - they do so, already - but to 
show them it's not always the most appro- 
priate technique nor is it some miracle 
means where you just press a button and 
it revolutionises your work. 

“Multimedia has a serious role to play - 
it's already used much more maturely in 
the US - but it shouldn't be chosen purely 
for faddish reasons." 

Identifying the kind of productivity 
improvements that multimedia is expected 
to achieve is even harder, according to Jeff 
Goldberg, an analyst with technology 
research consultancy, Dataquest 
“The truth is that multimedia is a com- 
pletely abused topic, one which has been 
described incorrectly by industry and. mis- 
understood by users,” be explains. 

“Multimedia is not a technique or goal 
in isolation but rather one single element 
of a much broader discipline. Anyone who 


applications for multimedia have been in 
presentation and these have been adopted 
and accepted, not because they were 
touted as multimedia but rather because 
no-one even mentioned the ‘M 1 word. 

Whereas the average business presenta- 
tion. a year ago used simple black and 
white transparencies and an overhead pro- 
jector, today you see computer graphics in 
colour and motion on a video projector. 
This, he asserts, is an appropriate and 
practical application for multimedia, even 
if other people do not class it as such. 

According to Goldberg, multimedia's 
chief achievement - so tar - is in its use 
as a “fix” to comet the inadequacies of 
the basic PC computer. To fill in the gaps 
in the original PC specification, suppliers 


generate is that the home TV .s 


foi l 




The home TV set some analysts see k as the 
agent of the multimedia revolution 


have come up with improved sound and 
vision capabilities, together with the abil- 
ity to play CD-ROM disks, turning the 
humble PC into a powerful tool for train- 
ing. video-conferencing, distance-learning 
and. inevitably, computer games. 

Nevertheless, he concedes that this early 
incarnation that we currently call multi- 
media is insignificant in terms of market 
share and cannot be said to fulfil the ambi- 
tious claims made for the concept 

Other parties are p inning their faith in 
the home TV set as the agent of the multi- 
media revolution. This autumn, hundreds 
of homes in Cambridge will take part in 
interactive multimedia trials and will be 
offered personalised news services, video- 
on-demand, games, education and arm- 
chair shopping. Large companies are 
involved, including Cambridge Cable, 
News International, Anglia Television, 
Acorn Computers and Olivetti. 

To some observers, however, the trial 


Telecom Valley 
on the French Riviera 


by Joel Strotte-McClure in Nice 


W hen the European Telecommunications Standards Institute (ETSI) holds its 
21st general assembly meeting in Nice nextmanth, it wont be the first time its 


vv 21st general assembly meeting in Nice nextmanth, it wont be the first time tbs 
high-powered executive members from.28 European countries visit the French Riuiera, ETSi 
which creates technical standards with a global impact on products and 

networks, has been located in Telecom VaBey on the Fhsvich R&dera since 1988, 


"We are a think tank for new Ideas in 
telecommunications and an important attribute to 
Telecom Valley on the Flench Riviera." explained ETSI 
director Karl Heinz Kosenbrock. " The main players in 
telecommunications were firmly established before we 
arrived but many others have chosen to relocate more 
recently. Being close to the action facilitates information 
flow and benefits their overall, activities.'' 

Telecom Valley is a key aspect of the French 
Riviera's ongoing transformation from tourism to high 
technology. The transition began over thirty yeans ago 
when IBM established a research facility In La Gaude 
and Texas Instruments opened its European 
headquarters In Villeneuve-Loubet. Today forty 
percent of the T 6.000 people in Sophia Antipolls - 
Europe's foremost science park, which Is celebrating 
its 25th anniversary this year, and the best-known of 
numerous business and industrial parks on the 
Riviera - are working in the computer science, 
electronics. information technology and 
telecommunications sectors. 

The creation of Telecom Valley in 1991 
consolidated the thrust of telecommunications 
companies throughout the area. Today the Telecom 
Valley association provides a network for 
communication, research, development and commerce 
between an increasing number of businesses. 

"The Telecom Valley association promotes the 
exchange of technological information, the development 
of specific telecommunications training programs and 
interaction with highly specialised subcontractors." 
explained Pierre FnmaroU. the first president of 
Telecom Valley and former managing director of Texas 
Instruments. 

Telecom Valley corporate founders Included 
Aerospatiale. AT&T, Digital Equipment. EJTSI. France 
Telecom, IBM. Rockwell International and Texas 
Instruments. The association gets a tremendous boost 
from the established presence of both ETSI and France 


Telecom, which has a variety of networking, business 
communication, research, educational and advanced 
telecommunications activities in the area. 

"Th£s region of FYance is second only to Paris in 
generating International telecommunications traffic and 
has a full range of highly developed services ", 
commented Michel Lafbn. director of France Telecom 
in Sophia Antipolis. 

Telecom Valley is also prospering because it Is 
much more than a mere marketing concept. 

" Telecom Valley fe a real force founded and nurtured 
by the telecommunications companies themselves 
contended Bnmo Peach, managing director of AT&T 
Paradyne and current present of the association. 

Long established companies on the French Riviera 
firmly back the region's latest connection for 
companies in the telecommunications arena. 

"Telecom Valley prevents us from remaining an 
insular and isolated company stated Jean Zicgex. 
director of Aerospatiale in Cannes. "It enables 
companies like mine to better profit from the expertise 
available in this region.” 

Telecom Valley is also home to a wide variety of 
high-tech start-up companies, educational institutes 
Hke Theseus and Burecom. and research facilities like 
France Telecom's National Center for 
Telecommunications Studies (CNETJ. Major 
telecommunications consumers - including Air France. 
Amadeus. Quest el. SITA and other multinational firms 
- are also found on the French Riviera. 

The combination results in an attractive site for 
telecommunications firms or users of anv na tion ality 
or size. 

"The established presence of large 
telecommunications companies makes it very sensible 
for Japanese firms to locate in Telecom Valley , " 
concluded Bruno Pagluca. director of Fujitsu 
Personal Systems. 



lie 


trar 


ago, which proved 
minimal user demand. Probably most 
valuable information that the trial wQl 


Pterin * “ft 

So perhaps multimedia belongs In the 
office after all; certainly that's where the 
larger informatics companies see > us 
future. Companies such as Alcatel. Philips, 
IBM and Olivetti, as well as telecoms play- 
ers such as BT envisage multimedia as a 
unified total communication system: 
unlike the telephones, fax machines, corn- 
outers and even videophones we have 
today, multimedia combines all these 
capabilities and more in one single desk- 
top terminal 

Now, they say, the common desktop 
computer has been transformed into some- 
thing much more powerful in fact a real 
tool for business. Soon we could be seeing 
the person we are phoning in a corner of 
our PC screen, with this image then 
replaced by sight of a document we are 
discussing Jointly. Researchers could 
examine pictures in a photographic library 
at any time, without leaving their desk, 
then extract the images required and use 
th»in in a new presentation of their own. 

S ignifican t problems remain before this 
can come to pass. Setting aside the lack of 
apparent user applications and easy-to-use 
connectivity, there are big bridges to cross 
in terms of workplace culture and user 
training. 

According to a senior executive of one ol 
the companies just mentioned, multimedia 
offers the office automation industry a lic- 
ence to print money - users are keen to 
adopt leading-edge technology and are 
probably prepared to pay for it - “but." he 
confesses in the same breath, “the tragedy 
Is that we'll probably blow the opportuni- 
ty .. . simply because all this technology is 
too complicated to use. 

“If people cannot even program their 
video recorders at home, how on earth will 
they relate to a Pentium PC. a CD-ROM 
player and two video cameras to drive?" 

rife dilemma may be not be so Immi- 
nent, though: according to Dataquest's 
Goldberg, the multimedia revolution can 
only take place with an adequate commu- 
nications infrastructure and this has not 
been fully defined or developed yet 

Existing technologies are too expensive 
and take-off will depend on further prog- 
ress with data compression or the deploy- 
ment of an affordable universal broadband 
network. 

Until then, it will remain an effective 
technique for specialist applications, but 
hardly the all-embracing cure-all por- 
trayed up to now. 


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INTERNATIONAL TELECOMMUNICATIONS 11 


INTERNATIONAL ALLIANCES 


Global link-ups could 
transform the industry 

The last year has seen the rise of global alliances between telecommunications 
operators, the impact of which could be a transformation of the international 
telecoms industry, reports Andrew Adonis 


T he outlines of the new 
structure of the world 
telecoms industry are 
starkly clear: three rival alli- 
ances of operators, each seek- 
ing to create and corner the 
market for one-stop interna- 
tional telecoms contracts. 
Although defensive as much as 
offensive in motivation, the 
alliances are displaying less 
and less regard for the “cartel 
culture" which has hitherto 
governed international tele- 
coms. 

The three alliances are 
headed respectively by British 
Telecommunications. AT&T, 
the largest US operator, and 
Deutsche Telekom, the state- 
owned German carrier. 

□ Concert, the joint venture 
company headed by BT. is 
widely credited as the most 
advanced of the three alli- 
ances. Its cornerstone is a 
S5.3bn alliance between BT and 
MCI, the second-largest US 
long-distance carrier, forged in 
June 1993. The alliance 
involved BT taking a 20 per 
cent stake in MCI for &L3bn. 
and the establishment by the 
two companies of a Slbn joint 
venture (Concert), based in the 
US. to develop and market one- 
stop voice and data services for 
multinationals. 

Concert has gained regula- 
tory approval on both sides of 
the Atlantic and launched a 
range of voice and data ser- 
vices. Its main strategic priori 


ity is building relationships 
with national operators to mar- 
ket its wares. 

So far, it has signed up three 
of the four Nordic national 
operators (Norwegian Telecom. 
Telecom Finland and Tele Can- 
mark. the Danish national 
operator), and Nippon Informa- 
tion and Communication (NIC), 
a sm all joint venture between 
NTT. the Japanese national 
domestic, and IBM Japan. 

None of these tie-ups 
involves equity exchanges or is 
exclusive, although the Nordic 
alliance is more than a simple 
marketing agreement since the 
four partners have agreed 
jointly to attack the Swedish 
corporate market where the 
national operator. Telia, is a 
key member of a rival alliance. 
However. BT does not rule out 
more equity partners for Con- 
cert. Its most evident weakness 
is in the crucial Asia-Pacific 
region, where NIC is no substi- 
tute for its parent (NTT), or for 
one of the larger national oper- 
ators. 

□ Worldsource/Onisoarce, 
the second of the alliances, is a 
more complex hybrid formed 
this June between two differ- 
ent groupings: AT&T’s World- 
source venture and Unisource, 
a joint venture between four 
mainland European operators. 

The two have been growing 
separately - indeed, in compe- 
tition - for more than a year, 
but are now committed to 


progressing in partnership. 

Worldsource involves no 
equity exchanges between car- 
riers. but is a bid by AT&T to 
enlist a cast of leading national 
and regional operators to mar- 
ket and help provide its inter- 
national business services. 

The members, who have 
joined with differing degrees of 
commitment, include KDD. the 
Japanese international opera- 
tor. Singapore Telecom, and 
Telstra, the Australian 
national operator. Telstra is a 
significant force across Asia- 
Pacific. 




ntil this June. World- 
source’s obvious weak- 
ness lay in Europe. 
AT&T pondered several strate- 
gic options but for a year 
appeared reluctant to chose 
between them. In the end. Uni- 
source became an. almost inevi- 
table partner. 

A joint venture between the 
national operators of Sweden, 
Switzerland and the Nether- 
lands, Unisource has direct 
contact with most of Europe's 
multinationals and was devel- 
oping a solid reputation. Its 
imminent expansion - now 
completed - to include Telefon- 
ica, the semi-state owned Span- 
ish national carrier, was a fur- 
ther attraction to AT&T 
because of Telefonica’s signifi- 
cant operations in Latin Amer- 
ica. And since Unisource 
included none of Europe's four 


largest carriers, the tie-up is 
hard Tor regulators to oppose 
on competition grounds. 

For its part, Unisource 
needed a US partner urgently 
to be credible to multination- 
als. Early in the year It joined 
AT&T in a successful bid to 
provide telecoms facilities to 
the EVUA, an association of 
more than 30 European multi- 
nationals contracting for a 
common corporate network for 
their European traffic. 

“It brings us what we needed 
to make a strong competitor in 
this international market," 
says Mr Viestnrs Vucins. Uni- 
source chief executive. 

□ Atlas, the third alliance, 
comprises Deutsche Telekom, 
France Telecom and Sprint, 
the third-largest US 
long-distance carrier. 

As with the AT&T/Unisource 
alliance. Atlas was preceded by 
a grouping of the European 
carriers, who a year ago 
formed a joint venture called 
“Eunetcom." 

In June, this was expanded 
to include Sprint, when France 
Telecom and Deutsche Tele- 
kom signed a deal to take a 20 
per cent stake in the US opera- 
tor for $4J2bn. 

“There are hard and soft alli- 
ances in this industry,” says a 
leading corporate finance 
adviser to Deutsche Telekom. 
“To our mind, the lesson of 
BT/MCl's marriage was that 
only the hard variety were 


Nikki Tait on the gradual introduction of intensified competition 

Australian battle begins 


M 


r Frank Blount, the 
former AT&T execu- 
tive who runs Telstra, 
the large government-owned 
telecommunications group, is 
forthright about where the 
Australian market is headed - 
“competition will intensify: 
this is just the warm-up." he 
says. 

Few industry observers 
would disagree. As recently as 
the late-1980s, the Australian 
telecoms market was essen- 
tially government-controlled 
and dominated by three enti- 
ties. There was the Australian 
Telecommunications Commis- 
sion. which ran the domestic 
telecom services: the Overseas 
Telecommunications Commis- 
sion (OTO, which provided 
international services; and 
Aussat. which was responsible 
for Australia’s satellite com- 
munications system. 

Already, there have been sig- 
nificant changes. The first two 
entities were merged to form 
Telstra (which goes by the 
Telecom name in its home 
market) and is still wholly- 


owned by the federal govern- 
ment Aussat meanwhile, was 
sold to Optus, a new second 
telecom carrier licenced in 
early 1992. Having started by 
competing with Telecom in cel- 
lular telephone market Optus 
moved into long-distance ser- 
vices in Iate-1992. 

To improve Optus’ chances, 
a series of ballots were held in 
Australia’s larger cities, giving 
customers a well-publicised 
opportunity to choose between 
the new carrier and Telecom 
for their international and 
national long distance services. 
This process is still continuing, 
although it has begun to move 
on to “second-line” cities such 
as Bendigo/Ballarat in Victoria 
where balloting starts on Octo- 
ber 12. 

Responses have varied, but 
in the key Sydney market 
almost 20 per cent of subscrib- 
ers opted to move away from 
Telecom. In Melbourne, the fig- 
ure was 14 per cent. At the 
same time, selective opportuni- 
ties have been available for 
overseas players. The UK’s 



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Vodaphone won entry into the 
mobile phone market last year, 
for example, initially offering 
services in Melbourne, Sydney 
and Canberra. 

A number of international 
companies have also entered 
the “re-sale" market. Last 
month. Pacific Star, a joint 
venture company established 
by Telecom NZ and Bell Atlan- 
tic. signed a deal with Optus 
under which the latter will 
supply long-distance services 
to Pacific. 

But, as Mr Blount says, this 
limited opening-up of the tele- 
coms sector is almost certainly 
just the start. The duopoly sys- 
tem in the long-distance mar- 
ket was always intended to be 
an interim arrangement, and 
the federal government's 
declared aim is to move 
towards fun network competi- 
tion by the middle of 1997. 

Earlier this year, in a speech 
to the annual conference of the 
Australian Telecommunica- 
tions Users’ Group. Mr Michael 
Lee, federal minister with 
responsibility for the industry, 
indicated post-1997 regime 
would have Canberra playing 
only a “minimal" role, “pro- 
tecting consumers and facilita- 
ting competition." 

The government appears to 
envisage the introduction of 
new legislation, setting out the 
ground-rules for this liberal- 
ised environment, in the back- 
half of 1996. That would then 
give companies seeking to 
enter the Australian market an 
18-month window in which to 
develop their plans. 

Among the many Issues 
which the post-1997 planning 
will need to address is what 
long-term role, if any, should 
be played by Austel. the indus- 
try watchdog. As Australia 
moves to greater competition 
on numerous fronts. Mr Lee 
has noted: “It is quite clear 
that ... the role of specialist 
Industry regulators like Austel 
will have to be examined." 

For Telecom, liberalisation of 
the Australian telecommunica- 
tions market has posed big 
management questions. The 
business has not always been 
held in high regard by its cus- 
tomers, nor has it fared partic- 
ularly well in terms of interna- 
tional benchmarking studies - 
especially in some key areas, 
like labour productivity. 

Telecom’s image was dealt a 
blow when Austel published its 
report on the “Casualties of 
Telecom" affair earlier this 
year. The CoT group was a 
self-styled band of protesters, 
mainly made up of small busi- 
nesses, who claimed that the 
company had failed to take 
their service complaints seri- 
ously and. in some instances, 
caused them significant finan- 
cial loss as a result 

Although Austel handed its 
judgment down in moderate 
language and the CoT-related 
complaints were a minute pro- 
portion of the total business 
handled by Telecom, the 
Impression left by the report 
was highly unfavourable. Tele- 
com. the regulator decided, had 
failed to take some complaints 
seriously and its behaviour 


was “less than that of a model 
corporate citizen." 

But if the challenge of 
imbuing Telecomwith service 
values whilst 

cutting staff numbers without 
damaging morale, look formi- 
dable, the financial picture is 
more satisfactory. Last month, 
Telstra unveiled an after-tax 
profit of ASl-Tbn after tax and 
exceptional items - up from 
A$905m in the previous year - 
on revenues 5.B per cent 
higher, at ASl3.4bn. Since half 
of Telstra's after-tax profits are 
now paid to its shareholder by 
way of a dividend, meaning an 
inflow of AS738m into govern- 
ment coffers. 

But even on this score there 
are problems. Some observers 
question what sort of return is 
appropriate for a government- 
owned utility. Others ask 
whether Telstra should really 
be in the private sector. 

Mr Blount, unveiling the 
results, declined to be drawn 
on the thorny, highly-politi- 
cised privatisation issue, 
beyond noting that ministers 
have said that the business 
will not be handed over to the 
private sector in the term of 
this government 

He did, however, note that 
“the development of a world 
class Australian telecommuni- 
cations network requires mas- 

A number of international 
companies have entered 
the ‘re-sale’ market 


sive investment." Over the 
next three years. Telstra plans 
to spend over A$&5bn- One of 
the biggest single investments 
will be In digital equipment to 
modernise the network. 

The company has also 
pledged to take its fibre optic 
and coaxial cable network into 
1.1m Australian home by the 
end of 1996 at an investment 
cost of A$71Dm - suggesting 
that cable pay-TV may then 
become a serious rival to the 
currently more advanced satel- 
lite availability. 

For Optus, the issue is how 
to capitalise on Telecom's 
weaknesses. The newcomer is 
owned by a mix of domestic 
and international institutions 
and acquired a new share- 
holder in Mr Kerry Packer’s 
Nine Network, the leading 
commercial TV network, in 
March. Nine Network paid 
A$2l8m for a 15 per cent stake. 
Optus has said that it expects 
to float at least part of Its 
equity on the stockmarket dur- 
ing the next calender years, 
and brokers have already been 
appointed. 

As a private company, Optus 
does not release full earnings 
reports. However, it makes no 
secret of the fact that it ran at 
a loss in 1933/4, although Mr 
Bob Mansfield, chief executive, 
has said it should break even 
in the current 12 months and 
move into profit thereafter. 
Revenues in the year just 
ended have been estimated at 
well in excess of A$8oom, and 
possibly oyer the A$lbn-mark 
in annualised terms. 



THE JASON PROJECT: advanced eomfnunteations are flnkmg students and scientists, half a world away. In tess than halt a second, in the Jason 
project, a pionee rin g concept m Interactive ‘distance tea mi ng.’ Pictured above Is the EDS Information management centre at Plano, Texas, where 
satellite signals are monitored. Next February, half a mflBon students and school-children w« be able to watch scientists In a live exploration of the 
crater of KHauea, one of the world's most active volcanoes, on the Wand of HawaB. This year, in other Jason ventures, children at UK schools were 
able to follow Uve* explo ra t i o n of the rah forests, reefs and caves of BeUzs In Central America. 


durable, so we had to go the 
whole way." 

However. Atlas may yet 
founder on the rock of regula- 
tion. BT faced a marathon 
examination by US regulatory 
authorities, lasting over a year, 
when it was pressed hard on 
the issue of the openness of the 
UK telecoms market to compe- 
tition. 

The US has since formally 
declared the UK’s telecoms 
regime to be “equivalent” to 
the US in terms of the open- 
ness - the only country 
besides Canada to enjoy that 
status. 

By that token. Atlas is set 
for a traumatic ordeal before 
the Federal Communications 
Commission and the US 
Department of Justice. Neither 
the French nor the German 
public voice telephony markets 
are open to competition - and 
will not be until 1998. 

AT&T is making much of the 
prospect of “monopoly” reve- 
nues being used to “subsidise” 
Sprint in its US and interna- 
tional activities, while US oper- 
ators are unable to compete 


head-on in either France or 
Germany. Atlas has to answer 
similar charges before the 
European Commission. 

Even if Atlas is allowed to 
proceed, it lacks Asia-Pacific 
partners. Mr Helmut Ricke. 
chairman of Deutsche Tele- 
kom, says Asia is “an immedi- 
ate concern", but partnerships 
have yet to be announced. 

If fha ou tlin e of th e an»«n»»pg 
is increasingly clear, vital 
issues concerning their future 
remain shrouded in mist. 
Three issues in particular, 
each of which has ramifica- 
tions for international telecom- 
munications more broadly: 

□ Market share: the alliances 
proclaim multinational compa- 
nies - anywhere between 400 
and 4,000 iff them, depending 
on the interviewee - as their 
target 

How fast will they gain 
them? And is that jnst the 
first, large step on a road 
which could see the affiances 
comer a large part of interna- 
tional telecoms business? 

There is alarm among the 
smaller European PITs, which 


fear that isolation from the 
alliances could result in a hae- 
morrhage of lucrative corpo- 
rate traffic, since their main 
corporate customers are almost 
by definition "multinationaL” 

Liberalisation makes the 
threat more potent still: the 
likes of BT and AT&T are 
already allowed to operate pri- 
vate corporate networks across 
the European Union: if - as 
appears likely - full infrastruc- 
ture liberalisation takes place 
across the EU in 1996. they will 
be able to put their weight 
behind fully-fledged alternative 
carriers if they consider that to 
be the best way into the local 
market 

However, for most Asia-Pa- 
cific carriers the pressure to 
ally is less intense. Although 
the region includes liberal tele- 
coms regimes such as Austra- 
lia. most of the market for 
international telecoms appears 
set to remain protected by 
monopolies into the next cen- 
tury. 

□ Cartel pricing: executives of 
the alliances say that they 
need to offer savings on basic 


prices of at least 10 per cent to 
make their one-stop services 
attractive. However, it is too 
soon to claim that the new 
regime will undermine the car- 
tel which keeps international 
prices artificially high. 

If, in a given market, the 
effect of the PTT joining an 
alliance is to keep out effective 
competition, it could have the 
opposite effect. 

□ Margins: is the core busi- 
ness of the alliances - one-stop 
international corporate ser- 
vices - high or low margin 
business? 

The pessimists say low mar- 
gin, because multinationals are 
demanding large savings for 
one-stop contracts. However, 
the optimists stress the 
undoubted dynamic effect of 
improved networks in boosting 
traffic and the sale of new ser- 
vices. 

Furthermore, should corpo- 
rate networks be the thin end 
of a larger wedge, the pickings 
could be richer still. That, at 
any rate, is the view from 
AT&T, BT and Deutsche Tele- 
kom. 



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FINANCIAL TIMES MONDAY 


OCTOBER 1 7 $ 


xi r 


★ 

INTERNATIONAL TELECOMMUNICATIONS 12 



An attractive market for investors 

Mexico making up 
for lost time 



Sprawling Mexico city: target tor expanding cellular telephone services nctraPmrM and 


Telecom price® in Mexico are 
failing sharply as a result of 
competition and the emergence 
of cellular services, reports 
Mark Newman 


W hile governments in other coun- 
tries remain cautious about 
deregulation, Mexico is forging 
ahead with a swingeing reform pro- 
gramme that will bring the national opera- 
tor Telmex into direct competition with 
some of the most powerful telephone com- 
panies north of the border. 

Competition will largely be in 
long-distance services. The Ministry of 
Communications and Transport agreed in 
July to grant an unlimited number of 
licences to companies to offer long- dis- 
tance services from January 1997. A 
detailed regulatory framework for the new 
operators will be drawn up in the autumn. 

Severn! Mexican industrial and financial 
groups have already thrown their hats 
into the ring. The leading contenders are 
those companies which have forged links 
with US telephone operators. 

Three such groups have emerged: 
w Mexico's largest financial group, Crupo 
Finnnciero Ranamex-Accival (Baoacci). 
which lias taken a 55 per cent stake in a 
consortium with US long-distance operator 
MCI. 

ZT Mexican cellular telephone operator 
Iusacell. which is *19 per cent owned by 


Bell Atlantic. Iusacell also has a liceence 
to build a fixed wireless local telephone 
network. 

□ US telecoms equipment manufacturer 
Motorola and the Mexican industrial con- 
glomerate Grupo Protexa; also, the US 
long-distance operator Sprint is in discus- 
sions with Grupo Protexa about joining 
the consortium. 

Joshua Levenburg, a Latin American 
analyst nt Pyramid Research in Massa- 
chussets, says there is “enormous inter- 
est" In the Mexican market - “the opening 
of the long-distance market is a tremen- 
dous investment opportunity’," he adds. 

Pyramid Research estimates that tele- 
coms service revenues in Mexico will 
almost double from $?.6bn in 1993 to 
Sl4.4bn in 1998; the market grew by 16 per 
cent in 1993. 

Mexican long-distance calling patterns 
are favourable for new operators. Seventy- 
five per cent of all long-distance traffic is 
between the cities of Monterrey. Guadala- 
jara and Mexico City. 

Telmex's long-distance and international 
call revenues last year totalled $42bn - 


more than 50 per cent of Telmex’s total 
revenues. 

Mexico's low telephone line-penetration 
levels also make it an attractive market 
for investors. There are only eight tele- 
phone lines for every hundred people. Tel- 
mex is having problems meeting the 
demand for new lines, and this gives oper- 
ators of wireless systems - who can instal 
lines in a matter of days - a distinct 
advantage. 

Telmex is vulnerable to competition - 
"you've got some major players with deep 
pockets coming in," observes Eduardo 
Cabrera. Jt is difficult to forecast the effect 
of competition on Telmex, he adds - "the 
key question in Mexico at the moment is 
how profitable Telmex will be in the long 
term." 

A proposed licence fee for new competi- 
tors in the range SlOOm to $500m will 
dampen the prospects for competition. But 
a more important Issue is the interconnec- 
tion fees that competitors will have to pay 
Telmex for passing calls over its network. 

Telmex will be seeking to pass on to 
competitors - through their interconnec- 


tion charges - part of the cost of operating 
its loss-making local telephone network. 

Long-distance competitors will operate 
along similar lines to companies such as 
MCI and Sprint in the US. 

Telmex customers will able to dial a 
code to choose a long-distance carrier, but 
they will also have the option of subscrib- 
ing to a particular carrier tor all their 
long-distance calls. This is the same sys- 
tem as in the US where AT&T has lost 35 
per cent of the long-distance and interna- 
tional calls market. 

But competition will develop along dif- 
ferent lines than in the US where local 
networks remain closed to competition. 


Two of the three leading Mexican consor- 
tia operate cellular telephone networks, 
iusacell owns cellular telephone networks 
in Mexico City, and controls other conces- 
sion in Guadalajara and in the centre and 
south-east of Mexico. Its concessions cover 
almost three-quarters of the Mexican pop- 
ulation. Motorola, meanwhile, has stakes 
in cellular telephone networks across the 
whole of the 2,000-mile border with the US, 
This gives the two consortia a big 
advantage over other prospective 
long-distance operators. Even when a cus- 
tomer choses a competing long-distance 
operator, the call begins and ends on local 
phone lines connecting the orginator and 


the person wh ?f! c JJ V ^v Telmex lor these 
peting earner ^ *° t ^4vments could 

ra netwoS^tog their cellular 

^SuSr phone services are 
expensive for customers to consider usms 
them as an alternative to Telmex 
Sard telephone service. But pnee^ are toll- 
rig sharply as a result of coropetit on ar^ 
the emergence of cellular as a residential 
js well as a business service. 

In the meantime. Iusacell is building one 

,f the world’s first local axed telephone 
letworks using cellular telephone technol- 
kv, Hie network, which will open in a 
Sal area close to Mexico City in the late 
lutuoui, uses frequencies a * A ^ 
BQMHz - the same part of the radio spec 
rum used by Scandinavian phone compa- 
res tor first generation cellular tdephone 
letworks, launched in the early IJOJ >■ 
iceUs's network is supplied by Northern 
reiecom which has a $330m three-year 
contract. 

Telmex has been bracing itself or com* 
petition since its privatisation in 1990 - 
'they've done a commendable job of trying 
o improve the technology: 70 per cent of 
he network is now digital.” notes 


rera. 

tlmex has also hiked up local call rates 




Prices tumble for international and long-distance calls 

Fierce competition in Swedish market 


Pressures in Sweden’s liberalised 
telecoms sector are intensifying 
as large international players 
enter the fray, reports 

Christopher Brown-Humes 


S weden vies with New Zealand for 
the title of the world’s most liberal- 
ised telecoms market, according to 
the Organisation for Economic Co-opera- 
tion and Development (OECD). Having for 
many years had a de facto state-owned 
monopoly operating in an unregulated 
environment, it has moved rapidly to 
establish a tight regulatory framework 
designed to promote open and fair compe- 
tition. 

The results have been striking. Despite 
the relatively small size of the country - 
Sweden's population is just 8.7m - some 
of the world's biggest telecommunications 
groups, including AT&T , British Telecom 
and Prance Telecom, have entered the 
market. Moreover a number of new com- 
petitors have sprang up, led by Tele2, 
jointly owned by Swedish media group 
Kinnevik and Cable & Wireless. 

ft means that Telia, the dominant oper- 
ator. is being challenged as never before - 
“Telia faces fierce competition on cus- 
tomer premises equipment, data commu- 
nications services, cellular services, inter- 
national calls, national long distance calls 


and infrastructure ” says Stig-Arne Lar- 
sson, Telia’s deputy chief executive. 

Indeed. local calls and Sweden’s analog 
NMT mobile network are two of the few 
domains where Telia still has a 100 per 
cent market share. 

The competition has brought a fall in 
international and long-distance prices in a 
country where they already low by inter- 
national standards. Bnt there has not 
been a full-blown price war and the effect 
on Telia’s profits has so far been limited. 

What is clear is that pressures in the 
domestic market are intensifying. In just 
18 months. Tele 2 has bagged more than 
10 per cent of the international calls mar- 
ket and from this autumn it will offer 
domestic long-distance services. 

Moreover, Telia has lost international 
calls and data transmission business to 
overseas rivals. It was more than a little 
dismayed when StatTel, a state procure- 
ment body, passed over it to award a 
prestigious data transmission contract to 
Prance Telecom. 

The biggest challenge may yet be to 
come. BT has just announced a partner- 
ship agreement with Telia's Scandinavian 
rivals - Norwegian Telecom. Telecom Fin- 


land and Tele Danmark - as part of a 
specific drive to win business in the Swed- 
ish market. Telia purports not to be 
alarmed by the increasing pressures, say- 
ing it expects to lose np to 40 per cent of 
international calls and 25 per cent of 
long-distance traffic in the next two 
years. Losing more than this would test 
Telia's patience, however, which may 
force it to be much more aggressive on 


pricing than it has been so far. 

“Being the market leader, we cannot 
stage a head-on price war. We would 
destroy the market and ruin our com- 
pany." comments Mr Larsson, while 
acknowledging it would be politically 
insensitive if the group went out to 
destroy the competition before it has fully 
developed. Telia bas responded to the 
onslaught in a number of ways: 

Firstly, it has implemented a fierce cost- 


cutting programme, reducing staff num- 
bers from 48,000 to 32,000 in three years. 

Secondly, it has begun differentiating 
its products more, offering customers tai- 
lor-made packages to meet their needs. 

Finally, it bas gone on the offensive 
both at home - where it is actively build- 
ing Us position In mobile telephones, for 
example - and in markets outside Swe- 
den. There are two strands to the overseas 


expansion strategy. One is to retaliate 
directly against competitors in their own 
home markets. A good example is the UK 
where Telia has been awarded a licence 
for international calls and has set np a 
switch in London. 

The trouble here is that access to most 
other European markets is restricted. 

The second plank of attack is Uni- 
source, a venture with Swiss, Dutch and 
Spanish partners which fs specifically 


designed to provide the international 
clout which the four companies lack indi- 
vidually. The grouping has forged a joint 
venture with AT&T for the delivery of 
voice services to 50 multinationals. 

Telia says it can share costs through 
Unisource while defending its home mar- 
ket (because multinationals can be offered 
one-stop shopping and a broader global 
reach) and captaring market share in 
other European countries. Again, the last 
ambition will have to await a broader 
deregulation of the European market 

Some worry that Telia is still too domi- 
nant claiming the newly-established reg- 
ulatory body, the National Post & Tele- 
com Agency, is not trying actively enough 
to promote competition. Underlying this 
is a broader concern about conflicts of 
interest when there is state-owned agency 
regulating a folly state-owned company. 

Jerker Torngren, the NPTA's Head of 
International Affairs, does not see it this 
way. He says: “What we want to create is 
competition. We are not saying we need a 
certain division of market share to create 
that competition." 

He also rebuts the conflict of interest 
suggestion, saying that in Sweden there is 


a very strict dividing line between the 
government ministries which draft legis- 
lation and the agencies which implement 
it - “it is the government which owns 
Telia, not us," he stresses, adding that 
there are no policy implications in the 
fleet that Telia is state-owned. 

Another concern is that tbe agency 
larks the teeth to enforce its decisions. 

For example, in the current row between 
Telia and Tele2 concerning long-distance 
interconnection rights, the agency can act 
as a mediator, but it cannot force tbe 
warring parties to abide by its findings. 

This is a weakness which could always 
be ironed out In due course. There were 
always likely to be some teething troubles 
given the dramatic change being imple- 
mented and the fact that much of the 
legislation governing the sector only took 
effect on July 1, 1993. In any case, there is 
a competition authority to fall back on, as 
its powers are more than adequate to deal 
with any clear abuse by Telia of its domi- 
nant position. 

The one surprise is that Telia, though 
behaving in virtually every’ respect like a 
private company, is still state-owned. This 
may change in due coarse. There is no 
doubt that management is keen on pri- 
vatisation: the incoming Social Demo- 
cratic government is much more ambi- . 
gious abont the process. Even so, the *t 
Social Democrats have hinted they may 
not oppose privatisation if they think it 
will help the group's international expan- 
sion ambitions. 


Telia, Sweden's dominant telecoms operator, is being challenged 
as never before: the state-owned company has lost international 
calls and data transmission business to overseas rivals, but 
the effect on Telia’s profits has so far been limited 


1W W4T 








Some of the world’s telecommunications l^ei^ii^^Mneci forces*,, 

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FINANCIAL times 



a far cry from tone 
bleepers, European 
wireless messaging 
offers a multiplicity of 
new business and 
personal 
communications 
applications, reports 

Paul Quigley 


I magine the nightmare office 
scenario: you are alone and 
it’s late - but you need to 
send documents, several pages 
In length, to colleagues who 
may be nest door. In another 
town or even in another coun- 
try. They need your missive, 
instantaneously, wherever 
they may be. You cannot send 
them facsimile messages - you 
do not know exactly where 
they are; they might have a 
cellular telephone, but you 
cannot phone them because 
the details they require are 
complex, specific or not readily 
communicable by word of 
mouth. What you have, and 
what they need. Is mission-crit- 
ical information. 

What would you do? Panic? 
Delegate? Resign? Situations 
like this, you realise, were not 
covered at business school. 

The pager? Indeed so: having 
endured the ignominy of tfmo 
living in the shadow of cellular 
telephony, the trusty war-horse 
of mobile telecommunications 
has kept up with the times and 
has been transformed into a 
high-speed, high-capacity, fre- 
quency-agile “wireless messag- 
ing 1 device. A far cry from tone 
bleepers, European wireless 
messaging is moving into the 
international limelight as a 
serious contender for a global 
wireless messaging standard, 
offering a multiplicity of inno- 
vative business and personal 
communications applications. 

The European Radio Message 
System (Ernies), an EGcham- j 
pioned second generation digi- | 
tal radio-paging standard. Is a 
model for international 
co-operation in telecommunica- 
tions. Conceived In 1967, Ermes 
uses 16 radio channels between 
169.4-169.8 MHz, and can hop 
about each available frequency 
band to transmit vital informa- 
tion at speeds up to 6^50 kilo- 
bits per second to pocket 
mobile messaging devices. 

As a broadcast-based service, 
Ermes’ inherent strength Heft 
in its ability to move large 
amounts of information, from 
point-to-point, point to multi- 
point, and also multi-point ' to 


MONDAY OCTOBER 1 7 1 994 ★ 

INTERNATIONAL TELECOMMUNICATIONS 13 


EUROPEAN WIRELESS MESSAGING 


Moving into the limelight 


multi-point Thus, any number 
of value-added service provid- 
ers can offer tailored informa- 
tion broadcast products to end- 
users over any Ermes net- 
works. 

As cross-border mobile and 
fixed telecoms traffic increases 
year on year, business systems 
and applications that cut 
through national boundaries, 
and can ‘roam,’ are now funda- 
mental pre-requisites. While 81 
European radio paging net- 
work operators are currently 
signatories to the Ermes ‘Mem- 
orandum of Understanding’ 
(MoU). interest is growing out- 
side its European origins. Pag- 
ing operators across the Asia- 
Pacific region are set to sign 
up to the standard. 

“Interest from the Asia-Pa- 
cific region is very important” 
says Mr Per Berntsen, chair- 
man of the Ermes MoU group, 
“because we are talking about 
very large volumes." 

Ermes operators also see the 
future In satellite distribution. 
Not only of value-added ser- 
vices that will be available to 
national and international sub- 
scribers. but also in enabling 
Ermes networks to be rolled- 


out across countries utilising 
satellite up-links and down- 
links between message switch- 
ing centres and their base sta- 
tions. This, effectively, reduces 
operator infrastructure costs 
by riimfcnatfag a large propor- 



Coming soon: tfie firet Swatch 
alphanumeric pager - It wS run on 
DeTsMobiTs “Cttyruf network 


tion of the networks’ require- 
ment for private leased-bne cir- 
cuits - hard-wired or micro- 
wave links - whilst at the 
same time, increasing the 


potential volume of base sta- 
tions to serve the coverage 
areas. Additionally, with mini- 
mal or no pa g in g bureaux per- 
sonnel message - handling inter- 
locution, network operators 
will be able to pass on cost- 
savings from lower overheads 
to rfy>apgr mpgcagrn g aryl ter- 
minal unit costs. 

The key factor with new 
mobile communications tech- 
nologies now coming on- 
stream is that they will be tar- 
geted at new user segments, 
not solely those who are 
already well-catered for; 
Ermes. and generic wireless 
messaging, will have a much 
broader user appeal as opera- 
tors and value-added service 
providers launch global prod- 
ucts. 

Mr Bemtsen concurs with 
this view - “there will be those 
who don't have GSM, or cellu- 
lar telephones, who would 
rather have a pager because of 
the type of work they do or on 
the grounds of the cost-effec- 
tiveness. Remember that 
mobile telephone services have 
always had a traffic cost - pag- 
ing does not. No connection 
charge, no monthly rental - 


the calling part pays. It’s a 
question of segmentation of 
markets.” 

Successful new messaging 
applications will be those that 
are modest, but not radical 
variants on current practices. 
For example, the PC running 
Windows applications software 
will be a familiar front-end for 
many business and personal 
computer users. The prospect 
of accessing a pan -European, 
indeed global network, through 
a communications software 
package will be about as 
daunting as loading and print- 
ing a document file. 

Further feature-rich benefits 
of international wireless mess- 
aging will include the ability to 
connect a cable from the pager 
to desktop or notebook PCs, 
and let the PC store incoming 
wireless messages direct to the 
hard disk 

This could ensure critical 
messages are not wiped inad- 
vertently from the device's vol- 
atile random access memory. 
You could, therefore, leave 
your pager behind and not 
miss messages, news or share 
prices. 

Even the pan-European digi- 



Faxea can be aas&y cotected on the move through Inter -City Paging's 
fax messaging service for pager users. Developed in conjunction with 
thepoBce, the pager has a wide range of security applications 


tal cellular systems, GSM 
(Global System for Mobile 
Communications and its sister 
technology. DCS1800. would 
have trouble performing the 
tasks required in the night- 
mare scenario, outlined above. 
GSM and DCS1600 both offer a 
short-message service (SMS), 
but have a limit of 166 charac- 
ters (about 30 words) per mes- 
sage. Compare this with 
Ermes’ 9,000 characters per 


message and you start to see 
the limitations and possibili- 
ties. Wireless electronic-mall 
could also be a possibility, but 
this option too requires col- 
leagues to be available, carry- 
ing their portable PCs fitted 
with radio modems, being 
within range of either a cellu- 
lar network or a dedicated 
packet mobile data network - 
and powered up. 

Message retrieval services 


Growing interest in two-way radio paging services 

A change of image in the 


R adio paging, perhaps the 
least glamourous area 
of the telecoms indus- 
try, is set for its own star turn 
In the US, thanks to a series of 
auctions of radio spectrum, 
staged by the Federal Commu- 
nications Commission (FC C), 
in the summer. 

The commission succeeded 
in raising over (600m from 
companies eager to bid against 
one another to acquire a new 
allocation of radio frequencies 
that will enable the winners to 
offer - for the first time, any- 
where - two-way paging ser- 
vices. 

The auction exceeded expec- 
tations and attracted bidders 
from outside the confines of 
the pa g in g industry: two of the 
most successful were EDM 
Messaging, a wholly-owned 
subsidiary of McCaw Cellular, 
America’s largest cellular oper- 
ator which has been taken over 
by AT&T, the largest telecoms 
company in the world; and - 
among others - Destineer, a 
new company which has the 
backing of the software giant, 
Microsoft. Both’ companies 


appreciated how two-way ser- 
vices go beyond the lrniitatimis 
of the staid, limited-revenue 
potential of existing pag in g 
systems. New systems allow 
users to make and receive data 
messages paging — sold, as 
one of the new range of inter- 
active multimedia services. 

Destineer and AixTouch, one 
of the largest cpftular operators 
in the US and a one-way pag- 
ing operator which also bid 
successfully for some of the 
new frequencies, are looking at 
KimflaT applications: both want 
to use two-way paging as way 
to invigorate the market for 
personal digital assistants 
(PDAs), the personal organiser- 
messaging devices launched 
last year by various manufac- 
turers, including Apple Com- 
puters and AT&T. Initial sales 
of the Apple Newton Message- 


pad were disappointing; and 
AT&T’s EO has been with- 
drawn from sale. 

However. AirTooch in partic- 
ular believes that PDAs can 
succeed if pitched at a business 
rather than consumer audi- 
ence. The company is already 
ugfng its gristing paging net- 
work for trials to a PDA manu- 
factured by the electronics 
company Casio and will extend 
the service to its new two-way 
frequencies next year. 

AirTonch is also looking at 
new, industrial applications for 
paging such as a monitoring 
device which would be sold to 
suppliers of vending machines. 
A radio device, fitted inside a 
vending system, would emit a 
signal when it was time for 
restocking, thus saving the 
time and expense of regular 
rhwrVs by the vending machine 


supplier. All five of the US 
companies licensed by the FC C 
are looking at similar new 
ways of widening paging's 
appeal and increasing its 
already substantial penetration 
in the US - where, inciden- 
tally, eight per cent of the pop- 
ulation owns a pager. 

B y comparison, in 
Europe, only three per 
cent of the population 
are pager-users; there is also 
greater market pressure in 
Europe as the cost of using cel- 
lular phones continues to falL 
Celluiar, particularly since 
the arrival of digital phones 
based on the pan-European 
GSM standard, would swamp 
the European pa g in g Industry 

unless R nan maintain its price 

differential or explore more 
advanced applications. 


Two initiatives in paging 
during the past year demon- 
strate the way that European 
industry is getting to grips 
with the daDang ee 
□ First, there was the 
launch of the MtaCall service 
last year by Sweden’s state- 
owned mobile operator, Telia 
MobCteL This had a signif- 
icant mfinenne on the market- 
ing strategies of other Euro- 
pean operators. MlniCaU is 
known as a “CPP" service 
which stands for "calling party 
pays.” In other words, the tar- 
iff burden is shifted from the 
pager-user - who buys the 
pager but no longer pays a one- 
off connection fee or monthly 
rental charges - to the caller 
who wants to leave a message. 
Instead, of a standard local call 
tariff, the caller is charged at a 
premium-rate for leaving a 


US 

message. The lost revenue 
from connection and subscrip- 
tion charges Is more than 
made up by increased contribu- 
tion from call charges, accord- 
ing to Telia Mobiltel. The 
Swedish model was closely 
studied by other-operators 
inhhiflmg BT and Mercury who 
launched their own versions of 
the service this autumn. BT 
gave their service an extra 
twist by offering it with the 
UK's first wristwatch pager, 
manufactured by SwatcL 
□ Secondly, an important 
innovation in Europe this year 
has been the launch of digital 
paging services. Based on an 
European Commission-backed 
standard raiipd Ermes (Euro- 
pean radio messaging system), 
the system had several techni- 
cal setbacks following interfer- 
ence to television sets in Ger- 


XIII 


would not be appropriate in 
the nightmare scenario: cer- 
tainly. they would want the 
information - but when? The 
next day? 

"Text messaging and per- 
sonal wireless information ser- 
vices will be very important in 
the future," Mr Berntsen 
believes. "They will become a 
natural part of most people’s 
working environment. I think 
they will need a pager - even if 
they have a mobile telephone. 
Ermes has the potential for 
giving such services to most 
markets, he adds. "We will see 
more creative ways of making 
information services that will 
also have a great appeal to the 
public." 

Ermes also has capabilities 
to acknowledge receipt of 
transmitted information, 
though this is not seen by the 
Mr Berntsen as a particular 
enhancement that will be in 
demand at this stage, while it 
is not being ruled out for the 
future. With digital cellular 
promising voice, data and fax 
services, mobile data promis- 
ing wireless email and remote 
dial-up data services and down- 
load functionality, wireless 
messaging can offer alphanu- 
meric document tr ansf er and 
real-time broadcast informa- 
tion services at minimal costs. 

Clearly, the convergence pro- 
cess of historically disparate 
mobile communications tech- 
nologies is well under way. 


many, before its launch in 
France. Several other Euro- 
pean operators are to start 
Ermes services in the near 
future; Telia Mobltel will 
launch its Minicall Europe ser- 
vice in the first quarter of 1996. 

Initially, Ermes terminals 
will be significantly more 
expensive than today's pagers 
but they will offer a wider 
range of services. The system 
transmits messages foster and 
is capable of including more 
text in each message. Futher- 
more, users are able to receive 
messages electronically from 
computers on Ermes pagers. 

Ermes' main advantage over 
existing paging systems is 
that, as a common European 
standard, it is possible for the 
first time to receive messages 
across Europe. 

As the equivalent digital 
technology to cellular’s GSM. 
which now has nearly 8m sub- 
scribers in Europe, Ermes 
must make a similar impres- 
sion if paging Is to shake off ItS 
dowdy image. 

Richard Harford 


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FINANCIAL TIMES MONDAY OCTOBER 17 1994 


XV 


INTERNATIONAL TELECOMMUNICATIONS 15 


it 



Earfy days In telecoms the launch of the first phone service between London and Paris m March, 1891 


BT Mtm. London Cfty of London i 


i room: Investment tn tetocoms has remained strong in the financial community, despite the recession 


Fun Ly«U van dcrMatr 


Increased competition 
and the aftermath of 
recession have fitted the 
balance of power away 
from the telecoms 
operators towards the 
users, reports 
Martyn Warwick 


I nternational telecommuni- 
cations was the industry 
which stood 19 best to the 
the global recession of the 
early 1990s. While many other 
industries suffered, telecoms 
kept going at a Strang pace, 
often on the baas that while 
one country, trading bloc or 
applications sector declined, 
another one, somewhere, was 
bound to be on the way up. 

Thus, while file market in 
Europe, the US and Japan stag- 
nated, telecoms operators, 
manufacturers and equipment 
suppliers focused their atten- 
tions on the more buoyant 
markets of parts of South East 
Asia, the Middle East and Gulf 
and South America. 

I .■ They also pitched for a share 
of the massive, but tradition- 
ally difficult, Chinese market 
and made forays into the 
highly uncertain world of post- 
communist Russia and eastern 
Europe. ■ 

However, while it is true 
that the telecoms sector sur- 
vived the recession more or 
less intact, the prevailing con- 
ditions of that period have had 
a long-term effect The present 
shape of the industry is, in 
part, the direct result of the 
realities of adapting to, and 
coping with a massive, world- 
wide, economic downturn. 

The other big contributory 
element is the remarkable 
increase in international com- 
petition in the provision of 
telecoms equipment and ser- 
vices. It is interesting to note 
that research undertaken by 
the public telecommunications 
organisations (PTOs) in Europe 
indicates that 80 per cent of 
their business is in the domes- 
tic sector. 


EQUIPMENT SUPPLY INDUSTRY 


More power now for the users 


Of the 20 per cent that is 
non-domestic traffic, 80 per 
cent Is trans-European rather 
than intercontinental. Of that 
European traffic, 90 per cent 
terminates within 1000 kilo- 
metres of its place of origin. 

So, at first sight then, it 
might seems odd that Euro- 
pean PTOs and other carriers 
are rushing into global alli- 
ances in the way that they are. 
The reason is competition: the 
battle to supply and service the 
world’s biggest international 
companies is under way in ear- 
nest Meanwhile; the combined 
effects of recession and intense 
competition lie behind the 
plethora of mergers, partner- 
ships and alliances which char- 
acterise today’s telecoms envi- 
ronment 

When the recession arrived, 
manufacturers soon discovered 
that even wealthy countries, 
such as Saudi Arabia the 
UAE. cut back on infrastruc- 
ture projects and expected 
.even-greater value for money. 
Tendering processes changed, 
competition intensified and 
margins were cut as prospec- 
tive customers demanded - 
and won - more comprehen- 
sive and generally cheaper 
technological solutions, sup- 
plied to tighter specifications 
and stringent timetables. 

It soon became apparent to 
the big industry players, as 
well as the second line organi- 
sations, that the pace of tech- 
nological change combined 
with a new market dynamic, 
meant that no one company, 
no matter how big, could any 
longer claim to be able to 
develop and supply every com- 
ponent of a telecoms solution. 
The result has been a rash of 
affiliations and acquisitions as 
manufacturer has combined 
with manufacturer, supplier 
with supplier and operator 


World markets: information communications technology 

Regional proportions by product areas 

O 20% 40% 60% 80% 

TOTAL 
Telecom services 
Telecom equipment 
TT Services 
Software 
FT h ar dw a re 


ilv\ 


100 % 

Hi 


Europe f Eastern Europe 


wj ■ 


I 

j 

.*CS3 


Rest Of world 


Product proportions by region 


20% 


40% 


60% 


80% 


100 % 



■ >.'M/ *• »'• •<* -m. »*, --nr n . 

Telecom services | 


Seuca: EwopMn MnrMldnTHlMlagrOteMMy - BT0 189* 

The maricet for telecoms eqidpment is classified under several main heedbigs: customer premises equipment, 
wNch includes private branch exchanges, terminal and mobOe equipment; then there is senitee-provkfaig 
equipment which includes puttie switching and tr an sm issi on gear; other main sectors include voice network 
sendees; date network sendees; installation end maintenance. Figures above are for 1903. 


with operator in an unprece- 
dented series of industry alli- 
ances. 

Some, such as the proposed 
Synoptics and Wellfieet 
merger, the Chipcom and Cisco 
partnership, the Cisco and 
Hewlett-Packard relationship 
and BT*s coalition with the 
Nordic telecom operators, are 
carefully planned exercises 
which can be seen to have both 
immediate and long term bene- 
fits for all partners concerned. 

However, there is a down- 


side. Most mergers are 
described as affiances and part- 
nerships, rather than take- 
overs. but in many cases reten- 
tion of the name of the smaller 
company is an indication of 
the potency of its particular 
brand rather than its contin- 
ued independence. 

Some other corporate exer- 
cises, although presented as 
grand designs and strategic 
alliances, are, in reality, little 
more than panicky reactions to 
changed market conditions. It 


VALUE-ADDED SERVICES 


Surprising collaborations emerge 


’hone companies and 
oftware suppliers aim 
□ reap the benefits of 
he electronic mail 
tonanza, reports 
/Ionics Horten 

r o ask a telephone com- 
pany to do joint market- 
ing with a software com- 
any is a bit like asking the 
jrtoise if it would collaborate 
ith the hare. It seems like a 
omplete mis-matcb in com- 
lercial culture. Yet that could 
3 just what the phone compa- 
res have to do in order to 
oost their value-added ser- 
ices business. 

The reason is electronic 
iail. Email is one of the fest- 
?t growing software applica- 
ons for personal computers, 
oftware giants Microsoft, 
otus and NoveU/WordPerifect 
-,ve targeted communications 


as the next big growth area for 
their own applications. They 
have simplified end-user email 
software and are aggressively 
pursuing it 

One of the problems with 
email services in the past Is 
that they were not user- 
friendly, and were usually 
accessed by equally unfriendly 
communications software. 

Lotus, Microsoft and Novell/ 
WordPerfect have evolved soft- 
ware which makes it easy for 
people to send mail, directly 
from their spreadsheets and 
word processors: what they 
call “mail enabled applica- 
tions.” It uses the same Inter- 
face that people are used to in 
their other applications, so 
that people do not need to 
learn a new way of working 
just to send mall. 

Jenny Proctor. UK market- 
ing director of AT&T Ezylink, 
cited the example of econo- 
mists in the City of London 
who want to replace fax with 


FT REPRINTS 


can supply reprints of artides/pages of the 
FT reduced to convenient sizes. 
Minimum 100 copies. 

Tel: 071 873 3213 
Financial Times 

Number One Southwark Bridge - 
London SE1 9HL 


email for sending reports to 
customers. This Is the direct 
result of the unproved personal 
computer software - “in the 
finance sector, mail enabled 
applications are a growth 
area,” she says. 

This should be good news for 
the telephone companies, 
which have the opportunity to 
sell services to support the 
increased demand tor connec- 
tivity - “software companies 
such as Microsoft have simpli- 
fied end-user software, and are 
promoting telecom activities. 
This is now acting as a driver 
for messaging services and 
frame relay managed data net- 
work services,” comments Neil 
Lawrence, applications and 
information marketing man- 
ager at British Telecom. 

The corporate email s yst e m s 
typically run on local area net- 
works (Ians); Ians in different 
buildings are connected to cre- 
ate an “enterprise-wide sys- 
tem.” 

One way to achieve lan-to- 
lan connections is to use a 
frame relay managed data net- 
work service - frame relay 
being a faster method of trans- 
mission than older packet 
switched data networks and 
more suitable for connecting 
Ians. This segment of the mar- 
ket Is currently small, with an 
estimated value of EcuSGm 
($74. 4m) across Europe, accord- 
ing to London-based market 
research consultancy Ovum; 
this is due to the fact that 
frame relay is a new technol- 
ogy- , . 

However, sales are growing 
fast, and vendors such as BT 
and AT&T report that they are 


struggling to keep up with 
demand for frame relay ser- 
vices: BT claims this segment 
of the market is growing at 
300-400 per cent, per year. 
Ovum analyst Clare McCarthy 
predicts a sharp upturn in 
growth from 1996 onwards - 
“by 1998, we are looking at 
projected European revenues 
of around EcuSOOm ($992m) for 
frame relay services,” she 
adds. 

Another way to connect Ians 
Is to use the public email ser- 

End-usars of telecom 
equipment now have 
more influence over 
purchasing decisions 

vices offered by the telephone 
companies. Most email services 
provide a simple way to con- 
nect the popular proprietary 
Ians such as Lotus cc Mail and 
Microsoft Mail. For example, 
cc: Mail users could connect to 
a service and send mail 
between two sites without ever 
knowing they were not using 
cc Mail all the way. According 
to Ovum, this market will 
grow at an average of 53 per 
cent a year in Europe. 

However, in order to reap 
the benefits of the email 
bonanza, the telephone compa- 
nies have to become as aggres- 
sive in their marketing tactics 
as the software companies 
themselves. It represents a sig- 
nificant cultural shift away 
from traditional telephone 

company thinking . 

According to Mr Lawrence, 
there has been a sea change in 


the way user purchasing deci- 
sions are taken. In the pest, 
users would go through the IT 
department to get email. Now 
they buy it out of their own 
budget - “end-users are now 
becoming more influential in 
purchase decisions,'* he says. 

To attract end-users, the 
phone companies will have to 
work with Microsoft. Lotus and 
Novell/WordPerfect on product 
marketing as well as product 
development For example, BT 
has a collaborative arrange- 
ment with Microsoft which per- 
mits geographically dispersed 
workers to use Microsoft 
groupware software for collab- 
orative working over ISDN 
lines. 

This will be an odd situation 
for most phone companies. 
According to some industry 
observers, those who have 
faced competition In core ser- 
vices. such as the US or UK 
phone companies, should be 
flexible enough to cope. Others 
will have difficulty, especially 
those which still operate in a 
non-competitive monopoly 
environment. 

End-users are also being 
attracted by the Internet, and 
CompuServe, two global net- 
work services which actively 
target individuals, and sell the 
benefits of going on-line. They 
are pursuing high profile mar- 
keting campaigns and are 
creating an awakening as to 
the possibilities of emafl. 

This could represent a fur- 
ther threat to the traditional 
email networks as operated by 
the telephone companies. The 

continued on next page 


because manufacturers and 
carriers alike have to fill the 
gaping holes in their portfolios 
of offerings if they are to stand 
any chance in the battle for the 
mighty budgets of their target 
customers: the world’s largest 
corporations and multinational 
businesses. 

Companies with, or intend- 
ing to build, global corporate 
networks have woken up to the 
fact that telecoms systems can 
leverage competitive advan- 
tage. The telcos have 
responded with a variety of ini- 
tiatives, the most radical of 
which is the concept of “total 
outsourcing.” whereby compa- 
nies hand over complete 
responsibility for the design, 
deployment and management 
of their telecom systems to a 
carrier and its affiliated suppli- 
ers, partners and acolytes. 


So far, the strategy has not 
met with great success, since 
many users, while apparently 
keen to contemplate a move 
from private to public net- 
works. are unwilling to abdi- 
cate responsibility for a vital 
corporate lifeline until a num- 
ber of important issues have 
been addressed. 

A key concern is that carri- 
ers are carriers, and therefore 
cannot appreciate the subtle- 
ties and nuances of non-tele- 
coms business sectors. Other 
Issues of concern Include the 
poor service and weak custom- 
er-care characteristic of some 
of the European and North 
American carriers, as well as 
restrictive contracts, uncer- 
tainly over cost comparisons 
and limited geographical cover- 
age. 

The telecoms research organ- 


isation, CTT. estimates that the 
total telecom spend by the 
world's top l.QQQ companies 
will top £25bn by 2003. It is 
obvious then, that aspirant 
providers of global networks 
and end-to-end service pack- 
ages must answer user con- 
cerns - or fail in a market of 
massive strategic Importance. 

Carriers are also striving to 
develop and market the ulti- 
mate carrier service: os power 
and bandwidth continue to 
become cheaper, business Is 
looking for a true multimedia 
information exchange system 
which will interconnect LANs 
and WANs and provide voice, 
image, video, data, information 
processing and even entertain- 
ment services across the corpo- 
rate network. 

The provider alliance that 
can provide such a system at 
the right price - and that does 
not necessarily mean the first 
one to market - will have the 
world at its feet and emerge as 
the telecoms carrier equivalent 
of Atilla the Hun. 

□ The uniter is deputy editor 
of 'Communications Intema- 
tumaL’ 


New mobile communications application 

Tactical advantage for racers 


is more than likely that some 
of these will end in dismal fail- 
ure. A new report from tele- 
coms strategy consultants, 
Analysys, supports this conclu- 
sion, observing that estab- 
lished names in both the tele- 
coms and computing-services 
markets could effectively dis- 
appear as wave after wave of 
alliance activity washes over 
the converging sectors of tele- 
coms and information technol- 
ogy. 

Alliances are taking place 


A s the European cycle rac- 
ing season draws to a 
close, riders on the Moto- 
rola squad will be hanging up 
their Lycra and switching off 
their radios. For three years 
the American-based team hag 
been using lightweight porta- 
ble radios to give it a tactical 
advantage and to improve race 
safety. 

In the big races like the Tour 
de France. Giro dltalia, the 
Spanish Vuelte and the Tour 
DuPont in the US, the teams of 
up to nine riders each have to 
keep in touch with their man- 
agers who follow tn care. They 
need to know when team tac- 
tics are changing and when a 
colleague needs help. 

Traditionally, the manager 
has driven alongside the riders 
and barked instructions. The 
Peloton Communication Sys- 
tem that Motorola uses means 
this dangerous manoeuvre is 
no longer necessary. 

Bach of the riders carries a 
receiver in their jersey pocket 
and an earpiece fitted Into his 
crash helmet ft can pick up 
the manager’s signal at up to 


four miles away, a distance 
that can easily separate first 
and last riders on an Alpine 
race. 

To keep the manager 
informed of what is happening 
in the centre of the bunch, one 
rider in the team has a trans- 
mitter unit, weighing eight 
ounces, fitted under bis saddle 
and a microphone mounted on 
the handlebar. He tells the 
manager whether any team- 
mate needs attention and how 
rival teams are performing. 

The Motorola team reckons 
the system gives it a competi- 
tive advantage. The team 
spokesman and former Tour de 
France cyclist Paul Sherwen is 
convinced It helps them to win 
- ‘in the Paris-Nice five-day 
race last year, our rider Fran- 
kie Andreou got out front in a 
breakaway group,” he says. “It 
became clear that he was won- 
dering whether he should drop 
back to conserve his energy. 
Then our team leader realised 
that the chasing group was tir- 
ing and the message went to 
Frankie to keep up the pres- 
sure. As a result, the break- 


away survived much longer 
than it would otherwise have 
done.” 

He also believes the team’s 
radio saves time - “if you are 
in the middle of the main 
bunch of up to 200 riders and 
you have a puncture, you put 
your hand up and hope that a 
race official sees it quickly. 
The official then gets a mes- 
sage to your team manager 
who drives forward with a 
spare wheeL It can take more 
than a minute to get help,” 
says Sherwen. 

Similar equipment has long 
been in use in automobile rac- 
ing. Motorola has worked with 
the Benetton Formula l team 
and with Indy Care in the US, 
but every ounce counts when 
cyclists have to pedal for six 
hours up 12,000 ft mountain 
roads. “Motorola managed to 
cut the weight of the receiver 
unit to just 2.5 ounces by modi- 
fying a standard Minitor 
pager,” says Paul Sherwen, “It 
is just light enough for the rid- 
ers to accept the burden.” 

Max Glaskln 


•-»*£. AT- • 


r'V 



Network management centre: with the gtobaRsaUon at business, targe companies demand an uninterrupted 
flow at Information, flexible provisioning and a range of tr an smission options. The Cable & Whelms aqiport 
centra, above, » open around the dock. 3 65 days a year. 








XVI 


FINANCIAL TIMES MONDAY OCTOBER 17 1994 


INTERNATIONAL TELECOMMUNICATIONS 16 


T 

fc 

c 

o 

ft 



Telecom reforms: lessons learned 

Monopolies 
will have to 
be abolished 

Book review: 'Implementing Reforms in the 
Telecommunications Sector Lessons from Experience.’ 
Edited by Bjorn Wellenius and Peter A Stem; 

The World Bank, 757 pages; price $59.95 


Hong Kong Telecom's 
Wireless, using satellite ca 

□ Continued from 

previous page: 

take up of traditional email 
does not match the quoted 
numbers for the Internet, 
which has 30m users world- 
wide. The Internet - or “The 
Net,’* as it is commonly called 
- covers around 140 countries 
and is expanding at the rate of 
ten per cent a month. Well 
over two million computers 
are linked to the network. 

In the UK alone, there are a 


i earth station links the global digital highway network of Cable & 
i London and Hong Kong 


B jorn Wellenius is tele- 
communications adviser 
to the World Bank and a 
respected authority on tele- 
coms development and 
restructuring. He and Peter 
Stem have done a great service 
to governments and the tele- 
coms industry by bringing 
together this collection of 
studies on the international 
experience of reform In the 
telecoms sector. 

The lessons are of critical 
importance to developing and 
developed countries alike. Vir- 
tually everyone agrees that 
telecoms modernisation is a 
spur to economic growth, and 
will become steadily more 
important as the information 
revolution advances. 

Governments start from 
starkly differing positions, 
within as much as between 
regions. At this summer’s con- 
ference of the Asia-Pacific Tele- 
community in Bangkok, a 
speaker hailing the advance of 
the superhighway in Australia 
was followed by another from 
Papau New Guinea recounting 
the treks faced by villagers 
wanting to reach a rural pay 
phone. There is no pretence in 
this book - which Includes 
case studies of countries at all 
stages from development from 
Sri Lanka to France - that 
reform can proceed without 


allowance for distinctive 
national ar>d regional traits. 

Nor is there any simplistic 
assertion that “big-bang” 
change is the only viable strat- 
egy. The US telecoms industry 
has retained its leading edge 
within the confines of a law 
drafted in 1334 - which looks 
set to survive for some while 
yet following the collapse of 
this year's Congressional legis- 
lation - while the Canadian 
telecoms industry operates 
within a law adopted in 1906 
which is only now being 
redrafted. 

In the developing world, 
“build, operate, transfer" con- 
tracts have evolved to inject 
private and foreign capital 
without breaching formal 
monopoly regimes. 

Even China's ministry of 
posts and teleco mmunica tions 
looks set to devise an elaborate 
ruse to the same effect, follow- 
ing contracts signed in princi- 
ple this month with Cable & 
Wireless, the UK group which 
owns a majority stake in Hong- 
kong Telecom. 

Yet the basic argument of 
the book, repeatedly pro- 
pounded by the editors and 
contributors, is simple and uni- 
versal in its application: that 
the only effective way to 
counter persistent shortfalls in 
telecoms investment is for gov- 



tadlopagwss* a tahtonscewswY: in southeast Asia smart 

touch with the company by using a private mobile radio system - In a ranga^aWo teS fro m red jurtig 
green. The systems being worn here are PhBps Messenger pagers, offering tone, numeric and taxi tecnitms. 


Business users are attracted by the Internet 


million Internet users and 
numbers are growing, accord- 
ing to David Mooring, market- 
ing consultant with Pipes, a 
reseller of Internet connec- 
tions. 

Pipes and others are target- 
ing corporate customers, and 
they could provide more of a 
competitive threat to the tradi- 
tional electronic mail services 
market. Mr Mooring points 


out that today most of those 
users are academics, but adds: 
“The number of commercial 
users is growing. J reckon that 
in a year's time there will be 
more nonacademic users than 
academics.*' 

However, Neil Lawrence 
believes that business custom- 
ers are attracted by the con- 
cept of the Internet, but find 
they need the greater security 


features of the business mess- 
aging networks. “Once people 
consider investing, they ask ‘Is 
it secure?' and ‘Do I get an 
audit trail?”* he says. 

Mr Lawrence reports an 
increased number of enquiries 
for British Telecom’s messag- 
ing services in recent months, 
in response to the Internet 
marketing campaigns. 

Jenny Proctor believes the 


email market will split into 
two groups: serious business 
applications and personal 
“chaf/lightw eight business 
use. 

She sees an emerging group 
of business customers who 
wifi require a more sophisti- 
cated electronic mail service, 
which the telephone compa- 
nies are in the best position to 
provide. 


emments to attract greater pri- 
vate sector participation. And 
tha t can only be done by abol- 
ishing monopolies, withdraw- 
ing the state from the direct 
provision of services, and open- 
ing up telecoms services and 
infrastructure to new entrants. 

Wellenius and Stem note in 
the preface: “Traditional state 
monopolies are giving way to 
more complex sector struc- 
tures that seek to overcome 
past constraints on telecoms 
development through commer- 
cialisation of operations, com- 
petition and private sector par- 
ticipation." 

Six hundred pages later, 
Richard Schultz wraps up the 
study with a subtle attack on 
the “exaggerated fears of 
restructuring." highlighting 
the “enhanced and refur- 
bished" role left for the state 
after privatisation and regula- 
tory reform. For policy-makers, 
the most useful of the 39 inter- 
vening chapters are the intro- 
duction and the regional over- 
views, which set reform 
programmes within the broad 
parameters of public sector 
constraints and ttu» dpmands of 
private investors. 

The introduction by Wellen- 
ius and Stern is about politics 
as much as telecoms. Discuss- 
ing the slow pace of reform in 
sub-Saharan Africa, they note 
that the region could have 
“most to gain" from reform but 
that little has happened in part 
because “national security is 
still a politically significant 
issue, compounded by a 
broader concern about foreign 


control of key factors of eco- 
nomic production and distribu- 
tion”. The rapid development 
of telecoms in Latin America is 
explicitly linked to the return 
to democracy across the region 
in the late 1980$. 

The thesis that economic lib- 
eralisation requires prior polit- 
ical liberalisation is hardly 
novel o or Is it necessarily dis- 
proved by China’s experience. 

In the case of telecoms, how- 
ever, it is a challenge to those, 
notably in the US, who see 
telecoms development and the 
“global information infrastruc- 
ture" as a means to promote 
democracy and all that goes 
with it The reverse is probably 
the reality. I shall never forget 
a phone interview earlier this 
year with a western business- 
man in Rwanda’s capital of 
Kigali, across a brilliantly 
clear fibre-optic international 
line, as he described the 
slaughter and mayhem taking 
place in the streets outside. 

L atin America is the devel- 
oping-worid model which 
inspires the authors. 
Chile led the way with privati- 
sation in 1987; in Argentina, 
Mexico and Venezuela subse- 
quent privatisations were com- 
pleted in less than two years 
(only in Mexico was much 
done to improve the network 
before privatisation); and most 
other countries in the region 
have followed suit. 

In his over-view, Wellenius 
pronounces most of the 
reforms broadly successful, 
although he notes serious regu- 


latory issues which remain 
unresolved. His rule of thumb 
is that privatisation and liber- 
alisation can be carried 
through in two or three years, 
but it takes a decade to sort v 
out the regulation. 

A key factor in the Mexican 
reform process was the open- 
ing of the cellular market to 
competition at an early stage 
of the reform process. This is 
also the case across Asia-Pa- 
cific and Europe, where compe- 
tition in cellular networks is 
now widespread and is being 
extended to fixed-line net- 
works. 

There are three clear bene- 
fits to such an incremental 
strategy: it obliges govern- 
ments to tackle inter-connec- 
tion and regulation of the state 
operator before its main busi- 
ness is subject to competition; 
it forces the pace of reform in 
the fixed-wire sector, where 
political and trade union obsta- 
cles to change are greater; and 
it brings together consortia, 
often led by non-telecoms 
groups such as Mannesmann 
is Germany and Bouygues in 
France, which can move across 
to the larger fixed-wire sector 
as liberalisation advances. 

The mobile communications 
sector, becoming ever more 
important, is strangely 
neglected. The absence of an 
index is frustrating. But the 
book is nonetheless a bible far 
those contemplating structural^ 
telecoms reform. 

Andrew Adonis 


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FINANCIAL TIMES SURVEY 


BUSINESS SCHOOLS; AN A-Z GUIDE 

Monday October 17 1994 


L ogically speaking, business 
schools should thrive in a 
period of uncertainty and rapid 
change- The knowledge, ideas and 
high octane brainpower with which 
the best ones are blessed, after all 
are potentially priceless assets for 
companies seeking a competitive 
edge. 

Yet for all the campus insights 
into derivatives trading, global 
markets and how to harness 
information technology - not to 
mention “softer” issues such as 
leadership and teamwork 
management education institutions 
in the US and Europe are in a 
hesitant mood. There are tentative 
signs, to be sure, that demand for 
executive programmes has picked up 
and that more young managers may 
again be prepared to invest in their 
own futures by embarking on a full- 
er part-time Masters of Business 
Administration (MBA) degree. But 
amid the fragile hopes for an early 
recovery, anxieties remain. 
l Have business schools yet done 
enough to dispel their old image of 
inward-looking institutions 
semi-detached from the real world? 

If so, how do they retain the best 
academic values of the universities 
from which many were spawned 
while addressing the pressing 
short-term needs of their rnmmwmiai 
customers? Is co-operation with 
competitors the only way to achieve 
critical mass internationally? And 
like the companies they advise, how 
do they hang on to, and manage, 
their own top talent? 

At least schools appear to be 
shaking off one persistent shadow, 
namely the never-very-convxncing 
argument that formal management 
education is a waste of time, that 
there is no substitute for 
seabaf-thepants learning. 

Few would quibble with the 
second part of that statement - 
hence the rethink of MBA courses to 
include more project work and the 
growth of short “company specific” 
training programmes - but the 
ever-growing complexity of general 
management these days and the 
speed with which new ideas and 
information flow across national 
boundaries have also reinforced the 
value for executives of stepping 
outside their own immediate 
working environment from time to 

limp 

That message, however, now has 
to be powerfully sold by business 
schools in a way which was almost 
unnecessary in the more 
free-spending 1980s: the marketing of 
courses of all kinds is an 


Though there are signs of a pick-up in demand for MBA 
courses and executive programmes, management institutions 
in the US and Europe are still hesistant, writes Tim Dickson 

An image that is blurred 

by diversity 


increasingly sophisticated, 
time-consuming and expensive 
activity. 

The extra effort is partly the 
legacy of a recession which slashed 
corporate training budgets, reduced 
through “delayering” the pool of 
middle managers who traditionally 
fill most seats in classrooms, and left 
those remaining in work so 
preoccupied with the task of self 
survival that “time-outs" at business 
school became impractical 
The job market, moreover, became 
markedly more difficult for 
graduating MBAs - and salary 
premiums less juicy - requiring 
schools to invest much more energy 
in helping students with their 
careers. 

Even If there is anecdotal evidence 
of recessionary pressures starting to 
ease, the direction, scale and 
sustainability of demand remains far 
from dear. While top European and 
US schools are reporting more 
interest in executive programmes, 
the extent to which this has affected 
so-called company specific 
programmes as opposed to open ones 
(where participants come together 
from different organisations) 
seemingly varies from institution to 
institution. 

The MBA outlook is equally 
patchy. Professor George Bain, 
principal of London Business School, 
concedes that there has been an 
important shift in the market from 
full-time programmes to part-time 
courses which can. be combined with 
a full-time job. LBS reduced the sire 
of its recent foil- time intake - “to 
preserve the quality of participants” 
- but Prof Bain says the school is 
experiencing “buoyant" demand for 
its (part-time) executive MBA. 

Prof Leo Murray, director of 
Cranfield School of Management, 
says demand for his full-time 
programme has recently been “much 
better” - but he agrees that the 
market as a whole has continued to 
grow in the UK only because of the 


various part-time delivery 
mechanisms, notably distance 
learning. 

To a large extent, such diversity 
should be welcomed: it makes 
management education accessible to 
a for wider range of participants, not 
least managers in the public sector 
(or fonner public sector) who are 
much better represented on courses 
offered by the new universities or 
fonner polytechnics than they are in 
the more established business 
schools. 

On the other hand, the 
bewildering range of MBA suppliers 
today - the number of business 
schools increased fivefold in the UK 
in the 1980s - has altered the image 
of what was once a relatively 
uniform and internationally 
tradeable passport to business 
success. 

T he market is no doubt the 
most reliable judge of quality 
and the American system of 
independent business school 
accreditation sometimes cited as a 
model for from ideal; nevertheless 
calls for tougher standards and 
better consumer protection are 
unlikely to fade away. “It would be 
nice to be able to distinguish the 
real thing, like champagne,” says Mr 
La do Van dm- Heyden, co-dean of 
Tnsaad- 

One issue which schools can no 
longer duck is the changing nature 
of their relationship with companies. 
As with all businesses, the customer 
is getting closer. To some extent this 
is a funding issue - Insead last year 
went out to corporate sponsors to 
build up an endowment of 
permanent capital - but it is also 
what big companies increasingly 
expect 

“In the past businesses looking for 
a company specific programme 
wanted just that - a programme," 
pyplairts one dean. “Now it is a mix 
of learning, consulting and research. 
The course we run would be a 


catalyst for change throughout the 
whole organisation and would 
typically be preceded by a lot of 
consultancy.” 

Mr Mike Osbaldeston, chief 
executive of Ashridge In the UK, 
says that consultants and 
management educationalists now 
often work together. “The dividing 
line is becoming increasingly 
blurred,” he suggests. “Whether you 
are developing individual managers 
or organisations doesn't matter - 
companies themselves are trying to 
do both”. 

Mr Osbaldeston believes that 
business schools on the whole have 
thrown off their “remote, academic 
and insufficiently practical" image, 
though he says the picture lingers 
on in some sections of the press. 

Nevertheless, formidable chal- 
lenges remain as schools try to make 
sense of today's corporate quick- 
sands, as much for themselves as for 
their clients. The need to be more 
international - in terms of students, 
faculty and course content - is one 
dear imperative but achieving the 
right balance has not been easy for 
institutions with mostly strong 
domestic roots. Hence the popularity 
of exchange programmes and alli- 
ances, a trend which is likely to lead 
to closer cross-border co-operation 
between schools. 

Business - school corriculums, 
meanwhile, require more than just 
an international flavour. Much 
soul-searching has already been 
devoted to translating the old verti- 
cal approach (marketing, finance, 
economics, etc) into a more inte- 
grated, cross-functional teaching 
style (better reflecting real world 
problems). The experimentation 
phase has yet some way to go. 

The remaining contents of this 
survey - which concentrates largely 
on the MBA rather than company 
programmes as such. - are an 
attempt to spell out some of these 
issues for would-be participants and 
recruiters alike. 



A 


After the 
golden age 

APPLICATIONS 
In retrospect, the late 1980s 
look to have been a golden age 
for European business schools: 
between 1987 and 1990. for 
example, MBA student num- 
bers grew at an estimated com- 
pound rate of IS per cent per 
annum in the UK. Recent 
trends, though, have been 
more sobering. Recession, ris- 
ing job insecurity, and indus- 
try and media criticism of the 
MSA's relevance have visibly 
checked the expansion of tradi- 
tional full-time MBA pro- 
grammes. 

The question now is whether 
the 1994-95 student intake will 
turn the tide. So far, the signs 
are mixed. In the UK Warwick 
says the number of applicants 
for its one-year full-time MBA 
programme increased by 5-10 
per cent this year and predicts 
“one of the best classes ever”. 
Lancaster is also upbeat, 
reporting a 20 per cent increase 
in demand for the 50 places on 
its full-time course - “to levels 
higher than before the reces- 
sion in 1990”. Other schools 
indicate that there is an 
increase in the numbers actu- 
ally signing on of 4 to 20 per 
cent. 

On the other hand, London 
Business School, the market 
leader in the UK, accepted only 
140 students for Its two-year 
full-time programme be ginning 
in September, against ISO this 
time a year ago (a figure which 
itself was slightly down on 
1992). London, which points 
out that it still had more appli- 
cants than last year, explains 
the fall by its determination to 
select only top quality candi- 
dates. 

Insead’s September intake of 
235 is marginally up on last 
year with Ms Helen Henderson, 
the school's admissions direc- 
tor, reporting that candidates 
are “better prepared and more 
committed” than at the end of 

Continued on next page 


Get one step ahead 


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■ An intensive part-time program for managers with 10+ years of 
experience from one of the world's leading business schools. 

■ Starting each July, 14 weeks of direct coursework spread over 
18 months and including four weeks of interchange with 
Chicago's U.S. Executive M.B.A. program. 

■ Taught by the same distinguished faculty that teaches in 
Chicago's U.S. programs — more Nobel Prize winners than any 
other business school. 

■ Participants from many different countries and industries — 

14 nationalities in the first cohort that started in 1994. 

■ New, first-class facilities in the centres of both Barcelona and 
Chicago. 

To get one step ahead, call or write: 

International Executive M.B Jk. Program at Barcelona 

The University of Chicago Graduate School of Business 


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08007 Barcelona 
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Tel: +343 488 33 80 
Fax: +34 3 4883466 


1101 East 58th Street 
Chicago, Illinois 60637 
U.S.A. 

Tel: +1 312 7022191 
Fax: +1 312702 2225 


Evening information receptions will be held: 


In Brussels on 

Monday, October 24; 6:30 p.m. 
ot the Brussels Hilton 


In London on 

Tuesday, October 25; 6:30 p.m. 
at the Grosvenor House 


To confirm your attendance at a reception, please call or fax one 
of the numbers above. 


Our day-release MBA 
lets you practise 
what we teach. 


At London Business School, we understand that although you may want an MBA ro further your career, 
your commitments won't allow you to take two years off work to achieve it. 

It is for this reason chat we offer our Executive MBA - a 30 month, day-release programme beginning in 
January each year. 

The advantage of this course is char on the days you're not in the classroom, you can be back at the office — 
applying everything you have learned ro your iob and, of course, getting paid to do it. So not only will you be able 
to benefit from the Executive MBA Programme straight away, so will your employers. Which is why such a large 
number of our students are sponsored by rheir organisations. 

What's more, because it is a day-release as opposed to an evening course, you are learning when you are 
at your most alert, rather than trying to concentrate after a hard day at the office. 

You will be taught to the same standard, by the same faculty and receive the same degree as the Full-time MBA 
Programme. And because it's from London Business School, it will rank you amongst the most highly qualified 
professionals in the world. 

Applications received by 15 November will be considered for the programme starting January 1995, provided 
there are places available. 

If you would like more in formation please return the coupon or call the number below. 

Fbr farther information, please attach a business card or write/Fax to Mrs Gai Le Roy, MBA Information Officer, London 
Business School, Sussex Place, Regent’s Park, London NW1 4S A Telephone: 071 262 5050, extension 3572. Fax: 071 724 7875. 


Name 


JobTnlc; 


Company: 


Fmno 


Address: {□ home or □ office) 




Postcode 

Telephones 


Number of years work experience - 


Do you hold an undergraduate degree?. 


London 

Business 

School 











- 


FINANCIAL TIMES MONDAY OCTOBER 1 7 1 994 


BUSINESS SCHOOLS: AN A-Z OUIPE II 


After the 
golden age 


Continued from previous page 


the 1980s; 1MD considered 
expanding its MBA class to 
two sections but is glad it did 
not: its "conversion" rate is 
high with only 100 offers 
needed to fill 83 places this 
year. 

While part-time programmes 
have generally held up better 
to recession, the tentative evi- 
dence so far this year is also 
mixed. The Association of 
MBAs suggests some employ- 
ers are more reluctant to sup 
port their employees with the 
payment of fees. Reliable dis- 
tance learning figures are even 
harder to establish: Amba esti- 
mates that around 4.000 new 
students started programmes 
in the UK in 1993-94. against 
more than 3,100 a year before. 
It is too early to gauge demand 
for the “class" of 1994-95. 


The big issue 
is quality 


Amba has accredited roughly 
a third of the UK's 99 business 
schools, plus a dozen of their 
leading continental European 
counterparts. Last year it 
accredited a distance learning 
course for the first time. 

As university institutions. 
UK business schools must be 
accredited by the Higher 
Education Funding Councils, 
which are charged with 
assessing the quality of 
teaching and research. 

However, the funding coun- 
cils’ approach to inspection 
and assessment might not be 
much help to applicants trying 
to choose a business school. 
For teaching, the funding 
council for England separates 
university departments into 
only three grades, one of which 
has not yet been used. 

Every English business 
school's teaching is either 
“excellent" or “satisfactory", 
according to the council. Had 
any Institution been found to 
be “unsatisfactory”, the third 
available ranking, there would 
have been serious questions 
over its future. 

An “excellent" rating is a 
genuine feather in an instit- 
ution's cap, but “satisfactory” 
is very broad. 


that many are fads - here 
today ancLgone tomorrow. Sev- 
enty-five per cent of all quality 
circles begun with enthusiasm 
in the US in 1982, for example, 
had been discontinued by 1986. 
The management writer Rich- 
ard Pascale neatly illustrated 
the point in his book Managing 
on the Edge (Simon & Schus- 
ter, 1990) with a graph showing 
the ebbs and flows of business 
Eads based on the frequency of 
citations in academic litera- 
ture. 


C 


Both sides of 
the case 


ACCREDITATION 
Given the proliferation of 
schools and courses, quality 
control is now a big issue in 
western management educ- 
ation. In the VS the American 
Assembly of Collegiate Schools 
of Business (AACSB). which 
drastically revised its criteria a 
couple of years ago. accredits 
most institutions offering the 
MBA and other Masters of 
Management qualifications. 

Europe has no single 
authority but the nearest 
equivalent is the UK-based 
Association of MBAs (Amba). 
which administers an accred- 
itation scheme linked to a soft 
loan programme for UK 
students. 


Buzzwords 
buzz off 


BUZZWORDS 

Business schools are bursting 
at the seams with buzzwords. 
“Internationalism", “leader- 
ship”. and “soft skills” are 
three which are hard to miss 
on most campuses at the 
moment 

The thing to remember is 


CASE METHOD 
The case study method is the 
best-known - and now possibly 
the most controversial - form 
of teaching in business schools. 
Pioneered in the US and 
closely identified with Har- 
vard. the term case refers to a 
written description of a busi- 
ness situation faced by a deci- 
sion maker at some point in 
time. Names, places and other 
details are sometimes dis- 
guised but they are almost 
always based on real events 
and real people. 

The case study method has 
also been widely adopted in 
Europe, where the undergradu- 
ate business tea ching approach 
has traditionally been instruc- 
tion based. “We agree that 
cases are a very good simula- 
tion for future settings,” says 
Mr Ludo Van der Heyden, co- 
dean of Insead, which along 
with IMD at Lausanne is spear- 
heading a drive to research 
and publish more cases about 
European companies. “We find 
that students remember them 


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and the concept they are 
meant to illustrate years 
later." 

Nevertheless. Mr Van der 
Heyden feels cases should not 
be over-used, that they are 
sometimes too long, and that 
they should be a vehicle for 
illustrating wider issues rather 
than reaching a specific solu- 
tion. “A good case teacher will 
not discuss a case to death. In 
the middle of the class he will 
start generalising and moving 
away from the case.” he sug- 
gests. 

Insead. which also favours 
the use of simulated games to 
provide what Mr Van der Hey- 
den relic **a more dynamic and 
controlled effect,” is harness- 
ing computer and video tech- 
nology to produce what it calls 
“business navigation cases”. In 
this way the school believes 
students can better put them- 
selves in the dile mma of a 
chief executive - with access 
to much, more information 
than would be provided by a 
conventional paper case and 
faced with a more “real-life 
like” range of variables. 

Recent research by the Euro- 
pean Foundation for Manage- 
ment Development - based on 
a survey of 86 graduate schools 
that provided 141 MBA or man- 
agement programmes offering 
masters' degrees - showed that 
more emphasis will be put on 
the case study method, group 
discussion and simulations and 
“other methods" during 1994-95 
courses, and less on the lecture 
approach and project work. 


ture of the UK market 

Very often, part of the course 
Is taught by company staff, for 
which credits are given, with 
the rest done by a partner busi- 
ness school or university. 

Academics are often critical 
of company MBAs. Warwick 
Business School, for example, 
takes the view that “single- 
company or single occupation 
MBA programmes diminish 
not only that MBA programme 
but also Its value to students". 

Warwick argues that “the 
fdlcrum of the MBA's value is 
Its breadth”, breadth which 
comes both from the way 
courses are designed and from 
having a rich mix of class 
members whose varied back- 
grounds add to the learning 
experience. 

Among those schools active 
in the company specific field is 
Henley, with 22 programmes 
running at the moment for, 
among others, BICC, Grand 
Met and Standard Chartered 
Bank. Lancaster runs single 
company MBA programmes for 
British Airways and VSEL. 


The club 
sandwich 


companies - often each from a 
different sector and therefore 
non-competitors - club 
together to find a programme 
which is structured round 
their needs. The business 
school which awards the 
degree keeps an overall eye on 
the academic content of the 
programme. 

One of the pioneers of this 
approach was the City 
University Business School. 
More than 20 companies are 
involved in CUBS' so-called 
management MBA, Including 
American Express, Lloyd's of 
London, IBM UK, Anglian 
Water Services and Ford Motor 
Company. 

Lancaster runs what it calls 
a multi-company modular 
programme for British 
Airways. Royal Mail. BNFL. 
North West Water and British 
Gas. among others. 

Henley has recently 
launched a European con- 
sortium MBA administered by 
its associate in Munich. The 
programme's 15 participants 
came from three different 
nationalities and five different 
pan-European multinationals 
(Mercedes-Benz, Deutsche 
Aerospace, Continental, Union 
des Assurances de Paris and 
Credit Commercial de France). 


Short of 
breadth 


COMPANY MBAs 
These are MBAs tailored spe- 
cifically for a single company 
and are another peculiar fea- 


CONSORTIUM MBA 

This is really a compromise 

between the company MBA 

and a standard full-time or 

part-time degree open to 

everyone. 

The company variety (see 
Company MBA) can he 
criticised for failing to provide 
the sort of stimulation that 
comes of having participants 
from different organisational 
cultures: some standard MBAs 
are accused (by employers at 
least) of being too general and 
insufficiently relevant to the 
needs of employees. 

The so-called consortium 
version is where a number of 


The burdens 
are heavy 


COSTS 

The MBA can Involve a large 
financial sacrifice. The cost of 
a one-year, full-time course in 
the UK can be well over 
£20,000, taking account of 
living costs and lost earnings 
opportunities. A two-year 
course at a US business school 
could cost a total of some 
$80,000. 

Business school fees are 
continuing to rise, although 



fl gold medal winner in Seoul and again in Barcelona. 1 was 
introduced to soiling at the age of six. fl 'perpetual 
dreamer' , I learned that team cooperation 
BLJand mutual support do not conflict uuith 
y- .' personal achievement at the highest level. 
Together with my pursuit of a vision, that 
making the cover of SAILING 
WORLD. I came to appreciate houj 
best to enlist the assistance- of peers 
▼ ond competitors towards the 
realization of common goals. 

• However, I had to wait for ISA’s 

* bilingual MBA education to feel 

equipped to start my own sailboat 

W manufacturing firm. The clincher is 

I that: at ISA, they make you work 

1H harder than for the Olympics ! 




Ic 10 u peI 


Nicolas HENARfl 
\um 

ENTREPRENEUR 


I, « H O O l or 


INSTITUT SUPliRlEUR DES AFFAIRES 


To request a brochure and an application form, 
please write to: ISA Admissions 
1, rue de la Liberation 
78351 Jouy-en-Josas cedex 
Fax: (331) 3967-7465 
Deadlines : 

1“ February 95 
I s April 95 


CHAMBR6 W COMMBJtt El DTNDUSrWEK PAW 


the pace of increase has slowed 
down recently, following 
several years of steep 
Increases. Last year, fees 
roughly rose in tine with 
Inflation. 

Top US schools, such as Har- 
vard. MIT, Stanford and Whar- 
ton, charge fees of about 
$20,000 a year. European 
schools, which tend to take 
just a single year to complete, 
are cheaper. However, a top 
school such as Insead costs 
FFr145,000. 

Most UK business schools 
charge fees of around £6.000 to 
£8,000. But there is a large 
range, from £5,000 for Heriot- 
Watt University to £15,000 for 
Manchester Business School. 

Fees for part-time MBAs are 
often more expensive than 
full-time courses, but the finan- 
cial pressures on the student 
are reduced by continuing to 
earn a salary. 

The heavy cost of taking an 
full-time MBA Is one explana- 
tion why part-time and dis- 
tance learning programmes are 
becoming more popular. In 
19921, more than two-thirds of 
MBA students remained in 
employment while studying. 

Some of the costs of pursu- 
ing a two-year, full-time MBA 
can be defrayed by getting an 
inte rnship In the summer vaca- 
tions. Students are sometimes 
able to combine studying with 
part-time work In two-year 
courses when the work pres- 
sures are not too intense. 


The way of 
the future 


DISTANCE LEARNING 
An almost exclusively British 
style of MBA delivery at the 
moment, many experts feel dis- 
tance learning is the way of 
the future. For others the very 
idea of a correspondence 
course contradicts the class- 
room teaching and group dis- 


cussion approach, which they 
say is the essential heart of 
this postgraduate qualification. 

Students on a distance learn- 
ing course study from home - 
usually on their own in the 
evenings or at weekends - but 
they are often assigned a tutor 
whom they can contact with 
problems and attend summer 
schools, weekend seminars, 
and local support groups. Pro- 
grammes typically take at least 
three years - sometimes con- 
siderably more - to complete. 

The Open Business School, 
whose teaching material is 
widely admired, is the market 
leader in the UK and is expand- 
ing into Europe. More than 
5,500 managers are studying 
for Its MBA (including about 
800 on the Continent). It 
expects to be providing more 
than 20 per cent of all UK MBA 
graduates within two years. 

Henley Management College 
Is well-established and was 
also early Into the field. It now 
has more than 5.000 students 
on its distance learning pro- 
grammes, either registered 
directly with Henley or 
through one of the school’s 19 
associates around the world. 

Warwick's 1,000th distance 
learning graduate will emerge 
next summer. Another early 
pioneer, the school has over 
U500 students at various stages 
of its three- or four-year pro- 
gramme, based in more than 70 
countries. Warwick is keen to 
stress its flexibility, pointing 
out that students can start on 
a part-time MBA within travel- 
ling distance of the City and 
transfer to, say. distance learn- 
ing if moved to another part of 
the UK or overseas. 

Herioc-Watt claims to have 
attracted mare than 8,000 stu- 
dents over the last three years, 
including students sponsored 
by multinationals such as IBM, 
Toshiba and General Motors. 
The school says its course 
material is entirely self-suffi- 
cient and that there is no 
requirement for tutor contact 

Kingston University, south 
of London, and Durham Uni- 
versity in the north of England 
are among other schools offer- 
ing MBAs by distance learning. 



THE UNIVERSITY 
OF BIRMINGHAM 


THE BIRMINGHAM BUSINESS SCHOOL 


MBA 


IN INTERNATIONAL 
BANKING & FINANCE 


Specialisms offered in 
Corporate Finance, Banking or Investments 


For further details of this prestigious 1 year full-time 
programme, contact Dr P J Cadle, 

The Birmingham Business School, 
PriorsfieW, Edgbaston, Birmingham, B15 2RU. 


Telephone 021-414 6239. Fax 021-414 8238. 


WHARTON 


Attend the January 29th 
session of the 
Wharton Advanced 
Management Program. 


LIKE NO OTHER ADVANCED 
MANAGEMENT PROGRAM IN THE WORLD. 


Because demand for this program 
been so strong, we are pleased to announce 
an additional session - January 29 - March 3, 1995. 


Five-Week Length 

You need to prepare tor the challenges ot today and tomorrow - In 
a reasonable amount of time. At Wharton, the five weeks are 
intense, in a world in which competition Is constant, you can't 
afford to be away any longer. 

Small Class Size 

The dass is limited to « senior executives from around the world. 
en^Kng us to be highly selective. Classroom discussion Is rich 
and varied, drawing on the experiences of all participants. 


Personal Development 

?!^„ SU ?5?l inC ^ aSl,lgly depends 0n your ability to lead diverse 
team* Wharton s program enables you to understand your 
strengths and weaknesses. Pre-course work. Individual coaching 
and team exercises help you to maxfmfoeyour leadership abilities. 
Broad Curriculum 

The Wharton AMP locuses on your role as a leader and the skills 
COT, P euUve sfrwegi®. Only Wharton 
k“ slru f s w*th foculty from the arts and 

y ° W lraraework P robten "W 

>r more Mom * ton on this luilque. Advanced Management Program, 
contact us at (215) 898-1776, ext 1321. 

■ Wharton AMP Dates: 

January March 3, 1995 • June 4- July?, 1995 
September 17 - October 20. 1995 


Utiiartm 


of the UnhJriy 

— - WHAOTONEXEnmvr EDUCATION 

Philadelphia. PA 19104-6359 ’ 

KKSMXECert.1321 (2 IS) 89S- 1778 ezL 1321 • RX AHk Dept 1321 (215) 38MW 


)i * % ’ 


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FINANCIAL TIMES MONDAY OCTOBER 17 1994 


BUSINESS SCHOOLS: AN A.-Z GUIDE III 


fj/l 


It’s too much 
for them 

DROP-OUTS 

Only a vary small proportion 
of students drop out of 
full-time MBA programmes in 
Europe and the US. The major- 
ity of these are probably 
caused by ill-health: even at 
the best schools candidates 
who have passed the admis- 
sions test are sometimes forced 
to leave If they fail to perfonn. 

The casualty rate for 
part-time courses and distance 
learning - particularly the lat- 
ter - tend for fairly obvious 
reasons to be higher. Combin- 
ing an MBA course with a 
full-tune job presents special 
challenges and the isolation 
inherent in studying from 
home proves too much for 
some candidates. 


If 




BA 


RN-YJSONAl ; 
; s f .'NANCE ; 

-. - . ' P- •• . 


7 Learning 
over there 


EXCHANGE PROGRAMMES 
As MBA courses try to become 
more international, some 
schools are offering students 
the chance to spend a term 
overseas at schools to which 
they are affiliated. 

For example, Manchester 
Business School is affilia ted to 
40 schools including Kellogg, 
Chicago and Berkeley. London 
Business School organises 
exchanges with 25 business 
schools around the world. 

The demand from students 
for exchanges, which typically 
occur in the spring term of the 
second year, often exceeds the 
availability of places. 

Students generally relish the 
stimulation of living abroad 
and studying at a different 
school for several months. The 
potential disadvantages of 
exchanges include incurring 
extra living expenses and 
spending time away from the 
job search. 


Rolls-Royce 
* of the market 


EXECUTIVE MBAs . 
Sometimes used in the UK as 
an alternative title for 
part-time programmes, the 
executive MBA is normally : 
used to denote the seniority of 
the “students" involved. This 
type of course Is also generally 
regarded as the Rolls-Royce of 
the MBA market, being aimed 
at high-flying executives whose 
companies pay the fees. 

Particularly popular in the 


US, these courses are typically 
held on Fridays and Saturdays 
and in week-long "bites” and 
field trfps. Employers are often 
attracted by an approach 
which combines work and 
theory In a potentially 
valuable way. 

The Universtty of Chicago 
School of Business is using a 
newly launched executive 
MBA programme at Barcelona 
to spearhead its international 
expansion. The part-time 
programme - 10 modules of 
one to two weeks spread across 
18 months - is the first one a 
leading US business school has 
offered in Europe that leads to 


The bulk of the first intake - 
which had their first class in 
July - are from European 
com p ani e s and almost all have 
at least 10 years of work 
experience. 

London Business School's 
next executive MBA course 
does not start until January 
but a spokesman said that 
inquiries had doubled over the 
last year. London also ba lives 
that companies such as 
Bankers Trust, Mercury, Blue 
Circle and British Airways are 
using flwdhip ' options Him tts 
executive MBA as a strategy 
for retaining high flying 
managers. “This, of course, is 
only feasible in a programme 
where participants do not 
leave their jobs”. 


What banks 
will lend 


FINANCE 

The most popular method of 
financing a MBA is through 
savings although bank loans 
also play an important part. 

Many countries offer 
Students help in finan cing 
MBAs through low-interest, 
long-term loans offered to 
students either with 
government backing or 
through private banks. 

In the UK, Amba administers 
a Business School Loan 
Scheme on behalf of Barclays 
and National Westminster 
banks. 

For students doing a 
full-time course, the bank will ! 
lend a marlnium of two- thirds 
of last salary plus tuition fee 
for each year of study at a 
reduced rata 

The repayment of the loan, 
which takes up to seven years, 
starts three months after the 
completion of the course. 

Take-up of the loan scheme 
is currently running well 
below levels at the turn erf the 
decade, reflecting an 
unwillingness an the part of i 
borrowers to take on debt and ! 
an unwillingness on the part of 
bank managers to lend to MBA j 


students without collateral. 

Students on a one-year 
course who are not accepted 
for an Amba loan may be able 
to apply for a Career 
Development Loan. 

Repayment of the loans, 
which are organised by the 
Department of Employment 
with Barclays, the Clydesdale 
Bank and the Co-operative 
Bank, begins three months 
after the study period Is 
completed. 

Some students get financial 
support from employers, 
particularly those doing 
part-time MBAs or distance 
learning MBAs. Amba 
estimates that 60-70 per cent of 
finance for these courses 
comes from employers. 

Although some employers do 
contribute to fees of full-time 
MBAs, they are generally 
deterred by the likelihood that 
students will want to change 
jobs at the end of their course. 

Full-time 
gets shorter 

FULL-TIME MBAs 
The classic model for the MBA, 
developed in the US, is the 
two-year full-time programme. 
While this is still the norm in 
North America, one year is 
now much more typical In 
Europe. 

Only London Business I 
School in the UK, for example, 
now offers a two-year course 
with IESE in Barcelona a rare 
continental example. 
Manchester (which now 
promotes its programme as a 
12-month minimum, id-month 
maximum, or 15-mouth 
“standard") and Erasmus- 
Rotterdam in the Netherlands 
have both reduced the length 
of their full-time courses in 
response to what they say is 
market demand. 

Institute de Empresa in 
Madrid runs a 16-month 
programme including four 
months’ paid internship in a 
national or multinational 
company. 

Job insecurity and the high 
opportunity cost obviously 
have much to do with the 
latest trend, but London is 
sticking to its guns. The school 
believes that one of the 
problems with a one-year MBA 
programme is that students are 
forced to start looking for a job 
almost from the moment they 
start their course. More 
importantly, though, it argues 
that two years allows time for 
more in-depth study, notably 
through more project work 
with companies. 

Most one- and two-year 
programmes split into a set of 
compulsory core courses (eg 
finance, marketing, operations 
management, followed by 
elective courses (see Optional 
Courses). Most will include a 
mandatory fa-company project. 



It’s a 16-month stint at the institute de Empress in Madrid 


G 


Not quite a 
welcome mat 

GMAT 

Pronounced Gee-mat, these 
letters stand for the Graduate 
Management Admissions Test, 
a requirement for most busi- 
ness schools round the world. 
Some institutions (notably 
Harvard) have devised tests of 
their own, but in many cases 
these cover similar areas of 
numeracy, literacy and verbal 
and numerical reasoning as 
the GMAT. 

A GMAT score, or its equiva- 
lent, is normally the starting 
point of any application for an 
MBA though a good result is 
not a guarantee to entry. Top 
schools usually demand mini- 
mum score levels of at least 
550-600 (out of a maximum, 
though rarely achieved, 800). 
MIT topped a table of US 
schools compiled recently by 
the Economist Intelligence 
Unit with an average score of 
680 per student, while Insead 
headed the European list with 
an average of 650. 

Despite its attraction as an 
international benchmark, the 
GMAT is a controversial . 
admissions tool. A growing | 
number of schools refuse to 
quote their average score on 
toe grounds that it is mislead- , 
fag, while some academics say 
that being only available in 
English, it is culturally biased. I 
Many schools allow for this 
when assessing non-white 
Americans. 

Because of these and other 
worries, the GMAT has 


PARIS CHICAGO MILAN 


recently been revised. From 
this month, candidates will for 
the first time face two half- 
hour essay questions designed 
to test ability to analyse com- 
plex issues and argue a posi- 
tion, as well as the traditional 
multiple choice questions 
divided into several sections. 

The test is given four timw a 
year in January, March, June 
and October in numerous cen- 
tres round the world. A reg- 
istration form and the GMAT 
Bulletin of Information, which 
lists test centres and dates of 
tests, as well as giving sample 
questions, can be obtained 
from the Educational Testing 
Service, PO Box 6108, Prince- 
ton, New Jersey, 08541, US. In 
the UK there are a number of 
independent MBA and GMAT 
training and preparation cen- 
tres. 

US and other 
influences 

GRANDES ECOLES 
The grandes ecoles, which like 
so much In France can be 
traced back to Napoleon, are 
independent of the French uni- 
versities, but closely associated 
with and partly financed by 
local chambers of commerce 
through a compulsory payroll 
tax on employers. 

Originally set up to prepare 
children of wealthy industrial- 
ists and merchants for a career 
in the family business, they 
evolved after the second world 
war into much more profes- 
sional and better focused man- 
agement training institutions, 
influenced greatly by wbat was 
going on in the US. 

Today, there are 21 grandes 
ecoles of management which 
torn out some 6,000 graduates 
a year. Students typically fol- 
low a five-year general man- 


agement curriculum which 
starts immediately after the 
baccalaureat and which is sub- 
divided into two years of dos- 
ses preparatorres devoted to 
pre-business school courses, a 
one-year foundation course and 
the two-year graduate pro- 
gramme proper. 

The qualification they 
receive is generally known in 
France as the masters fa man- 
agement. and is quite distinct 
from the MBA However, Paris- 
based HEC (through its special- 
ist arm the Ins ti tut Superieur 
des Affaires) and Groupe ESC 
Lyon are among those which 
also run MBA courses. 


Information 
at a price 

GUIDES AND BOOKS 
Useful guides Include Which 
MBA?, by George Bickerstaffe, 
a fact-packed directory of the 
leading MBA programmes 
offered by business schools and 
universities around the world. 
The sixth edition, just pub- 
lished, is available from the 
Economist Intelligence Unit, 15 
Regent Street, London SW1Y 
4LR. Price £21.90. 

The UK’s Association of 
MBAs (see Organisations) pub- 
lishes a Guide to- Business 
Schools, an alphabetical direc- 
tory of UK and some continen- 
tal and North American 
schools, with a commentary by 
Godfrey Goizen, price £16B9. 

The UK's Association of 
Business Schools publishes a 
Directory which is issued free 
to aft inquirers. EFMD publica- 
tions (see Organisations) 
includes a new edition of its 
Guide To European Business 
Schools and Management Cen- 
tres (non-EFMD members 
BFr3500), a European Manage- 


How students finance their MBA programme 



World 

North 

America 

Europe 

Rest of 
world 

Sett-financed* 

8Q 

86 

77 

71 

| If self-financed, how was the money reteedTf ] 

Bank loan 

28 

33 

25 

18 

Redundancy pay 

2 

1 

4 

1 

Savings 

41 

36 

45 

53 

Parental help 

IT 

17 

17 

17 

Spouse support 

7 

7 

7 

e 


Itmuu m wK neewdad by Mudantt to wen. 


Sourca. ketch MM? I 


Main qualification before business school (1092) 


Engineering 


Science; moths 


Economics 

Arts; languages 

Social sciences; 
pofitics; philosophy 

Accounts: finance 


CtHn P ut ing ,'jm 4 % Percentage of MBA graduates 

wWl 8 *» **1®** 
statistics (Soma reopondaritt had auoflficattona 

M more than one subject) 

Law H| 2% — I — - 


ment Development Directory 
(details of over 350 executive 
courses from 37 European busi- 
ness schools, BFrS.OOO). and 
The Quality Assessment and 
Accreditation Systems for 
Management Education in 
Europe, a 30-page overview 
(BFr2,000 for non-members). 

A useful source on US 
schools is “The Official Guide 
to MBA programs" (published 
by Warner Books). 

The MBA Career Guide is a 
twice-yearly publication 
(annual subscription £18.95) 
which reviews over 100 leading 
business schools. The Guide's 
publishers (46 Dehmcey Street, 
Regents Park. London NW1 
7RY) provides a free clearing 
house service for business 
schools' own information 
packs, GMAT training and 
scholarship advice. 

Ex-White House speechwri- 
ter Peter Robinson has written 
an entertaining book - Snap- 
shots from Hell - which offers 
impressions of his first year 
studying for a Stanford Busi- 
ness School MBA It is pub- 
lished in the UK this month by 
Nicholas Brealey Publishing, 
£9.99 in paperback. 


Positive 

contamination 


HEALTH SERVICE MBAs 
The changing state of the 
health service wrought by the 


government's health reforms 
has, not unsurprisingly, stimu- 
lated more interest in manage- 
ment development fa the pro- 
fession. 

Health Service MBAs are 
taught at the university busi- 
ness schools of Canterbury, 
Durham and Nottin gham with 
health management electives 
tending to form half of the 
MBA 

Most Interest in health ser- 
vice MBAs is in part-time 
study undertaken over two 
years. 

The two-year Northern 
Health Service MBA at Dur- 
ham is nearly two years old, 
having started in January 1993. 
Average work experience prior 
to MBA study is much higher 
than at most business schools 
- approximately 15 years with 
the average age of candidates 
standing at 37. 

The depth of work experi- 
ence is a considerable 1 advan- 
tage in boosting academic 
achievement, says Mr David 
Stoker, MBA director at the 
university. 

“There is a lot of positive 
contamination with the stu- 
dents learning from each other 
as well as from the course." 

Typically, health electives in 
an MBA include such subjects 
as Health Information 
Systems; Comparative Health 
Care Systems and Health 
Across Europe. 

Duke University's Fuqua 
School of Business claims, as 
part of its weekend executive 
MBA programme, to be offer- 
ing the first US programme 
designed specifically to meet 
the needs of health care indus- 
try managers. 


! : • ( » ■ 

i ; ; 




riof 


Fully Accredited MBA Programs 
Since 1846, Saint Xavier University 
in Chicago has been a leader in 
American education. Accredited in 
Paris, Chicago and Milan by the 
North Central Association of 
Colleges and Secondary Schools, the 
Graham School of Management 
offers MBA classes during evening 
hours and on weekends. An classes 
are taught in die English language, 
with an emphasis on the practical 
application of business knowledge. 
Courses and graduate credits are 
interchangeable among all locations. 


THREE LOCATIONS. 
ONE DEGREE. 

M.B.A. 


Earn Your MBA in Less Than a Year 
If you have an undergraduate degree, 
then you may be able to complete your 
American MBA with only 36 semester 
hours. Register for two classes during 
each of the three semesters per year and 
receive your MBA in about two years. 
Or, join the new full time "fast track” 
program and have an American MBA 
diploma in half the time. 


Learn From International Experts 
Faculty at the Graham School of 
Management have extensive "real 
world'' experience combined with the 
highest level of academic credentials. 
In Paris and Milan, the people 
teaching your MBA classes actually 
work for tnultir national corporations 
and organizations. Areas of study 
specialization include general 
management, finance, human 
resources, marketing and interna- 
tional business. Internships and 
navel-study programs are also 
available for MBA students. 


Saint Xavier University 

Established in Chicago, 1846 

WRITE OR CALL TODAY FOR A FREE CATALOG 


Mr. Joe GoMiamond, Assoc. Dean 
Graham School of Management 
20 Rue dc S ain t-Peiersbourg 
75008 Paris, France 
(01) 42-93-13-87 Fax 45-22-12-65 


The Aston MBA 

A World Class Qualification 

Flexible 

Programme 

Fun-time entry 
in October 

Part-time on/off ll 

campus entry in If 

October, January Ba 

& April ^HR|p 

For farther information on The Aston 
MBA, complete and return this slip to: 
Postgraduate Office, Aston "Bnsno® School, 

Asian University, Birmingham. 04 7ET 
FT/PT/DL (please tide) 

Nam* _ — - — — 

Address . - • • .... 


Past Code _ — Te ^ — ' 

Itt all aaOtl-339 3011 M.4U8) Jr, 

„ MiCMUffivenm 


Dr. Charles Shanabruch, Dean 
Graham School of Management 
3825 West 103rd Street 
Chicago, Illinois, 60655, USA 
(312)298-3600 F*x (312) 779-9061 


Don. Alessandro Mo nets. Asst. Dean 
Graham School of Management 
Piazza del Carmine, 2 
20121 Milano, Italia 
(QZ) 861-647 Fax (02) 861-027 





the modular MBA for 

experienced 

managers 


The Ash ridge 
Executive MBA 
Programme 


Adiridgc Management 
College 
UerkluiiMed 
Herts I UM INS 
hiiltbnd 

Ifojnrv no. 31 HWft 


You're looking for a very special MBA. One that’s practical. One chat can he tailored to 
your personal needs and the demands of your job. One that keeps you in touch wish tin- 
real business world. In short, you want an MBA chat leads to real business achievement. 

Your search ends here. Building on a strong reputation for executive development. 
Ash ridge's MBA programme - designed exclusively for experienced managers - brings 
together a small class of 25 participants Itohi some ten different 'nationalities. 

Tire programme is available both as a one-year ora two-year part-time option. 

Based in a magnificent country house 50km northwest of London, Ash ridge offers an 
unrivalled business school environment in which to lejm and develop. 

To explore how the Ashridgc MBA could be the right career move for you, 
why not visit us at the AMBA Business School Reception at rise loD on 
17 October. Alternatively, ring Doris Boyle on (0442) 841143 (or fox her this 
advertisement with your business card on 841144) - she will be pleased to send 
you further information together with details of Ashridgc's other executive 
development programmes. 








FINANCIAL TIMES 


MONDAY OCTOBER 


{7 1994 


BUSINESS SCHOOLS: AN A-Z GUIDE 


No need for 
nuts and bolts 


INFORMATION 

TECHNOLOGY 

Tiie Information Technology 
MBA aims to tench effective 
management via the use of IT 
and to make information 
systems play a role in corpo- 
rate strategy. The course runs 
at the business schools of City 
University in London and Hull 
University. 

Henley also offers the IT 
Hybrid Manager MBA which is 
built around the consortium 
approach and facilitates the 
interaction between managers 
from the IT function and from 
elsewhere in the organisation. 

The abilities that it aims to 
teach are competence in the 
selection, introduction and 
development of information 
systems to a level that will 
moke IT an effective tool of 
corporate strategy. 

The IT MBA caters for both 
types of candidate - those au 
fait with the nuts and bolts of 
technology and those who are 
not. Ms Anne Leeming, direc- 
tor of the IT MBA at City Uni- 
versity Business School, where 
IT comprises half of the course, 
stresses that a technical apti- 
tude is not essential. 

“It is not a technical course. 
It is focused ou management 
using IT." 

Therefore, the constant 
developments in IT do not 
invalidate a specialist MBA In 
the subject Ms Leeming says 
that the course has hardly 
altered since it began in 1989. ! 


English is the mother tongue. 
Mr Kamran Kashani, the MBA 
programme director, says that 
the “pool" accounts for about 
40 per cent of applications but 
that as a deliberate strategy 
IMD makes sure that only 25 
per cent of its 83-strong class 
“is in that cluster. 

Insead's fresh intake last 
month was 65 per cent western 
European (of which a 
surprisingly high 9 per cent 
are German). 17 per cent from 
the Nafta countries, and 6 per 
cent eastern European. The 235 
students represent 33 different 
nationalities. 

London Business School, 
meanwhile, has an MBA class 
that is 75 per cent “overseas", 
much the same as last year. 

Many feel the key issue is 
the programme content, 
though how this is achieved 
varies widely from school to 
school. Some add specific 
international options, others 
have tried to introduce an 
international dimension to the 
whole course. 

Some European schools have 
developed programmes 
whereby students can spend 
terms at up to three different 
schools and still take the same 
degree. The link between 
Cranfield and Groupe SC Lyon 
in France is noteworthy in this 
context. 








Henley Management Coflege in Henley-on-Thames, Oxfordshire, with professor Ray WBd, Its principal 


Positions 

vanish 


The fish in 
the pool 


INTERNATIONALISM 
This is one of today's big 
business school buzzwords, but 
there is still debate about what 
constitutes a truly inter- 
national approach. When 
judging whether a school is 
really international, attention 
should be paid to student mix, 
faculty mix, cross-border links 
(see Exchange Programmes) 
and course content. 

Schools like IMD, London. 
Insead and Manchester 
typically attract a high 
proportion of international 
students and faculty. 
Manchester's full time class is 
roughly 25 per cent UK, 15 per 
cent other European Union, 
and 60 per cent rest of the 
world. IMD pays attention to 
the size of what it calls “the 
Anglo pool" - the proportion of 
students from countries where 


JOBS 

In recent years, many 
newly-qualified MBAs have 
found it a challenge to find a 
suitable job. 

Companies' cost-cutting and 
restructuring exercises have 
removed many of the 
management positions that 
MBA graduates aspire to. The 
management consultancies and 
financial services companies 
which traditionally recruited 
large numbers of MBAs scaled 
back in the downturn. Even 
highly qualified candidates 
from top business schools have 
suffered lengthy periods of 
unemployment 

Anecdotal evidence suggests 
that there has been some 
improvement in recruitment 
levels. As well as some pick-up 
in interest from financial 
services companies and 
consultancies, there are signs 
of increased interest from 
non-traditional recruiters, 
including the manufacturing 
sector. 

However, finding a job 
requires more effort than it did 
in the last decade. At a time 
when companies are laying off 


I large numbers of employees, 
some are reluctant to be seen 
to be actively recruiting MBA 
students. Although jobs are 
available, it has become more 
important to seek them 
through alternative routes, 
such as networking. 

One consequence of the dif- 
ficult job market is that it has 
blighted many MBA students' 
ambitions to change career. 
When employers are able to 
choose between numerous 
applicants, they tend to opt for 
experience. 

But even when MBA gradu- 
ates remain in the same career, 
they are often able to move up 
the managerial scale. This may 
be accompanied by a move to a 
smaller organisation. A survey 
of alumni conducted by Amba 
in 1992 found that, before their 
MBA. 43 per cent were 
employed in large organisa- 
tions and 20 per cent in smaller 
organisations; after the MBA 
those proportions were 
reversed. 

The same survey found that 
around 30 per cent of MBA 
graduates worked in consul- 
tancy and finance. Some 27 per 
cent of MBAs were in general 
management, 19 per cent in 
sales and marketing, 11 per 
cent in corporate strategy and 
planning and another 12 per 
cent In finance and control. 

For those employed while 
studying for a MBA. 56 per 
cent remained with their exist- 
ing employer for at least a year 
after graduating. Of those not 
employed while studying for 
their MBA, 40 per cent did not 
start a job immediately after 
the course's completion. On 
average, it took these students : 
5.5 months to get a job. , 

The real difficulty facing 
those contemplating a MBA. i 
particularly a two-year MBA. is 
that job prospects are hard to j 
calculate at the time they 
embark on the course. Anyone I 
leaving an existing job to do a 
MBA is taking a gamble on the 
state of the job market on grad- 
uation. 


OUR STANDARDS 

are always higher 



These days, ihcre are many business schools offering 
you a variety of qualifications. But If you really want to 
fulfil your potential, there's one choice which Is truly 
outstanding - Manchester Business Sc hoot For nearly 50 
\cJr>. we have *>ei the highest standards for management 
Jet elopmeitt... gaining: J reputation lor excellence which 
at tract > h^h achiever, from nil around the work!. 

Our programmes combine theory and practice in a highly 
effective system that's become known as 'The Manchester 
Method' This takes you through rejWife 'hands on' projects 
lor businesses and organisations ranging Irom the likes ol JCI 
and Shell to small companies. Practical exercises explore cite 
ssay that management disciplines operate in the work 
place., and there arc many opportunities for Internationa] 
experience, »«» 

With a tfnah/KMioit from Miincbcstcr Business School, you 
develop shills u bicb Imiv rail and recognised value: which 

^ ^ accelerate your development and progress 

H aB i \.)-nnr career. Our standards are always 
lln AM* \ higher - sn why settle for anything less? 


Manchester Business School 
now offers: 


FULL-TIME MBA 

.1 flexible count with differing 
entry levels, .and completion in 
I 5 months, rather than 
tu n years. In give you a bead 
start in the job market. 


PART-TIME 
DAY RELEASE MBA 

over rears. 


RESIDENTIAL EXECUTIVE M8A 

a J year programme to 
derclnp key managers without 
disrupting work patterns 


MASTER IN BUSINESS 
INFORMATION SYSTEMS 


DBA AND PHD programmes. 


f Bid <* > 
« ttt * f 

Ob actor* - 

SUJtiS® 


For more details, please contact 
Alison Walker by pbane or fax 
on Ibe number below. 


MANCHESTER BUSINESS SCHOOL 


BOOTH STREET WEST, M 
TEL: ( + 44) 0161-275 631 1 FAX 


ANCHESTER MI5 6PB 


: ( + 44) 0161-275 6489 


Manchester Business School 


An MBA with 
garnish 


JOINT DISCIPLINE MBAs 


The latest edition of Which 
MBA (see Guides) notes that 
some American schools are 
offering opportunities to 
combine an MBA with another 
postgraduate degree such as 
law. These joint degrees, it 
notes, “are becoming 
increasingly popular among 
both recruiters and students". 

In the UK, meanwhile, there 
is a tendency to specialism in 
some schools. 

City University, for example, 
offers five one-year full-time 
programmes which combine a 
general management “core" 
with one of five specialisms 
(finance, human resources, 
information technology, 
international business/export 
and marketing). Other schools 
have resisted this approach 
and argue that a particular 
emphasis can be achieved in 
the choice of electives or 
optional courses. 


Just talk in 
English 


LANGUAGES 

Most schools will demand 
some proof of fluency from 
non-native speakers applying 
for an English-based pro- 
gramme (which the vast major- 
ity are). 

While s ^fr Us h alone is suffi- 
cient for virtually all UK 
schools - London Business 
School which requires profi- 
ciency in another language is a 
notable exception - an increas- 
ing number of British schools 
such as Manchester and Dorset 
stress their language learning 
facilities. Some continental 
European schools run courses 
which are wholly in English, 
but most in. say, France and 
Spain require that at least 
some classes are also taken in 
the “home'’ tongue. 


managers and employers. MCI 
studies the level of training 
and qualifications prevalent 
among managerial levels and 
makes recommendations for 
standard setting. 

Its most recent work was 
draft standards for senior 
management, after having set 
b enchmar ks for best practice 
tor middle managers, first-line 
managers and supervisors. 
Last month these finished 
trials in . a variety of 
organisations. 

MCI’s research among 
thousands of managers helps 
shape higher level national 
vocational qualifications. 
Standards are formed from its 
research and passed onto the 
National Council for Voc- 
ational Qualifications which 
sets NVQs. The role of MCI is 
largely opinion-forming and 
quality setting rather than that 


of dictating specific goals. 
Which NVQs managers take is 
entirely up to them and their 
bosses. The nuts and bolts of 
qualification attainment are 
seen as the employer’s res- 
ponsibility. 

There Is no direct link with 
business schools which 
generally tend to be more 
academically oriented, 
concentrating largely on the 
MBA. Mr Andrew Summers, 
MCI chief executive, says: “We 
would like to see MBAs 
developing to be more focused 
on competence as well as 
knowledge." 

He sees the MBA as essen- 
tially a preparatory qual- 
ification after which It is 
important to demonstrate 
competence, something for 
which NVQs are designed. 
Several business schools do 
award NVQs and the MCI does 
some work with these. 

MCI is non profit-making, 
funded by private and public 
sector subscriptions, which 
s yjms to develop management 
skills and generally improve 
managerial quality. It is 
backed by about 1,600 
companies and the government 
and its members cut right 
across the sectoral board; from 
private through public to 
voluntary. 

While being a national 
forum, the thrust of its 
operation Is via a series of 
local networks which promote 
activities and information 
among employers. The 
networks often link with other 
interested parties in a region 
such as Training and 
Enterprise Councils and 
Chambers of Commerce. 


Block release 
for the boss 


MODULAR MBAs 


Thjg is a term which can best 
be translated as the 
management equivalent of a 
block release course. 

Warwick Business School 
launched such a course In 
January this year which 
Involves participants being 
absent from work for 13 
intensive one-week “modules 
which are spread over about 
three years. 

One of the most established 
modular MBAs - designed 
especially for experienced 
managers - is run by Ashndge 
Management College in 
Hertfordshire. 

The emphasis of the 
programme is on developing 
leadership behaviour and on 
helping candidates to acquire 
the skills that are needed to 
manage, across international 
and cultural boundaries. 

Henley Management College 
in Oxfordshire was also early 
into the field. 

Meanwhile, the Judge 
Institute of Management 
Studies at the University of 
Cambridge has introduced an 
innovative modular structure. 

This involves extended 
periods of full-time study 
which are sandwiched between 
substantial work experience 
(tor either one or two 13-month 
periods depending on the 
option chosen), where what is 
learnt in class can be put into 
practice. 


Jobs of recent MBA graduates by sector (%J 


K 



World 

North America 

Europe 

Rest of world 

Consultancy 

17 

17 

17 

13 

Ban king/finance 

25 

30 

20 

23 

Manufacturing 

19 

19 

22 

11 

Other 

40 

34 

45 

53 


Sounar Mhcft JUBA? 


The hilt of 
success 


Benchmark 

setters 


Average starting salaries of recent graduates (in $)* 


KNIGHTS 

Sir John Egan (BAA, formerly 
of Jaguar), Sir Christopher 
Hogg (Courtaulds and Reuters) 
and Sir Iain Vallance (BT) all 
got where they are with the 
help of an MBA. Sir Graham 
Day (formerly British 
Shipbuilders, Rover and 
PowerGen) and Sir John 
Harvey-Jones (former 
chairman of ICZ) did not 
No business school deans are 
thought to have been awarded 
knighthoods. 


MANAGEMENT CHARTER 
INITIATIVE 

The Management Charter 
Initiative (MCI) began in 1988, 
the creation of Sir Bob Reid 
and a number of groups 
including the British Institute 
of Management and the 
Confederation of British 
Industry. 

It does not provide 
professional training but 
rather tries to foster an 
interest in training and 
relevant qualifications among 


North America 

Europe 

Rest of world 

Chtcaqo 

65,000 

IMD 

75,000 

Macquarie 

52,447 

Kellogg 

65,000 

INSEAD 

67.050 

AGSM 

45,454 

Stanford 

85,000 

ISA 

63,345 

Melbourne 

45,454 

Duke 

60,800 

London 

58,100 

Otago 

35,393 

Columbia 

60,000 

ESC Lyon 

55.743 

Sydney 

31,468 

Berkeley 

60,000 

Aston 

52,150 


• - 

Carnegie Mellon 

59,732 

City 

52,150 



UCLA 

59,200 

EAP 

50,675 



Georgetown 

58,764 

Warwick 

50,612 



Darden 

58,000 

MBS 

49,170 




"Data suppUad by school, convarted uttng avwaoa rates tar January 19*5; data not onset*) for el achooto. 


Sourccc Which MBAT 


9 


The Open 
University 


Don’t go to a 
business school 


Let it come to you 


• Tho Open Bwhiims School in port of the Open 
University. 

• Professional qualifications for Cert ifi cate. Diploma 
and MBA. 

• OBS mchhg methods develop your mnnagamtint 
afei II* sritflat you remain at work. 

• OBS study la supported by over 1,000 experienced 
tutors, tutorials, residential and day schools, regional 
Open University centres and fallow students. 

• Modular prognunmas give you flexibility and choice 
over what you study, and whan. 

• Our management coursea are 'transportable'- you can 
study with the Open Business School throughout 
tiie UK end continental Western Europe. 

• Teaching methods proven over 25 years, and rated 
‘excellent' by the Higher Education Funding Council 
England. OBS is a member of AMBA. 


For it tree brochure call 
the OBS HOTLINE on 0008 373077 
(24 hours) 









5 SMssswr 


^5KSL'« 


UCLA’s Executive MBA Program 


Takes Teamwork Worldwide 


7-Moutb International Field Study, with 5-day residential 


Team-focused, interactive dosses comprised of skilled exec- 
utrva from a vast ntnge of businesses and professions 
Notebook computer technology used Both hi classroom and 
curriculum 

Gasses held Friday and Saturday om alternative weekends for 
two years 


Tie*- yjTfTSPf* 


of Business 


The John E, Anderson Ghdl'Xie 
School of Management at UCLA 


MBA Programmes 


Leicester Business School 


Rated ■EiCPflenT by thn Higher Education Funjirat Gouncd 

* F^B-iuno 

* Rnrt Hnr E*ocvt«e 

* Pan lime EwMwig 

* Cd’Wthi'W 


For further inf txmatlofi phone 
0533 .577 230. or wrtta to Sue Owen. 
MSA Administrator, Latarator 
Business School. DeMontfott University. 
The Gateway. Leicester LEi 9SH. 


De Monttort 
UNIVERSITY 
LEICESTER 



THERE’S AN MBA 
AND THERE’S A 
BRADFORD MBA. 



Bradford University's Management Centre is one of Europe’s 
top business schools. Its MBA Programmes offer the opportunity to 
achieve an internationally recognised, highly prestigious degree in 
business administration. 


Whether on a full or parr-time basis, if you wish to study tor an MBA. 
make sure it will give you the credit you deserve. 


Rtr more information please contact quoting Re£ FT 3/10. 

The Postgraduate Secretary. University of Bradford Management 
Centre, Emm Lane, Bradford, West Yorkshire BD9 4JL. 

Teh (0274) 3&1373. Fax: (0274) S46866. 


MANAGEMENT 

CENTRE 


UNIVERSITY Of BRADFORD 


The Thinking Manager's MBA .... 


Suwwdiil managers who survive and way effective have the ability n> think laterally, 
creatively and appropriately, as more demands are placed on their urganisitiom. The 
self managed learning approach a) Roffey Park develops a chnulc where effective 
thinking is valued: where styles of thinking and assumptions are challenged; and where 
good drinking is ttftecatd to lead 10 effective action, for a copy of our Utest brodtnre, 
or to find out more about our two year part-time MBA (validated by the University of 
Sussex), telephone Sheila Dale at 

Roffey Park Management Institute 
Forest Road. Horsham. West Sussex RH124TD 
TckfftOHM 01293 S5I6-W 
Facsimile 01 293 85 1565 


■ ■ CANTERBURY BUSINESS SCHOOL 

■ ■ UNIVERSITY OF KENT AT CANTERBURY 


Master of Business Administration (MBA) 

experience Programme, FoD-orne (12 months) and pan-tinre{2-4 y 


PwcxperisKe Programme, FaH-tirne (12 months) and pan-time (2 -4 yeses) 

MBA (Strat^pc Health Service Management) 

PnrrJtmr: Jtmuiflnce ? HfTTX rW mnnfli 


Port-otoc: attendance 2 days per montj? 

Master of Business Studies (MBS) 

Prc -experience Programme (12 months) 

Research Degrees 
MA.MPhil.PKD 


Fee further details please contact; Gradu ate A dtmuamg, Canterbury Bittiness 
School, The University, CsnteiWy, Kent CT2 7 PE England. Tdepbortft {UK) 
0227 764000 Ext 7726. Fat (UK) DZ27 761 187 (Threnunona]) vH 227 761 IS7. 


To Advertise your 

management courses 

in the Business Section . 
eveiy Tuesday please contact 

MELANIE MILES 
on Tel: 071 873 3349 
or Fax: 071 873 3064 



















FINANCIAL TIMES MONDAY OCTOBER 17 1994 


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Old boys on 
the way up 

NETWORKING 

la other words, t h i s is what 
you know and whom you 
know. Networking can be 
all-important for mayfmior^ g 
the potential of a business 
education. 

Networking meanc nn ytfrmg 
from genteel inquiries in a 
wine bar in exchanges of CVs 
and job opportunities via a 
graduate association. 

By its very nature, 
networking is not an organised 
activity although more 
structures are growing and 
many organisations are 
springing up that are more 
akin to a recruitment agency 
than the traditional 
word-of-mouth image of 
networking. 

Business schools are a useful 
marketplace and the largest 
and best-known centre for 
business alumni is the 
Association of MBAs (Aruba). 

Amba membership now 
stands at arotmd8,000, as it has ' 
grown rapkQy in the past few 
years. 

Cranfield School . of 
Management is another 
important source of networks. 
It is home to the Management 
Development Advisory Service. 

Individual schools tend to be 
a good avenue fbr netwo rkin g, 
whether they offer a definite 
association or not Schools 


FT SURVEYS INFORMATION 


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MASTER GLOBAL 
STRATEGIES 


DUKE 


THE FUQUA 
SCHOOL 
OF BUSINESS 


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University of Cambridge 


MBA 


An international 21 month progra mm e combining 
three terms in Cambridge with 
a senes of practical work-based assignments. 

For information and admissions please contact: 

The MBA Office 

The Judge Institute of Management Studies 
Frczwilliam House, 32 Tmmpington Street, 
Cambridge CB2 1QY. 

TeL* +44 (0) 1223 337052/3- Fax: +44 (0) 1223 324009. 



VOUT 


future ? 


MBA 


University 
of Wales 

Manchester 
Business jmnrnk 

S&l 

School Vime? 



BUSINESS SCHOOLS: AN A-Z GUIDE 


obviously have HnVg with 
business and are often 
approached by companies far 
recommendations. Alumni 
associations, however, are also 
targeted by schools in their 
fund-raising activities. 

Following the recession, 
networking organisations have 
also flourished to serve 
particular specialities in 
business and industry , 

Networking is frequently 
used to secure work on 
occasional projects as well as 
permanent jobs. This pertains 
especially to technological 
I related work. 

Practice in 
lieu of theory 

NVQs 

National Vocational Qualifica- 
tions are designed to test skills 
anti competence in the work- 
place and operate in more than 
80 per cent of occupations. 

They emphasise practical 
skills within a job and seek a 
demonstration of understand- | 
mg of that job’s requirements 
rather than theoretical exami- 
nations. 

Therefore, it is difficult to 
equate them directly with tra- 
ditional academic standards. 
But very roughly an NVQ level 
1 Is approximately similar to 4 
GCSEs. grade D to G; NVQ 2 
ranks alongside S GCSEs, 
grade A to C and NVQ 3 can be 
compared with 2 A levels. 
NVQs level 4 and 5 are harder 
to gauge as they are geared 
towards management compe- 
tence and require demonstra- 


tion of a fair amount of per- 
sonal autonomy. They can be 
approximated with education 
achieved at higher levels, not 
necessarily degree standards 
but beyond A leveL 

Much erf the standards set fbr 
NVQs level 4 and 5 came from 
; management standards laid 
I down by the Management 
i Charter Initiative. 

Hie quality of NVQs. which 
1 are tested in the workplace and 
operate on a fairly flexible 
basis with requirements vary- 
ing among different occupa- 
tions, is monitored - by the 
National Council for Voca- 
tional Qualifications. The 
council, which is resp onsib le to 
the government, approves and 
accredits the qualification. 

Accreditation lasts for five 
years, after which it must be 
renewed. 

NVQs, particularly the lower 
levels, have been subject to 
mm» criticism with the suspi- 
cion in academic and indus- 
trial circles that they cannot 
be a substitute for traditional 
methods of testing knowledge. 

The advantages and disad- 
vantages of NVQs versus a 
more traditional qualification 
such as the MBA boll down to 
relevance. Managers may want 
more practical expertise in 
addition to straightforward 
academic knowledge or in 
same circumstances they may 
need people-based amities and 
utilitarian aptitude in prefer- 
ence to theoretical achieve- 
ment 


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The London Business School In Sussex Gartens, Regents Parte Amulet 


O 


Amba and 
acronyms 

ORGANISATIONS 
The Association, of MBAs (15 
Duncan Terrace, London N1 
8BZ, TeL- 071-837-3375). Founded 
in 1967 by a group of British 
graduates recently returned 
from leading US business 
schools, Amba’s original aims 
were to promote management 
| education in the UK and to 
develop an information and 
' social network for business 
School almrmL 

Today Amba also performs a 
quality controlling role for UK 
and continental institutions 
(see Accreditation), runs an 
reception for business 
schools and potential recruits, 
and publishes a Guide to Busi- 
ness Schools (see Guides). 

The Association of Business 
Schools (344-354 Gray’s Inn 
Road, London WC1X 8BP, teh 
071-837-1899). With 100 business 
school members, tire ABS is in 
effect the trade as soc iat ion for 
th e tut manag ement education 
industry. Its aims indude pro- 
motion and government lobby- 
ing. but its most visible contri- 
bution is a Directory of 
members and the courses they 
offer (see Guides). 

The European Foundation 
for Management Development 
(40 Rue Washington, B-1050, 
Brussels. teL 322 648-0385). 


EFMD - a European forum for 
information, research »t»a best 
practice in manRpampnt devel- 
opment - bag in the past dis- 
cussed the idea of common 
European standards for accred- 
itation. The consensus now is 
that Europe is not a single 

model and that na t i on al nnrms 

and mutual recognition are the 
way ahead. 


How most 
people do it 

PART-TIME MBAs 
Most business schools run 
part-time MBA courses; indeed 
most MBA degrees in the US, 
the UK (Europe’s largest mar- 
ket) and Asia are now awarded 
to part-time students. Part-time 
MBAs fall into a number of 
sub-categories, some of which 
(Executive MBAs, Distance 
Learning and. Modular MBAs) 
are discussed elsewhere. 

The most common part-time 
MBA courses - from City Uni- 
versity in London to Esade in 
Barcelona - are taught after 
working hours a couple of eve- 
nings per we* and/or at week- 
ends, with occasional residen- 
tial periods thrown in for more 
in-depth study. “Students” on 
part-time programmes are 
often older and more experi- 
enced than their full-time 


counterparts. Many managers, 
though, find it hard to set 

aalHa timp to Study St th» lamp 

trmp as holding down a chal- 
lenging job - frapp* the appeal 
of the modular approach. 


A hands-on 
alternative 

PROJECT APPROACH 
In their third term, MBA 
students often become 
mini-consultants, flpatiqg with 
a company’s marketing 
challenges, expansion 
opportunities, management 
dilemmas. Alternatively, 
part-time students may 
undertake a specific task for 
their company which mil be 
appraised as part of their MBA 

This is the project approach 
which forms the practical 
application erf MBAs at almost 
all business schools. The proj- 
ect approach, which deals with 
real situations, has prospered 
in UK business schools. 

It contrasts with the case 
study approach, championed 
especially by Harvard business 
school. Case study methods 
trad to require a response to 
theoretical situations; project 
approaches are the hands-on 
alternative. 

Both are meant to test the 
student's ability to synthesise 
the various aspects of the 
course. They will need to 
exercise ability in most of the 
core subjects covered; 
determine the relevance of 


MBA IN INTERNATIONAL BUSINESS 


i ~.r v - v . - v v ' V 

■Vvt.vO-.;'; _i : «• • . -Vi' ?■ - 55 &S. ; v ^ 

• ‘ >-"-*• * -v '-v 


UNIVERSITY OF BRISTOL 

Modular MBA programme available foil-time and part-time 


International 

Multicultural 

Practical 

Entrepreneurial 


International faculty; international collaboration; 
international study options 

Interactive multicultural teams; managing diversity to 
work together across national and cultural boundaries 
Skills development; contact and discussion with business 
leaders; company placements 

Build your own programme from the modules offered; 
test your own personal and professional strengths 


The MBA Programme, Graduate School of International Business, 
University of Bristol, 10 Woodland Road, Bristol BS8 1UQ - 
Telephone: +44 (0)117 973 7683. Fax: +44 (0)117 973 7687 



Invest in 
your future 
with the 

Cranfield 

MBA 


Cranfield 

/ UNIVERSITY 


School of Management 


Over die Iss 30 years Cranfield has established 
an exceptional reputation in business circles. It's a 
reputation due is built, not hat on esoHlem leaching 
Mawta.rU, but through wrung Hnks with Industry and 
commerce and a flexible response to the needs of 
modem business. 

Right now. with hundreds of MBA courses to 
choose (xun. ii is more important than ever to select 
• the one dial's rfgbi fix you. 

Our standards are high Only i few vfil succeed 
in gaining entry. Bar those who do and who 
subsequently graduate with the Cranfield MBA. will 
!n*e achieved a measure of success that reaCy means 
something. Both bo them and to thetr employers. 

It you have 1 good degree and/or business 
qualification and s least 3 yean' wort ex p erience, 
fjfid out more about our two-year part-time 
p p gnmm e beginning in January or our one«ycar fall- 
time programme beginning in September by 
c o n tacti n g 

Maureen Williams, Cranfield Scbool of 
Management, Cranfield. Bediord. England MX43 QAL. 
Teis +**(0)1254 7*1122. Etoc ++«0H2M 751806. 

Alternatively come and talk to us at the 
AMBA Business School Reception. 

Monday 17 October, 5.00pm 
at the lnsdmte of Director?. London. 


each onP 1 in fo** given situation 
anti act accordingly. 

Business schools often invite 
smaller companies to take up 
consultancy services from stu- 
dents pnrfprfalrmg their third 
term project For the company 
it can prove a very cost-effec- 
tive method of receiving such 
services from people who are 
not t h flt for from going - ynfo 

such roles on a permanent 
basis. 

Cranfield School of Manage- 
ment is rmn r g fiqi in not mnWirg- 
the project an obligatory part 
of the MBA. A foil-term project 
can be undertaken but the 
school finds that students pre- 
fer to take more electives. 
Cranfield is the only business 
school to offer an academic 
year of four teaching terms 
and according to Mr Colin Gor- 
don, director of the full-time 
MBA, students are drawn to 
the centre because they can 
maximise their theoretical 
learning. 

“Many have a number of 
years' experience in work and 
feel that they benefit more 
from the various electives. 
They do some project work 
that lasts three to four weeks 
and often feel that this is 
enough.” The proportion of 
students who do choose to take 
the full-term project option is 
very smell. 

To manage 
the state 

PUBLIC SECTOR MBAs 
Aston, Henley, Birmingham 1 
and Exeter in the UK offer i 
MBA programmes in public 
sector management. | 

Several others (eg Bradford, i 


South Bank and Strathclyde) 
lay ou specialist modules in 
this area. Cranfield runs a 
course for the Ministry of 
Defence which combines the 
general core of its full-time 
MBA with a number of special- 
ist electives. 


Q 


Emphasis on 
experience 

QUALIFICATIONS 
The qualifications required for 
MBA students have changed 
over the past few years. More 
emphasis is placed on experi- 
ence of work than was the case 
a few years ago when it was a 
reasonable rule of thumb 
among business schools that 
an MBA was usually bolted 
straight on to a first degree. 

The average age for candi- 
dates beginning a full-time 
MBA is 28; for those on a 
part-time course it is 3832 and 
for those distance learning it is 
considerably more. 

Qualification requirements 
tend to be a first degree and 
about three years' experience 
in work. In exceptional cases 
candidates with work experi- 
ence but no degree are 
accepted by business schools 
although they only make up 
about 2-8 per cent of MBA can- 
didates. 

And Mr Roger McCormick, 
director-general of the Associa- 
tion of MBAs, issues a general 
note of caution against busi- 
ness schools willing to accept 
candidates without work espe- 


Erilptoyment changes after MBA 


Changed omptoywr within 6 months 2854 




Changed e mplo yer 
wHMd 12 months 11% 


Became eeir-empioyed s% 


Re maine d with exist! nfl-emptayer'; J5B% 


rieace. “In spite of their abil- 
ity, those without relevant 
experience will probably find 
that their peers are critical of 
them.” he says. 

A GMAT is not a necessity 
for all business schools. If a 
candidate does elect to take the 
GMAT in preparation for an 
MBA then it is worth remem- 
bering that a business school 
will expect a good result, or a 
good reason why a high figure 
has not been attained. 

Hie MBA is a multidisciplin- 
ary generalist degree that 
should not require specialist 
knowledge to study for. How- 
ever, in practice the modern 
MBA programme is heavily 
quantitative; anyone with lim- 
ited skills in mathematics will 
struggle. 

As for the value of an MBA 
once that qualification is 
obtained, Mr McCormick 
believes it Is a solid foundation 

This 6-page guide 

was written by 

Tim Dickson, 

Christine Buckley, 

Vanessa Houlder and 

John Authors. 

Design: Robin Coles. 

Editorial production: 

Qabrie^owngt^ 

which will facilitate advances 
later. “An MBA is generalist 
which has its use in the long 
term. It is not intended to pro- 
vide an immediate springboard 
but to prepare someone for a 
role in senior management 
fetter on.” 

MBAs are not graded. A can- 
didate achieves a pass or a fail; 
there are no classes as with a 
first degree. 

It is difficult to rank MBAs 
and Mr McCormick flinches at 
the thought, although of 
course business schools have 
varying reputations and that 
may have a bearing on employ- 
ers' considerations. 

Specialist MBAs are just 
that, an industry or sector-tai- 
lored qualification. They are 
not considered of greater value 
than a traditional MBA. In 
fact. Mr McCormick warns of 
the danger of MBAs which are 
too hybrid, as opposed to a 
core MBA with speciality com- 
ponents tacked on. 

“There is a bit of a trend to 
tart up specialist MScs as 
MBAs,” he says. 




'I 

Henley today - 
leading the way. 




IM ulUMKVt’H' IMS 




tuo M i iivurtu i • '. 


^ HENLEY _e 

C« l1 ' 

As Europe’s most experienced independent management college, Henley offers 
unrivalled quality, and unique versatility - an ideal partner in management 
development in so many ways. 

• Qualifications - Now one of the world’s largest international Graduate Business schools, 
Henley is working with over 6,500 managers from 80 countries through its range of Diploma 
and MBA programmes, operating in 22 countries. 

• Corporate Programmes - Now working with one of the largest corporate client groups 
of any business school, Henley is providing tailored programmes to suit the needs of 66 
organisations worldwide. 

• Executive Programmes - Now with a portfolio of open programmes - from two days to 
six weeks duration, Henley is helping develop over 500 managers each year from around the 
world. 

• Research St Development - Now there are 200 managers from 25 countries working on 
Henley's doctoral programme - one of the largest and mast innovative in Europe. 

These, along with conferences, briefings, assessment and mentoring, are just some of the 
services provided by Henley in partnership with individuals and organisations worldwide. 

To find out more cal) our information office ore 01491 418803. 

Henley Management College. Green lands. Henley-on-Thames, Oxfordshire RG9 3AU, England- 
Telephone 01+91 418803. Fax 01491 571635. International Telephone «~M ]-r91 *18803. 


ft l I L I) INC PEOPLE - B l I L P I N O 6 L S f N ESS 


Are you os selective about 
your choice of VI BA programme 
as ive are about our students? 


At the Centre for Executive DEmoniExr wr i t liiu Badb Unnenity w offer faodj FaQ-Time arid Fan-Time MBA 
pngnBMi- Following a recent m i mnr .-we adneved the bight* rating ponble far our teadung method* from the 

Govermnezn’a HiCHE* Education FfNtHHG Council for England - EXCELLENT 

Oar BOSCVfWE nOGMIME U duignad to pve you n inimarre waagnm education which yon will apply , 
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Oar one year AMBA accredited RHL-TIMc PROGRAMME grvt* voo a comprehend** general management 
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Ohvkmsffyaa're looking fbr the beat eourae - we’re looking be this best people. 

'We want to meet executive! from both the Public and Private WIMI with good degree* or professional 
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reserved for oojy those wfab the enarariOMnl. nanny and dnenmnancm to meceoiL 
IFjmt po«*c*» tboae qualities, we’d Cke to hear from you today. 

Fbr f nil OrtafU trlepbo*t, unrltr orjax quoting R&FE&£NG& S FT2 
ms-rime Prog r a m me 7W; 0223 826152 • Part-Time Programme Ms 0225826211 - Fax Me. 022$ 826210 
Cnfirt for ExeaOlvr Dnekfpmmut EnirertHy Of Bath, Oarmon Comt Bath, BA27AY 




UNIVERSITY OF BATH 










r- 03 t W P n 5? *-3 -3 


tr-j - 
g-aSi-i-j — — — 


FINANCIAL TIMES MONDAY OCTOBER IT .994 


BUSINESS SCHOOLS: AN A-Z GUIDE VI 



The library at Cranfield Institute of Technology 


OK for those 
at the top 

RANKINGS 

Published rankings have been 
common in the US for some 
years - the Business Week sur- 
vey is the most widely quoted 
and probably the most reputa- 
ble - but European business 
schools have traditionally 
shied away from league tables. 
That said, there is a strong 
view that proper rankings 
would make u contribution to a 
more efficient and well-in- 
formed market place if the 
right methodology could be 
found. 

Most of the attempts so far 
are superficial, either because 
they concentrate only on one 
aspect of 3 business school 
portfolio i eg research reputa- 
tion, MBAs, executive pro- 
grammes} or because the 
method of assessment is 
flawed. Even schools which 
publicly “knock” the idea of 
rankings will use them In their 
promotional material if they ! 
are shown in a good light. [ 


Rewards 

diminish 

SALARIES 

The years when MBAs could 
be sure of a large rise in salary 
as a result of gaining their 
qualification have gone. The 
premium attracted by the 
qualification has declined, 
perhaps reflecting both 
recession and a changing 
balance in the supply and 
demand of MBAs. Some 
students have even 
experienced unemployment 
and pay cuts as a result of 
taking the MBA. 

One of the difficulties facing 
MBA graduates is that 


MBA 


WE'LL BRO A D E \ 


Chaosean WBAfrcrr 
Ci'.y U'Wers.ty Senses School 
3.-d ocen up n world of 
career possibles. 

0 -jr Fu'i-l^e W3A lasts *2 nc.irhs 

3nd corr,b;ees a grounding m 
esse'T -J! ski!;s 3!--d knowl- 
edge v,"ih advanced 
naming -n one cf the • 
following specalis-r-s: 

Finance. 

Human Resource 
Monagernen:. 
information 
Technology i 
Management, interratiana; 

Business A expert Manage nen. 

‘.'.a-ket.ng c- Encinjerng 
Manage ms nt. 
L'p ;e 15 5?uden?5.~,-ps ,ve 
avaiiaWe for outstcnping appi.cants. 


Rated “Excellent'' by 



management consulting and 
the financial services industry, 
which was traditionally 
considered a route to a top 
saLary. cut back sharply on 
recruitment in recent years. 
Many graduates have turned to 
small and medium-sized 
companies, where salaries are 
generally lower than those 
than in large organisations. 

The financial case for the 
qualification has lessened over 
the past decade. In the first 
half of the 1980s, students 
could expect an average 
increase in salary of 40 per 
cent as a result of taking a 
MBA, according to an Amba 
survey. By 1991. the figure had 
fallen to 16.5 per cent. 

A later survey, in June 1992, 
showed that 30 per cent of 
MBAs earned between £30,000 
and £40,000 a year. Seven per 
cent reported salaries of less 
than £20.000 and, at the other 
end of the scale. S per cent had 
salaries over £70,000 and 3 per 
cent earned more than 
£100,000. The majority of MBAs 
were eligible for pension, a 
company car, private medical 
insurance and a 
performance-related bonus. 


Apply early if 
in need 

SCHOLARSHIPS 

BURSARIES 

SPONSORSHIP 

A limited number of scholar- 
ships and bursaries is offered 
by business schools. These are 
usually targeted at people with 
special merit or need. It is 
important to apply early for 
awards, which are often listed 
in the school’s brochure. 

Some students are sponsored 
by their employers to do a 
MBA. But it may be difficult to 
persuade an employee to pay 
the fees for a full-time course, 
not least because most stu- 
dents contemplate a career 
change at the end of the 
course. Sponsorship is gener- 
ally limited to part-time, dis- 
tance learning and company 
programmes in which the stu- 
dent remains in employment. 


MBA 


YOUR HORIZONS 


We also offer ihe Evening MBA 
«md ihe Management 
(consortium) MBA 

For further details please 
canua me Postgraduate 
Adnussaats Officer . 

Gty Ureveraity 
. Business School, 
jk Fiotusher Crescent, 
flk BstJcon Cenire. 

. v W LONDON EC2Y 
8HB.Engl.ind 

Telephone 
7 Qtn 477 5603 

frUfUjrnfl 

+4-i i r i jrraeoq 
linlsmjticnai). 

Fax 

01 7 1 *77 8338 JftiMruP 
+44 171 477 8338 (jlfemjfaofia/) 


Government funding body 


fflCITY 

University 


BUSINESS SCHOOL 


[ 


MASTER I\ Bim'SS VDMIMSTIt \TH)Y 

II) Ojien l.i'iirmiih 


I In* *li»iuil.!tinjs and pi.ii.iic.il prowdinme enables and empowers ni.imiKm to 
ili-ki-lop i heir i ioieirii.il .1+ pnjActhe. responsive and responsible indivnfujli. 

• R. 1 .. 1 I »in .ilIhiti le.lininil 

• n.-,i lo|., ni,iuer\- in if* wuIiM 

• V i!u- wuiiiii 01 ilktirv ami pr.iLiiu' 

• i_"mutiiIiih-iiI 1.1 eiivIk-Fxi.* .ind quality 

• *u|ii’>'lF' •li.'ii'liifMIH.-nl ill I0.IIFI1111; orv.tmwlii.iili 

• f.V?i ili-.iinliii. .niipFiibiliiv ,nir 1 innoviiiion 

• \kiii(fi[\ iiorkihopi and roidcniuf period* 

• lntorni.il lAi.wilnj" .iImj ollenxJ 

• >i . i>— in 1 11 iti miied cuun-dfinj; and lutorul support 

• h Ji ilil.ilc-i Ir.uolvt Ol fowninK limn 1 nrl 1 v 1 d 11 . 1 l ID ory.in nation. 

CcrlifJrjfe and Diploma Programmes also available 
Further information can be obtained from: Bob Lythgo* or Roger WI1«, 

Ihe Management Unit, University of Reading, PO Box 225. Whiteknighti, 
Reading KCe 24}. Telephone: (0734) J1 8180. Fox: 10734) 3)6539. 


THE UNIVERSITY OF READING 

MunayeFneni Unit 


A comprehensive list of 
grants, scholarships and 
awards is available in the 
Grants Register, published by 
Macmillan Publishers of 
Basingstoke, which is available 
in most large libraries. 

Institutions which offer rele- 
vant scholarships include the 
Association of Commonwealth 
Universities, the London 
Chamber of Commerce & 
Industry, Rotary International, 
Royal Academy of Engineer- 
ing, the American Association 
of University Women, British 
University North America Club 
and the English Speaking 
Union of the Commonwealth. 

Some awards are specifically 
directed towards minorities or 
women. Thus, Cosmopolitan 
magazine offers a bursary for 
studying at Insead. 

Further information from 
the Fulbright Commission, 
Doughty Street, London WC1. 

Cosmopolitan 

picnics 

SOCIAL LIFE 

Pressure of work can militate 
against an active social life for 
MBA students; indeed for all 
but the most gifted it may be a 
contradiction in terms. How- 
ever. student clubs, student 
government and community 
activities are all possible out- 
lets for surplus energy and pro- 
vide an opportunity to test 
newly acquired leadership and 
negotiation skills. 

Most schools will help organ- 
ise sports, such as tennis, 
while parties with a country 
theme are a favourite of clas- 
ses with a wide international 
student spread. 


unclear. The concession - 
extending relief for Individuals 
paying their own vocational 
training bills to graduate and 
postgraduate courses consist- 
ent with level five of the 
National Vocational Qualifica- 
tions system - became affec- 
tive in April 

The issue is obviously an 
important one for business 
schools at a time of flagging 
demand for full-time MBA 
courses. It was also highlighted 
by an All-Party House of Com- 
mons Trade and Industry Com- 
mittee report which expressed 
tiie view that it was “unfair 
and damaging that individuals 
paying for training are treated 
less favourably for tax pur- 
poses than companies doing 
so”. 

An inland Revenue spokes- 
man told the FT earlier this 
month: “It Is up to the training 
organisation to say whether it 
(the MBA) could lead to an 
NVQ.” Asked whether claim- 
ing relief was worth a try. he 
replied- “Yes". 


Influx to act 
as stimulus 

UNDERGRADUATE COURSES 
There is more to business 
schools than MBA courses. 

Government statistics show 
that business studies is the 
fastest-growing undergraduate 
degree course. Youngsters, 
many with vocational business 
qualifications, are keen to take 
courses in management and 
business rather than econom- 
ics, where numbers are drop- 
ping. 

Courses at undergraduate 
level are still for less popular 
than MBAs. Last year business 
studies accounted for 17 per 
cent of all higher degrees 
awarded at “old” universities - 
excluding those upgraded from 
polytechnics in the last two 
years - but only 4 per cent oT 
first degrees, according to the 
Universities Statistical Record. 

But the number of business 
studies undergraduates rose by 
9.9 per cent last year, to 17,200. 
while most “new" universities 
are offering business degrees, 
often in combination with 
other subjects. 

Universities hope that the 
influx of undergraduates will 
act as a stimulus to improve 
the teaching of business. How- 
ever. a business studies degree 
is unlikely ever to be regarded 
as a stepping stone for an 
MBA. Instead, business 
degrees, particularly from new 
universities, are intended to 
provide well-qualified middle 
managers. 

Business schools are also 
diversifying into providing 
shorter courses for middle 
managers later in their 
careers, often helped by gov- 
ernment F unding for t raining 
For example, Warwick Univer- 
sity's Centre for Small and 
Medium Sized Enterprises 


Courses may 
qualify 

TAX RELIEF 

The principle of tax relief for 
MBA courses appears to have 
been conceded in the UK - but 
its application still remains 


School of financial Studi 


MBA Financial Services Sector 

This MBA Programme it specifically designed for people 
working in the fin a nci a l services sector who wish to develop 
their ikiDs into a broader management context 

MBA Financial Studies 

The Fin a nci a l Studies MBA is designed to develop general 
management skills focused Tor people in finance and accounting. 

Postgraduate Certificate 
in Accounting and Finance 

This one year course, aimed at manager) across the whole 
business spectrum, is des ig n ed to unravel the mystique behind 
accounting and finance. 

AH arc h igh quality post gradua te comes combining distance 
learning with periodic blocks of atosadutce over weekends 
in S h e ffield . Applicants should hold a first degree and/or 
a relevant professional qualification, or be qualified 
by experience. 

For Junker irformadin about entry reqwr ma us, anas* details, 
attendant* and eosu, phase contact Vanessa Daakunt 
Postgraduate Office, School of Financial Studies and Lots 
Sheffield Hailam Umversity, City Campos, Pend Street ' ■ 
Sheffield SI 1 VfB. Telephone 0742 S3 3694. Sf 

Fax 0742 533726 . *7 


Sheffield / 

Hailam University 



EXPAND YOUR HORIZONS 

THE DORSET BUSINESS SCHOOL 
THINKS DIFFERENTLY 

Firmlv notcil in the local, thriving business community 

oil iltc South Cckirf, «v arc also justly proud of our 
strong international cnmnxtinns. This gives us the 
ability to apply global perspectives to local and national 
issues • an increasingly important requirement tor 
doing business in a shrinking world. 

Ihe key ro helping businesses grow is in developing 
and liouiug the skills of management teams to equip 
them c<> adapt to dunging drcurnsrances - and that’s 
where \vc can make a positive contribution to sour 
growth - either personally or corporately. 

If you wish to nuke the most otynur skills, or your 
managers’ skills, call us today to sc c how we can help. 
Contact John Gurell, Dorset Business School, 
Boumanuuth House, Christdiurch Road, 

Bournemouth, Dorset BH1 pLU. 

Tel: ++ 44 (0) 202 595400. 

Fit: ++44i0) 202 298321. 

BOURNEMOUTH 

UNIVERSITY 

!u Puniui ui bitBcmc m VouMnjl fthmuun 




operates the “Host Initiative" 
This takes redundant senior 
executives from large compa- 
nies in the area, such as 
Rolls-Royce and Rover, gives 
them a training course for a 
few months to update them on 
management theory, and then 
sends them to placements with 
small companies. 

The scheme recently found 
permanent employment for Us 
100th executive. This benefits 
the local economy as smaller 
companies attempt to fill the 
gap left by the contracting car 
builders, and the government 
will encourage similar schemes 
elsewhere. 


V 



The graduate enterprise prog ram me workshop at Durham University business school 


Entrepreneurs 
in the making 

VENTURE CAPITAL 
A type of finance which has 
been of keen interest to MBAs 
and other business school 
graduates (though latterly the 
recession may have dented 
their enthusiasm). Surveys 
show that more than 90 per 
cent of MBA applicants cite 
career change as a motivation 
for going to business school 
and that 5 per cent end up 
being self-employed after their 
studies. 

Entrepreneurship has been a 
notably popular optional 
course (or elective) in recent 
years. 

W 

Childbearing 

disadvantage 

WOMEN 

Many business schools are con- 
cerned about the low percent- 
age of women they attract, 
which is generally less than 25 
percent 

There are some exceptions. 
The schools which recruit the 
highest percentage of women 
students are Ashridge at 50 per 
cent, Monaco at 47 per cent 
and Toronto at 46 per cent, 
according to the Which MBA? 
guide. 

Before 1976, women were vir- 
tually unrepresented among 
MBA graduates, according to 
Amba. Over the next 13 years, 
the proportion of women tak- 
ing MBAs grew steadily until it 
reached about 20 per cent; 
since 1989, it has plateaued. 

Explanations for the low pro- 
portion of women vary. Some 
schools believe it is in line, or 
even above, the number of 
women expecting to reach 
senior management positions. 
"While women still represent a 
minority of MBAs, the propor- 
tion is relatively large com- 
pared with the overall manage- 
ment positions occupied by 
women 7 ’ says Amba. 


Another explanation is that 
women in their late 20 s - a 
common age to take a MBA - 
are often considering a break 
in their career to start a fam- 
ily. Some schools are trying to 
promote the idea that women 
who take career breaks to 
bring up a family might find 
an MBA a way back into the 
job market 

Forty per cent of women 
managers who responded to a 
survey conducted by City Uni- 
versity Business School felt 
that schools could do more to 
promote the benefits of an 
MBA to employers. 

The authors agreed that 
schools need to reassure 
women that an MBA adds 
value to their careers, and that 
the difficulties of attendance 
facing many women at the tra- 
ditional age of 29-32 should be 
acknowledged. “Promoting an 
MBA as something a woman 
may consider during a career 
break or moving towards a 
modular system whereby an 
MBA can be taken over a lon- 
ger period are strong options 
for the future", they concluded. 


not necessarily follow. 

In France, intending appli- 
cants could check for member- 
ship of the Chapitre des 
Grandes Ecoles though Insead, 
one of the best-known interna- 
tional schools, is outside the 
university system. 

On the whole, the more 
stringent and demanding the 
entry requirements of a busi- 
ness school, the higher up the 
quality ladder a programme is 
likely to be. 


Y 


Passport may 
be invalid 

YUPPIE DEGREE 

In the second half of the 1980s 

the MBA attracted the nick- 


FT SURVEYS INFORMATION 


X 


Titles of no 
degree 

X-RATED 

BUSINESS SCHOOLS 
Students or prospective stu- 
dents should be very wary of 
institutions offering MBAs in 
the UK which are not validated 
by a university. 

Regular MBA employers 
have a good idea which pro- 
grammes are respectable - 
they will certainly shun the 
“degree mills" around the 
world which award MBAs on 
payment of fees but which 
require limited, if any, aca- 
demic input from the candi- 
date. 

Although an American busi- 
ness school may well be 
accredited at home by the 
American Assembly of Colle- 
giate Schools of Business, 
approval by that body of its 
affiliates outside the US does 


FORTHCOMING SURVEYS LIST 

Tel 071 873 3763 
Fax 071 873 3062 

SURVEY SYNOPSES 

Tel 071 873 3763 
Fax 071 873 3062 

BACK NUMBERS 

£1 .30 up to one month previous. Callers at shop - £1 
£2.00 one month to one year previous Tel 071 873 3324 

SURVEYS INDEX (past two years) £3 

Tei 071 873 3213 


FUTURE SURVEYS: A SELECTION 
International Telecommunications .Monday, October 17 
Quarterly Review of Personal Finance 

Friday/Saturday October 21-22 

China ... — Monday, November 7 

India M .«.~.~ n .. M .«» n . M .~.~ n «.». M .~.Tuesday l November 8 

Hungary Friday, November 11 

Germany Monday, November 21 

UK Property Review Friday, November 25 

Management Buyouts Thursday, December 1 

Vietnam Wednesday, December 7 


ALL THESE DATES ARE PROVISIONAL 

REPRINTS Quotes available for minimum 100 order 

Tel 0 71 873 3213 


ADVERTISING 


Tel 071 873 3763 



Only one MBA carries this 
International Quality Mark... 
...The Warwick MBA 

W« non ofiw Tbs Wonmd MBA by Futtura, PtaUims, Modular and Distant* looming study, wjh fa 
BtXibJify ta i>™ between programmes should you need to 

I you ham a first degree or cquiralarn gwJBctton, appropriate wafr 
axpsri m as otto wont to Judy or a School which to fa highest railing far 

both leeching and reseoi.*. +e would be fietoed w hecr from yoo ■Mr’ 

The WarwfeJc MBA, Warwick Business School, 

Unhmrsily of Warwick, Coventry CV4 7AL, r 

England. Tok +44 (0)203 524306, 

Fax *44 (0)203 523719 WARWICK 


EDITORIAL Information should be sent in writing to the 
Commissioning Editor for the survey concerned, Number 
One Southwark Bridge, London SE1 9HL, or fax 071 873 
3107 

Cheques and postal orders for the FT Surveys Index 
and Back Numbers should be made payable to 
Financial Times Ltd. 


A Unique 


MBA by Distance Learning 


from Heriot- Wait University 

The Heriot-Wait University MBA by Distance Learning b reputedly the 
fastest growing; MBA worldwide. Created by the Esm£e Fairbaim 
Reseeroh Centre at the University, it has attracted over 8,000 students 
from over 110 countries worldwide in just 3 yean. Its rigorous and 
challenging quality fa enhanced by many unique features: 

• Winner at the 1994 Queen's Award for Export Achievement 

• Certification in nine counes (7 compulsory plus 2 deatves 0 f yow choke) 
will lead to the award of the MBA degree 

• Written by on International Faculty drawn from leading Business Schools 
Id Europe and North America 

• Full Distance Learning with no requirement for tutor contact 

• Open Access - no GMAT or first degree fa mandatory 

• Flexible - no Imposed study route 

• Each of the modular counes fa suitable for uso separately to the MBA as 
means of personal development or as part of a corporate training plan 

• No maximum intake: variable shut date 


WARWICK 


4 


For foil Information on this unique MBA 
contact the publisher Valerie Crrajoa, 
Pitman Publishing. 

IBS Long Acre, London WCZE 9 AN 
TeL 07 i -379 7 X 3 Fax. D 7 t -240 5771 . 



• ••• 

m. 

E 

2 

5 

Ur 

m* 


name (mainly in the US) of 
“yuppie degree". For many, it 
seemed an automatic passport 
to red braces, high salaries and 
fast cars. That image, however, 
has had to be revised in an era 
of more sober expectation, 
greater management complex- 
ity and softer leadership styles. 


For designer 
mugs 

ZARF 

According to Collins’ English 
dictionary the Zarf is a Middle 
Eastern holder, usually 
ornamental, for a hot coffee 
cup. It is an essential piece of 
for the ambitious MBA 
student. 


fd 
P u 



I V 


pi 

ix* 


Z 


H 


I 

S 

P 


jo 

E Q 


5- ^ 



MBA 


umuint. nui nsu ir 7 ]i 

VJTII *>V TOt IN I I HNAUONAL LM’MtTIM. 



z y A NEVtBAS-Bradford 
MBA degree is a powerful boost 
for your business career 

NIMBAS, through A ptt&Knhtp with the Umveriity of Bradford Management 
Centre, emhfcs tmivenity or polytechnic graduates to acquire the prenigfous 
Univcniiy uf Bradford MBA degree in the Netherlands or Germany. 

NIMBAS offers four programmer 

ONE- YEAR FULL-TIME PROGRAMME 

TWO-YEAR PART-TIME PROGRAMME 
1T< jfa offer lha pnrt-mm MHA pmtrsnuru ol Enee. Qersaxy. 

TWO-YEAR GRADUATE-STREAM PROGRAMME 
for recent graduates. 

TWO-YEAR MODULAR EXECUTIVE PROGRAMME 

Wh snzly nwduicj held iu Tbc Ncthcrfamb, UK, Germany and fiance 
NIMBAS la AMBA accredited 

’ Far further information: Postgraduate Secretary, NIMBAS 

PO Box 2040, 3500 GA Utrecht, The Nczbaiisdj 
Telephone: +31 <0) 30 314 323 Fas + 31 (0) 30 367 J30 



M 

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