A fortnight ago Meta told its shareholders it expected headcount at the end of 2023 to be “approximately in-line with third quarter 2022 levels”. Now 11,000 employees at the former Facebook – 13% of the total – will receive a sacking email, the brutal American way of making redundancies. The cartoonish avatars, on the other hand, survive. There was no hint of a backwards step by Mark Zuckerberg on spending on his precious virtual reality metaverse, despite howls of protest from irate investors about how much it is costing and how returns are uncertain.
But the cull of jobs – so soon after a suggestion that muddling through with hiring freezes would suffice – suggests Zuckerberg is rattled. He has messed up monumentally, as he weakly conceded, by adding almost 20,000 staff in the last 12 months in anticipation of an advertising boom that did not materialise. The share price is down by three-quarters this year. If there was ever a moment for non-Zuckerberg shareholders to insist on equal voting rights, this is it.
Meta is not unique among US tech and media firms in having a voting structure that gives the founder outsized control, but the mismatch is extreme: Zuckerberg’s 13% shareholding carries 54% of the votes. Outside shareholders should never have accepted the arrangement in the first place and, as argued here last week, inexcusably created the cult of the god-like tech pioneer. The relevant question now, though, is whether they want to try to undo their mistake.
There is no way of knowing for sure that Zuckerberg would have taken better decisions if he had been more accountable to outside interests, but the chances would surely have been greater. Boardrooms need fresh air and challenge. Meta’s outside investors should let rip with resolutions demanding governance reform, or else shut up.
Vodafone sale lacks any fanfare
Vodafone’s frustrated shareholders have been waiting ages for chief executive Nick Read to deliver a big deal and (they hope) inject life into a sluggish share price. And here comes a biggish piece of restructuring – the sale of a chunk of the €15bn (£13.2bn) mobile phone masts business at what looks a decent price. The share price reaction? Zilch. In fact, a small fall on the day.
The lack of enthusiasm probably has three sources. First, the disposal of a portion of the Vantage Towers operation is complicated, as things usually are at Vodafone. The FTSE 100 firm will transfer its 82% holding (it sold the rest via a listing of the unit in Germany in 2020) to a new joint venture with private equity firms KKR and GIP. That joint venture will then make an offer to buy out minority shareholders and Vodafone should eventually emerge with a reduced holding of about 50%. But the many variables mean that, on day one, cash receipts could only be described as somewhere between €3.2bn and €7.1bn. Much depends on how many minorities sell.
Second, it’ll take ages for the cash to arrive – completion won’t happen until the second half of next year. Third, the complexity underlines how hard it is to get anything done in telecoms-land. Selling a slice of Vantage ranked as one of the simpler deals being pursued or rumoured. A combination in the UK of Vodafone and Three – currently under negotiation – will have competition regulators all over it.
Still, Read over-delivered on price with Vantage. The IPO happened at €24 and the latest deal is priced at €32. A one-third improvement in the current climate ain’t bad for an infrastructure asset. But the implied message from the market remains: if Vodafone is to emerge as a slimmer, less indebted and easier-to-love investment, more smart dealmaking is needed.
National Audit Office digs up the Bulb deal
Well done, the National Audit Office: it will investigate the murky arrangements that will see Bulb, the bust energy supplier, transferred to Octopus Energy later this month. Somebody had to.
Ministerial boasts about how the government is ensuring “the best possible outcome” for taxpayers are infuriating because no evidence has been offered to support the claim. We haven’t been told what Octopus is paying and how the temporary “profit share” arrangement with the state will work. The secrecy is indefensible when everybody knows that, even on the most optimistic projection, the quasi-nationalisation of Bulb will cost the public purse at least £1bn.
We trust the NAO will not be cowed by the government’s feeble pleas about “commercial confidentiality”. Octopus may turn out to be the best home for Bulb – but we need to know the transfer process was fair and competitive.