European Business News (EBN), 96-10-09

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From: The European Business News Server at <http://www.ebn.co.uk/>

Page last updated 1105 October 9

CONTENTS

[01] RWE makes surprise change in telecoms alliances

[02] News Corp. plans to sue Time Warner on antitrust charges

[03] Japan's trade surplus continues to narrow

[04] British Energy announces plan to cut its workforce by 23%

[05] Samsung Aerospace nears Fokker bid

[06] Bank of England governor Eddie George fears inflation in 1998

[01] RWE makes surprise change in telecoms alliances

The company said it had abandoned plans to form a mobile telephone alliance with Viag and British Telecom because the companies couldn't agree on market positioning.

Instead, RWE is now negotiating with Germany's Veba and Britain's Cable & Wireless on take a new direction for entering Germany's telecoms market. Veba and C&W already cooperate in telecommunications through their Vebacom joint venture. RWE said the talks were in the final stages, and Veba said it would be making an announcement on the outcome later today.

Viag and BT, for their part, said they would proceed with plans to apply for E2 mobile telephone licences in Germany. The companies have called a news conference for Thursday to outline their joint strategy to compete with Deutsche Telekom when the German telecommunications sector is opened up in 1998.

It wasn't immediately clear in what area of telecommunications RWE would tackle in its new alliance. But the company isn't eligible to compete for the E2 license because Veba is already part of the consortium operating the E-Plus license.

[02] News Corp. plans to sue Time Warner on antitrust charges

Fox alleges that Time Warner, America's second-largest cable system, violated an agreement to carry the Fox News Channel and put on competing MSNBC instead.

Separately, the New York State attorney general's office has subpoenaed Time Warner documents, and people familiar with the situation have said that prosecutors are investigating whether the decision not to run the Fox channel amounted to violation of antitrust law.

News Corp. said it will file its suit today and that it will cover all over Time Warner's cable systems. The company also said it will seek a permanent injunction against Time Warner's planned purchase of Turner Broadcasting . Shareholders are set to vote on that plan Thursday.

[03] Japan's trade surplus continues to narrow

The current account surplus dropped to 460.6 billion yen ($4.14 billion), and the Japanese Finance Ministry said the surplus was expected to continue on its downward curve. The current account surplus has shrunk consistently since December 1994, with the exception of August 1995.

The surplus in goods and services trade plunged 92.5% in the month to 22.9 billion yen, while the surplus in merchandise trade narrowed 29% to 566.7 billion yen. Both surpluses have narrowed for 21 consecutive months.

The tourism account showed its biggest ever monthly deficit for a month, expanding 5.6% to 333.8 billion yen, amid a rise in the number of the Japanese traveling abroad, it said. Shoji Shirota, economist at the Yamaichi Research Institute, noted that ‘imports of high-quality and value- added products have been increasing, leading to a continued rise in the value of imports despite the dollar's recent rebound against the yen.'

The Finance Ministry also annouced its revised current account figures for the second quarter. In the three months, the surplus narrowed 39% from the year before to 1.58 trillion yen. The surplus in goods and services slid a steep 88% to 206.6 billion yen, while the surplus in merchandise trade dropped 37% to 1.88 trillion yen.

[04] British Energy announces plan to cut its workforce by 23%

The company said the staff reductions will result in a one-time restructuring charge of £100 million. A total of 1,460 jobs will be eliminated, trimming the total workforce to 4,800.

Chief Executive Officer Robert Hawley said British Energy ‘would continue to drive to reduce costs and improve overall efficiency to ensure we are competitive.'

British Energy has already met fierce criticism, particularly from union, over the planned layoffs, which were widely reported earlier this week.

[05] Samsung Aerospace nears Fokker bid

South Korean news agency Yonhap said Samsung is in 'last-stage' negotiations that involve arranging the financing and management conditions.

And a source based in the Hague told AP-Dow Jones World Equities Report that the Dutch government expects negotiations with to be completed within a ''couple of weeks.'' However, a Samsung Aerospace spokesman denied the report saying ‘there's been no progress ... since the two sides exchanged a letter of intent last month.'

Yonhap said Samsung Aerospace plans to secure the financing for the deal from Dutch banks. The report said an announcement was likely to be made during the Seoul Air Show between Oct. 21-27 in Seoul.

Despite the provisional agreement, however, Samsung Aerospace is taking a prudent stance on the takeover because additional conditions are sensitive, Yonhap said.

Fokker collapsed in March when majority shareholder Daimler-Benz withdrew its financial support after it failed to agree on a rescue plan with the Dutch government.

[06] Bank of England governor Eddie George fears inflation in 1998

According to minutes of George and Clarke's Sept. 4 monetary meeting, Clarke countered that there are 'no signs of unsustainably fast growth or of inflationary pressures building up.' He also noted that a slight strengthening in sterling since the previous meeting on July 30 represented a 'modest tightening' of monetary conditions.

Britain's base rates have been at 5.75% since June 6 this year, when they were lowered by a quarter percentage point. George said the government's target for underlying inflation to stay at or below 2.5% was 'already at risk.'

On an 18 month view, he continued, the degree of risk depends on the pace at which the output gap should start to close. The output gap is the difference between actual output levels and potential production levels.

George also warned that 'the longer a tightening was delayed, the sharper it would eventually need to be.'

The bank governor said that although the short-term outlook for inflation remained favorable monteary data 'pointed to inflation picking up again in the course of next year, putting the inflation target at significant risk in 1998.'

From the European Business News (EBN) Server at http://www.ebn.co.uk/

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