Jeremy Warner's Outlook: Some signs, at last, of progress at Equitable Life, but the road ahead remains a long one

T-Mobile in drive for market share; BAA's tussle with Goldman Sachs; 3i feeds bid rumours with capital return; GM wants Vauxhall workers to eat cake

Has Vanni Treves redeemed himself as chairman of the stricken life assurer, Equitable Life, with the sale yesterday of £4.6bn of annuities to Canada Life? He made himself look a fool by expensively proceeding with a no-hope negligence case against the society's former auditors and directors. Predictably, the legal escapade ended in costly failure.

Now the strategy seems to be to put the company into liquidation by selling off all the remaining policies to someone else in the apparent hope that members might thereby save on administrative costs. This is going to be more complicated than it seems. Equitable has done well in offloading the annuity liability on to Canada Life, and without having to pay a premium for the privilege either. The transaction helps clear the decks for other disposals.

Yet Equitable has already contracted administration and asset management of its remaining policies to HBOS. Without these management contracts, it is hard to know quite what the society is selling, and it may be costly to buy HBOS out. Regrettably, the trials and tribulations of downtrodden Equitable Life members are not yet over. Their ultimate fate is still far from clear.

T-Mobile in drive for market share

The big mobile phone companies spend about £2bn a year in Britain on customer acquisition and retention. Since the market is no longer growing very much, most of this money is wasted on a zero-sum game of winning subscribers from each other. Churn is as high as 30 per cent a year.

If the mobile operators were to sit down together and collectively agree not to spend anything at all, they'd be £2bn a year better off without any significant loss of revenue. They cannot do this, of course, because it is illegal. Is there no way of breaking out of this cycle of wasted expenditure?

As things stand, there is very little to differentiate the main network operators one from another on quality and breadth of service. Over time, even price is much of a muchness, with any new initiative that looks like working being matched pound for pound within weeks.

As figures from T-Mobile yesterday reveal, the German owned network has been successful in the last quarter in winning new subscribers. But those gains have come at a cost. Earnings are lower and margins have nearly halved. How much pain is Deutsche Telekom, T-Mobile's owner, prepared to take in its drive for market share?

The spiel is certainly a bewitching one. On quality, simplicity, the mobile internet and price competitiveness, T-Mobile is said to be doing something genuinely new. Don't be so naive, say old hands, who have seen it all before as the mobile operators jostle for position. Breakout? Believe it when you see it.

BAA's tussle with Goldman Sachs

Picture the scene, told for the first time today in this column. Goldman Sachs is invited in to pitch as an adviser to BAA in its attempt to see off an unwanted takeover bid from Ferrovial of Spain. The presentation is a compelling one, made all the stronger by the presence at the beauty parade of Goldman Sach's head of infrastructure investment. If anyone knows how leveraged infrastructure companies such as Ferrovial operate, this guy must do, for he's employed doing exactly the same sort of thing.

At the end of the meeting he gets up and says, by the way, why bother with a defence at all? Why not just accept a higher offer from us instead? OK, so the sequence of events wasn't quite as jaw dropping as that, but it wasn't far off.

What actually happened was that Goldman was indeed invited to pitch for the defence advisory fee, and left with the implied threat that perhaps BAA ought to watch its back if the fee didn't go to Goldmans. It didn't and before long Goldman Sachs came back with its own takeover approach. No wonder Marcus Agius, the chairman of BAA and a career investment banker out of the City old school, hit the roof. And no wonder too that soon afterwards Hank Paulson, the chairman of Goldman Sachs, was forced to take his London-based rainmakers to task. They were plainly out of control.

None of this means that Goldman Sachs has gone away. It would still willingly act as white knight if invited to do so. And despite Mr Paulson's ruling that there are to be no more hostile bid approaches, if it was open season Goldmans might still enter the fray without invitation.

As things stand, the Ferrovial consortium's 830p-a-share bid cannot be regarded as a serious offer. It needs to be a lot higher to win. Yet under the Takeover Code, BAA must issue its final defence before Ferrovial has to make up its mind on whether to bid more. For BAA to continue to do nothing is therefore a quite high-risk strategy.

Mr Agius is going to have to give something back to shareholders even though Ferrovial may eventually decide to walk away having not raised its bid. But how much? Too much and BAA runs into the same problem of debt leverage it criticises Ferrovial for. Too little, and it might tempt Ferrovial or Goldman Sachs into making a proper bid.

3i feeds bid rumours with capital return

Anyone would think 3i was on the wrong end of a takeover bid. Yesterday brought news that the quoted private equity group is increasing the size of its capital return to £700m, nowadays the classic defence when faced by an unwanted suitor. As it happens, there have been vague rumours of a takeover - from KKR or some such other unquoted private equity house - but this is not the reason for the capital return.

Rather, it is simply because 3i has realised a lot of investments over the past year - some £2.2bn worth to be precise, of which £576m is profit. Although new investment has also risen strongly, it is not by nearly as much as the disposals. With so much money still pouring into private equity, and profitable opportunities increasingly hard to find as the market grows more competitive, it makes sense to give the surplus capital back rather than attempt to reinvest it.

All that said, 3i seems to be very much back on the front foot as an investment house after the disaster of the post bubble years. Return on shareholders funds rose from 15.2 per cent to 22.5 per cent last year, which puts this curiosity of a company - there are hardly any quoted ways into private equity - up there with some of the best in the sector. This improvement is not yet properly reflected in the share price, which continues to value the company more like an investment trust than the financial services concern it aspires to be. Yet nearly two years into the job as chief executive, Philip Yea is showing clear signs of progress.

GM wants Vauxhall workers to eat cake

Well I never. As justifications for sacking 1,000 car workers go, they don't come more inventive than that used by Carl-Peter Forster, the president of GM Europe. You might think that GM's decision to cut one of three shifts at the company's Ellesmere Port plant had something to do with poor productivity.

Or perhaps, as with Ryton, it was simply because the models produced there had reached the end of the road. But no. Apparently it is nothing to do with such considerations. Instead it is because Britain's labour market is seen by GM as so buoyant that Merseyside can more easily afford to accommodate these cuts than Germany, Belgium, or anywhere else in Europe that GM has capacity.

This was presumably meant as some kind of backhanded compliment to sugar the pill, but whatever the explanation for Mr Forster's remarks, it is plainly not a good reason for closing a manufacturing plant. Now that one of the shifts is to go, it is hard to believe GM is to keep the others. If the British labour market can absorb 1,000, why not 3,000? Let them work at McDonald's, as Marie Antoinette might have said.

j.warner@independent.co.uk