Major International Business Headlines Brief::: 21 January 2019

Mon Jan 21 10:19:04 CAT 2019

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Major International Business Headlines Brief::: 21 January 2019

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*  Zimbabwe's inflation soars to 42 percent Y/Y in December: Zimstats

*  South African rand flat in early trade

*  Saudi Arabia plans oil refinery, petrochemicals plant in S.Africa

*  SocGen and Absa join forces on wholesale banking in Africa

*  South African rand steady in early trade

*  Sudan inflation quickens to 72.9 pct in Dec -state news agency

*  China Moly to increase stake in Congo's Tenke copper mine to 80 pct

*  South Africa's central bank defends mandate, holds rate

*  Kenya's Safaricom's overdraft service exceeds expectations -CEO

*  South Africa's Woolworths hit by sluggish sales, earnings warning

*  China economy: Fourth quarter growth slips to 6.4%

*  Brexit: Liam Fox yet to seal no-deal trade agreements

*  Nissan says Ghosn received $9m in improper payments

*  Ryanair issues profit warning as fares fall

*  Murdoch asks to merge Times titles

 <mailto:info at bulls.co.zw> 

Zimbabwe's inflation soars to 42 percent Y/Y in December: Zimstats

HARARE (Reuters) - Zimbabwe’s inflation hit a fresh 10-year high of 42.09 percent year-on-year in December, from 31.01 percent in November, driven by increases in the price of basic goods, the statistical agency Zimstats said on Thursday.

On a monthly basis, prices increased 9.01 percent during the same period compared to 9.20 percent in November.

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South African rand flat in early trade

JOHANNESBURG (Reuters) - South Africa’s rand was unchanged early on Monday, as the dollar held steady and investor risk appetite held up despite data showing China’s economic growth had slowed.

At 0618 GMT, the rand traded at 13.8250 versus the dollar, unchanged from its previous close.

Government bonds were also flat, with the yield on the benchmark 2026 instrument at 8.905 percent.

With no major local data releases scheduled on Monday, traders said the rand’s trajectory would be driven by news headlines.

“Today is a dead day as far as data is concerned, and so it will be to the headline screens we turn for some sort of catalyst,” Standard Bank said in a note to clients.

The rand has enjoyed a strong start to 2019, rallying more than 3.5 percent against the dollar. But it remains vulnerable to global risk events like Brexit as well as uncertainty surrounding this year’s local parliamentary election.

Global financial markets appeared to take in their stride data showing that China’s economic growth had cooled slightly in the fourth quarter.

China is one of South Africa’s top trading partners.

Saudi Arabia plans oil refinery, petrochemicals plant in S.Africa

PRETORIA (Reuters) - Saudi Arabia plans to build an oil refinery and a petrochemicals plant in South Africa as part of $10 billion of investments in the country, Saudi Energy Minister Khalid Al-Falih said on Friday.

Saudi oil would be used in the planned refinery whose construction would be led by state energy company Saudi Aramco, Al-Falih said in comments following a meeting with South African Energy Minister Jeff Radebe in Pretoria.

“There have been exchanges of talks by Saudi Aramco teams and they have been supported by the South African energy ministry,” Al-Falih said.

The exact location of the refinery and petrochemicals plant will be finalised in the coming weeks, Radebe said.

Saudi Arabia was also interested in using South Africa’s major oil storage facilities, Al-Falih said, adding that Saudi utility developer Acwa Power was looking at investing in South Africa’s revamped renewable energy programme.

He also confirmed that there were discussions about the kingdom investing in South Africa’s state defence company Denel, which was exclusively reported by Reuters in November.

South African President Cyril Ramaphosa is trying to woo foreign investors to help revive a struggling economy as he prepares for a parliamentary election this year.

Saudi Prince Mohammed Bin Salman met with Ramaphosa on the sidelines of the Group of 20 summit in Argentina in November.

SocGen and Absa join forces on wholesale banking in Africa

JOHANNESBURG/PARIS (Reuters) - French bank Societe Generale and South Africa’s Absa joined forces in Africa on Friday, partnering on corporate and investment banking to broaden their reach across the continent.

The agreement will lead to a closer relationship between the two after Absa, one of South Africa’s biggest lenders, split from its former parent, Britain’s Barclays, in 2017.

It will see them leverage one another’s complementary geographic footprints and product sets, with Absa strong across southern and eastern Africa and SocGen well established in western and North Africa.

“We mirror each other very well,” Nothando Ndebele, head of financial institutions group at Absa’s corporate and investment bank, told Reuters by phone, adding it would be hard to find another bank with that footprint.

Absa has set itself a series of targets as it tries to make a name for itself as a pan-African, standalone bank.

It said the arrangement would give it a bigger share of its clients’ wallets, and help meet its target of doubling its share of banking revenues in Africa from 6 to 12 percent.

SocGen Chief Executive Officer Frederic Oudea said in a statement it made sense to join forces as firms on the continent developed increasingly sophisticated banking needs.

The banks will also work together to serve Chinese firms on the continent - a lucrative market. Absa will also purchase SocGen’s South African business offering custody, trustee and clearing services, for an undisclosed price.

Oudea is trying to boost profitability at SocGen by exiting countries and businesses where it lacks critical size and capacity for synergies.

That has seen SocGen sell banks in Albania, Belgium, Bulgaria and Serbia. The bank seeks to offload banks holding as much as 5 percent of its weighted assets, or close to 17.5 billion euros ($19.96 billion).

Richard Southbey, head of wholesale cash management at Absa’s corporate and investment bank, told Reuters the price of the South African purchase was not material for Absa, but filled a hole in its offering.

Cooperating with SocGen also allayed concerns Absa would not be able to serve its multinational clients well, or would struggle to compete with larger players, after its separation from Barclays, said Patrice Rassou, head of equities at Sanlam Investments, a top ten investor in Absa.

But Jan Meintjes, portfolio manager at Denker capital and another Absa investor, said the benefits might not materialise, and Absa had “bigger problems” impacting its bottom line.

“The turnaround in the retail and business banking business, just from a relative size point of view, is obviously where the bulk of the value unlock could be,” he said.

Absa’s shares were down 0.14 percent at 1330 GMT, while SocGen’s shares were up 0.4 percent.

($1 = 13.8205 rand)

($1 = 0.8769 euros)

South African rand steady in early trade

JOHANNESBURG (Reuters) - South Africa’s rand traded steady against the dollar on Friday, after slipping in the previous session following the central bank’s less-hawkish tone and decision to leave interest rates unchanged.

At 0635 GMT, the rand traded at 13.7300 per dollar, not far off its New York close of 13.7250 on Thursday.

South Africa’s central bank on Thursday kept its benchmark repo rate unchanged at 6.75 percent, as expected, saying it had noted an improved inflation outlook. [nL8N1ZH48M]

“The rand staged a mild recovery against the greenback overnight, drifting back to the comfort of 13.72, as risk assets benefited from positive U.S. factory data that helped allay growing growth concerns, and while the U.S. and Asian equity markets posted gains amid positive trade talks,” RMB analysts wrote in a note.

“Yet there is still very little on offer in terms of data or events to drive USD/ZAR and, by implication, benchmark bonds, lower, with U.S. treasuries relatively unchanged. Expect the USD/ZAR 13.65-13.85 range to be sustained.”

In fixed income, the yield on the benchmark government bond due in 2026 added 2 basis points to 8.82 percent in early trade.

Sudan inflation quickens to 72.9 pct in Dec -state news agency

KHARTOUM (Reuters) - Sudan’s inflation rate increased to 72.94 percent in December from 68.93 percent in November, state news agency SUNA said on Thursday.

Since Dec. 19, Sudan has seen widespread anti-government protests, triggered by price increases and limits on cash withdrawals.

China Moly to increase stake in Congo's Tenke copper mine to 80 pct

HONG KONG (Reuters) - China Molybdenum Co Ltd said on Friday it had agreed to buy a holding company for $1.14 billion in order to increase its control in Democratic Republic of Congo’s massive Tenke copper mine.

China Moly, already the majority owner of Tenke, will have an 80 percent stake in the mine after the acquisition of BHR Newwood DRC Holdings Ltd, a holding company set up by private equity firm BHR to buy a 24 percent stake in Tenke in 2017, China Moly said in a filing to the Shanghai stock exchange.

China Moly previously bought 56 percent stake in Tenke for $2.65 billion in 2016 from Freeport McMoRan Inc.

“The purchase will increase the company’s control in Tenke copper mine and further enhance company’s profitability and resilience,” China Moly said in the filing.

China Moly had assisted BHR in its purchase of the 24 percent stake in Tenke and as part of the deal, China Moly has the right to purchase BHR’s stake in the mine at a pre-agreed price if BHR left the project.

Congo’s state miner Gecamines holds 20 percent stake in Tenke, one of the world’s largest copper mines with proven and probable reserves of 3.8 million tonnes of contained copper.

South Africa's central bank defends mandate, holds rate

PRETORIA (Reuters) - The South African Reserve Bank defended its mandate of price stability on Thursday, after the ruling African National Congress said the bank should broaden its focus to include employment and economic growth.

The central bank’s mandate now focuses on price stability, but the ANC said in its 2019 election manifesto that monetary policy should also “take into account other objectives, such as employment creation and economic growth”.

Governor Lesetja Kganyago said the bank’s mandate was to protect the value of the currency in the interest of balance and sustainable growth. Changing the mandate, he said, meant amending the constitution.

“So anyone who says that the SARB must focus on growth has clearly not read the constitution,” Kganyago told reporters after announcing that the bank had decided to keep the benchmark repo rate unchanged at 6.75 percent.

“The fathers and mothers of our Constitution took the view that to have balanced and sustainable growth, you need price stability.”

President Cyril Ramaphosa said on Wednesday that the ruling party had no intention of tinkering with the independence of the Reserve Bank.

South Africa’s economy only recently emerged from a recession triggered in part by investor worries about policies such as the ANC’s plans to make the Reserve Bank fully state-owned and allow land expropriation without compensation.

After Thursday’s rate decision, the rand weakened to a session low of 13.8175 per dollar. Past attempts to alter the central bank’s mandate have caused the rand to weaken.

Kganyago said the monetary policy committee had noted an improved near-term inflation outlook, mainly driven by a drop in oil prices and a stronger rand.

The bank now projects inflation will average 4.8 percent this year, down from a previous forecast of 5.5 percent. An average of 5.3 percent is expected in 2020.

“The overall risks to the inflation outlook are assessed to be moderately on the upside. Against this backdrop, the MPC unanimously decided to keep the repurchase rate unchanged,” Kganyago said.

All 27 economists surveyed by Reuters had predicted rates would be left unchanged, but they said a hike was likely at its third meeting of the year in May.

“With Reserve Bank Governor stating that growth forecast for 2019 has been revised down, the dovish tilt could support speculation over the central bank slowing down on rates this year,” said Lukman Otunuga, a research analyst with FXTM.

Kenya's Safaricom's overdraft service exceeds expectations -CEO

NAIROBI (Reuters) - Kenya’s biggest telecoms operator, Safaricom, notched up one million users for its new overdraft feature on the M-Pesa platform in just eight days, surpassing its CEO’s expectations, he said on Thursday.

Started 11 years ago as a service to allow Kenyans without access to the banking network to transfer money via mobile phones, M-Pesa now offers loans and savings in conjunction with local banks, as well as merchant payments services.

Safaricom, part-owned by South Africa’s Vodacom and Britain’s Vodafone, launched the new overdraft feature called Fuliza on Jan. 7 this year.

“We got a million (customers) by day eight and by day eight we had lent $10 million. Now we are probably at $15 million,” CEO Bob Collymore told Reuters in an interview.

“If you don’t have enough cash, you simply draw down from the overdraft and you keep drawing down until you have got to your overdraft limit, which is predetermined by an algorithm.”

Fuliza is underwritten by Kenyan lenders KCB Group and CBA Group, which already had partnerships with Safaricom to offer short-term loans on the M-Pesa platform.

M-Pesa has around 20 million active users in Kenya and it has become the principal driver of profit growth for the dominant telecoms provider in East Africa, as revenue from traditional voice and text services has flattened off.

OBSOLETE

Collymore said he would welcome any potential takeover of the smallest operator, Telkom Kenya, by No.2 operator Bharti Airtel, following recent media reports of such a deal.

As the market leader with 65 percent of mobile phone users, or 30 million subscribers, Safaricom has long been dogged by regulatory proposals to clip its wings to boost competition.

“It is a good thing because what you create is an entity which has got at least 30 percent market share. There is a critical mass that any player needs to get to, to be operating sensibly,” he said of the potential Airtel/Telkom deal.

The regulator Communications Authority is finalising a report on competition, which among other things seeks to control Safaricom’s ability to set its retail prices, curb its marketing expenditure and force it to share its extensive infrastructure with the other operators, to level the playing field.

If the reported takeover of Telkom by Airtel goes through, it could render the competition report unnecessary, Collymore said.

“It will be obsolete,” he said. “The conditions which you studied (competition in the sector) a few years ago are no longer relevant.”

South Africa's Woolworths hit by sluggish sales, earnings warning

JOHANNESBURG (Reuters) - Shares in Woolworths fell more than 8 percent on Thursday after the South African department store operator posted slower half-year sales growth and said it expected its headline earnings to drop by 5 percent in the period.

Woolworths, which owns clothing and homeware retailer Country Road, said it expects half-year headline earnings per share (HEPS) to either be flat or fall by up to 5 percent from 206.3 cents for the same period a year earlier.

It said adjusted HEPS are expected to decline between 7.5 percent and 12.5 percent from 223.4 cents.

Woolworths shares were down 9 percent to 50 rand at 0727 GMT, which would be the biggest daily fall in the stock in more than three-years if they close at this level.

The drop came after Woolworths said group sales rose by 1.9 percent in the 26 weeks ending Dec. 23, 2018, compared with a 2.5 percent increase in the 26-week period ended Dec. 24, 2017. The retailer had an additional pre-Christmas trading day in 2017, which helped boost the sales.

South African retail sales climbed 3.1 percent in November, led by household furniture and appliances, textiles, clothing and footwear and general dealers as consumers enjoyed the sales opportunities presented by Black Friday.

Woolworths food sales climbed 6.3 percent, with volume driven by low inflation higher levels of promotions and price investment. Comparable store sales increased by 4.2 percent.

Sales at the local fashion, beauty and home business declined by 2 percent, with comparable store sales down 2.4 percent due to a significantly smaller winter clearance sale in the first quarter, the group said.

The fashion, beauty and home business has been under pressure recently from constrained economic conditions and mistakes in womenswear offerings.

While sales in David Jones, which is based in Australia, inched up 1 percent, with sales performance weakening in line with the rest of the Australian retail market in the final weeks leading up to Christmas, it said.

David Jones has been going through a transformation which includes putting in place new merchandise and finance systems, new online platform and repositioning its food business and has led to significant costs and disruptions.

China economy: Fourth quarter growth slips to 6.4%

China's economy grew at its slowest rate since 1990, stoking fears about the impact on the global economy.

China expanded at 6.6% in 2018, official figures out Monday showed.

In the three months to December, the economy grew 6.4% from a year earlier, down from 6.5% in the previous quarter.

The data was in line with forecasts but underlines recent concern about weakening growth in the world's second largest economy.

China's rate of expansion has raised worries about the potential knock-on effect on the global economy. The trade war with the US has added to the gloomy outlook.

The official figures out Monday showed the weakest quarterly growth rate since the global financial crisis.

What does China's slowdown mean for the UK?

China's trade figures should concern us

China mulls longer weekend to boost shopping

Why are the Chinese buying fewer cars?

While China watchers advise caution with Beijing's official GDP numbers, the data is seen as a useful indicator of the country's growth trajectory.

Slowdown warnings

Growth has been easing for years, but concern over the pace of the slowdown in China has risen in recent months as companies sound the alarm over the crucial market.

Earlier this month Apple warned weakness in China would hit its sales.

Carmakers and other firms have spoken out on the impact of the trade war with the US.

How worrying is China's slowdown?

China's government has been pushing to shift away from export-led growth to depend more on domestic consumption.

Policymakers in China have stepped up efforts in recent months to support the economy.

Those measures to boost demand include speeding-up construction projects, cutting some taxes, and reducing the level of reserves banks need to hold.

Capital Economics China economist Julian Evans-Pritchard said the Chinese economy remained weak at the end of 2018 "but held up better than many feared".

"Still, with the headwinds from cooling global growth and the lagged impact of slower credit growth set to intensify... China's economy is likely to weaken further before growth stabilises in the second half of the year."--BBC

Brexit: Liam Fox yet to seal no-deal trade agreements

The UK has yet to finalise agreements to replace existing free trade deals the EU has with 40 big economies if there is a no-deal Brexit.

International Trade Secretary Liam Fox said he "hoped" they would but it depended on whether other countries were "willing to put the work in".

He said more deals were coming, after signing one with Australia.

Concerns have been raised that the UK will leave the EU without a deal that would protect current arrangements.

The UK is due to leave the EU on 29 March, under the Article 50 process and the UK's EU Withdrawal Act, with or without a deal - unless the UK chooses to revoke Article 50 and continues as a member of the EU.

MPs defeated the withdrawal deal negotiated with the EU by a huge margin earlier this week, which provided for a "transition period" of 21 months, under which much of the UK's relationship with the EU would remain the same.

In 2017, Mr Fox said that the UK could "replicate the 40 free trade agreements before we leave the EU", so that there would be no disruption to trade.

But with just over two months to go until Brexit, not one has been signed, said the BBC's business correspondent Jonty Bloom.

The Department for International Trade says some agreements are at an advanced stage but none of the 40 free trade deals that the EU has with other countries have so far been rolled over so that they will cover the UK after Brexit.

The closest the UK has come to rolling over a free trade deal is an initial agreement with Switzerland to replicate the existing EU-Switzerland arrangements "as far as possible". But that deal has not been formally signed yet.

Asked about a report in the Financial Times that Britain would not be close to finalising most of the 40 free trade deals the EU currently has with other countries, Mr Fox told the BBC: "I hope they will be but there are not just dependent on the UK. Our side is ready.

"It's largely dependent on other whether countries believe that there will be no deal and are willing to put the work in to the preparations."

On Friday, he signed a "mutual recognition agreement" with the Australian high commissioner in London - to maintain all current relevant aspects of the agreement it has with the EU. The EU does not have a free trade agreement with Australia.

He said there would be a "pipeline of them to be signed as we go through" and the agreement made it easier for UK goods to comply with Australian standards.

Mr Fox also said that staying in a permanent customs arrangement with the EU would "not be delivering Brexit" as he did not believe it would allow the UK to pursue an independent trade policy.

Some opposition parties have been making the case for a customs union. Theresa May held talks with the leaders of parties including the SNP and the Lib Dems, about a way forward after she won a confidence vote by a narrow margin in the Commons on Wednesday.

She also spoke to German Chancellor Angela Merkel and Dutch Prime Minister Mark Rutte on the telephone on Thursday night, and will be speaking to more EU leaders over the weekend.

But Labour Leader Jeremy Corbyn, who wants the UK to be in a permanent customs union with "strong" ties to the single market, has refused to take part in talks with the prime minister until she rules out the prospect of leaving the EU without a deal.

In a letter to Mrs May, Mr Corbyn said her talks were "not genuine". He also accused her of "sticking rigidly" to her withdrawal agreement.

As many as 20 Tory ministers have also said they would quit the government unless the prime minister allows them to try to stop a no deal Brexit, according to the Telegraph.

Mrs May says ruling out no deal is impossible as it is not within the government's power.

Writing in the Financial Times, Shadow Chancellor John McDonnell said the Conservative Party was "riven with division" so Labour would "return to Parliament to promote the compromise we believe is not only in the best interests of our economy but is also capable of securing sufficient support both here and in Brussels".

If Parliament was at an impasse, and Labour could not get a general election "we should also retain the option of seeking a public vote," he added.

Mr Corbyn has come under pressure from dozens of his MPs to back calls for another EU referendum. On Friday a pro-referendum campaign group paid for a wrap-around advertisement in his local newspaper, the Islington Tribune , urging him to back a "public vote on Brexit".

In a speech at JCB Headquarters in Rocester, Staffordshire, former foreign secretary Boris Johnson said changing the date of leaving from 29 March would be "shameful", and the public would view it as "an elite conspiracy to thwart Brexit".

He instead urged the government to use Brexit to "unite the country".--BBC

Nissan says Ghosn received $9m in improper payments

Nissan and Mitsubishi have said Carlos Ghosn received "improper payments" totalling €7.8m ($8.9m; £6.9m) from a joint venture between the carmakers.

The claim follows a joint investigation by the companies into misconduct carried out by Mr Ghosn.

Mr Ghosn, former chairman of both firms, has been detained since November on charges involving financial crimes.

Both companies sacked him after his arrest last year. He denies any wrongdoing.

In a statement, Nissan said Mr Ghosn was compensated by the Netherlands-based joint venture, but he signed the contract without consulting two other board members, Nissan chief executive Hiroto Saikawa and Mitsubishi chief executive Osamu Masuko.

Renault 'preparing to replace Ghosn'

Carlos Ghosn: The driven 'cost killer'

Five charts on the Carlos Ghosn scandal

Mr Ghosn received compensation totalling €7.8m, according to the statement.

"Nissan views the payments Ghosn received from [the joint venture company] to be the result of misconduct and will consider measures to recover from Ghosn the full sum," it said.

Why is Mr Ghosn in detention?

Mr Ghosn has been charged with financial misconduct and breach of trust.

The 64-year-old is accused of having understated his pay for eight years and of having shifted private investment losses temporarily onto Nissan.

His lengthy detention in Japan without trial has drawn criticism and raised suspicion of a power play within an alliance between the two Japanese carmakers and Renault.

The Brazilian-born executive was the architect of the Renault-Nissan alliance and brought Mitsubishi on board in 2016.

Renault, in which the French government has a 15% stake, kept him on as chairman and chief executive even after his arrest in November.

But there is speculation it could replace him as a boss with expectation of a board meeting as soon as this weekend.

Renault was seen as the dominant partner because of its 43% shareholding in Nissan, despite selling fewer vehicles. Nissan's shareholding in Renault is only 15%.--BBC

Ryanair issues profit warning as fares fall

Ryanair has cut its profit forecast blaming lower-than-expected air fares.

The airline's chief executive, Michael O'Leary, said Ryanair could not rule out having to cut fares further. Fares are expected to fall 7% this winter.

He said the low fares were already causing problems for rivals, including Flybe which was rescued last week.

Full-year profits are now expected to be in a range of €1.0bn to €1.1bn (£880m to £970m), compared with its previous forecast of €1.1bn to €1.2bn.

The profit forecast has been cut despite Ryanair saying it expects to carry more passengers than forecast.

It had previously warned on profits in October.

Mr O'Leary said there was too much capacity on short-haul routes in Europe this winter, adding that customers were enjoying "record lower air fares".

Ryanair named 'worst short-haul airline'

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Ryanair warns on profits as strikes hit income

"We believe this lower fare environment will continue to shake out more loss making competitors, with WOW, Flybe, and reportedly Germania for example, all currently for sale," he said.

The airline had previously expected air fares to fall by 2%, rather than 7%.

More cuts could be coming, Mr O'Leary added.

"While we have reasonable visibility over forward bookings [for the fourth quarter], we cannot rule out further cuts to air fares and/or slightly lower full year guidance if there are unexpected Brexit or security developments which adversely impact yields between now and the end of March," he said.

The announcement follows last week's rescue of Flybe, which has received an offer from a consortium including Virgin Atlantic and Stobart Group.

It also comes after difficult period for Ryanair, which was named the UK's least-liked short-haul airline for the sixth year running in a survey carried out by consumer body Which?.

Strikes by staff during the summer season forced it to cancel hundreds of flights for which it has refused to offer passengers compensation, and Which? said "thousands of respondents" had said they would never fly with the airline again.

The impact of these strikes was reflected in Ryanair's half-year results in October, when it reported a 7% fall in profits, although the airline was also affected by industrial action by air traffic controllers.

Ryanair said the latest profits guidance excluded start-up losses in Austrian airline Lauda, which have been cut from €150m to €140m thanks to lower-than-expected costs.

Mr O'Leary said the airline was winning market share, citing plans by rival carrier Norwegian to close bases in Rome, Gran Canaria, Tenerife and Palma, where the airlines compete.

More detail will be provided with third quarter figures on 4 February, Ryanair said.--BBC

Murdoch asks to merge Times titles

Rupert Murdoch newspapers the Times and the Sunday Times are asking the government for permission to share resources, including journalists, between the two titles.

The application to the Department for Digital, Culture, Media and Sport (DCMS) is necessary as legal undertakings were made to keep them separate when he bought them in 1981.

The papers employ 505 between them.

The DCMS is seeking public views on whether the changes are warranted.

John Witherow, editor of the Times, said: "The persistent cost pressures facing our industry mean that we need to manage our newsrooms as carefully as possible. We need to stay competitive in an increasingly difficult market so that we can continue to build a sustainable future for Times' journalism."

Removing duplication

News UK, the part of Murdoch's News Corp that owns the two papers, said the change would allow more flexibility to share resources across the titles, while continuing to commit to them remaining as separate newspapers with separate editors.

"This would enable the papers to contend with the continual disruption that has faced the media industry in the digital age," News UK said.

In the application, the papers cite a number of factors affecting the industry, including the fall in circulation as readers shift online.

It says the most "obvious way to achieve further cost savings without affecting the quality of journalism is to remove unnecessary duplication in costs inherent in running entirely separate Monday to Saturday and Sunday newspapers".

It says that "virtually all" other major UK national appears have integrated their editions.

Martin Ivens, editor of the Sunday Times, said: "The Sunday Times remains the biggest selling broadsheet in Britain and to protect our distinctive voice we need the freedom to work more closely to avoid duplication and invest more in the agenda-setting journalism we are famous for."

News UK, which also publishes the Sun, said that it amounted to a "small change" to the legal undertakings.

A spokesperson for the National Union of Journalists said: "We are concerned about the News UK request to change the existing legal undertakings and the potential impact shared content will have on journalists and journalism.

"Cuts are likely to follow if the company are allowed to proceed. We will be seeking further clarity about the details of the proposals announced today."

'Powerful forces'

The decision to agree to any changes to the legal undertakings rest with the Culture Secretary, Jeremy Wright.

Documents published by the DCMS, which invite comments on the matter by 5pm on 11 February, show that News UK first raised the topic in October and made a formal application last week.

The department also published a letter from the six independent national directors who oversee the editorial independence of the two papers. In it, the directors say they back the application in light of the "powerful forces that affected the media industry since the advent of digital technology".

The papers put up a paywall for their websites in 2010 and as of October the Times had an average daily paid print circulation of about 421,000, and paid digital subscribers of approximately 231,000. The Sunday Times had an average paid print circulation of about 723,000 and paid digital subscribers of approximately 254,000.

Their potential restructuring is the latest development in Mr Murdoch's empire.

In September, his 21st Century Fox sold its 39% stake in Sky to Comcast, ending the media mogul's association with the satellite broadcaster after almost three decades.

Fox had originally sought to buy the 61% of Sky it did not already own after selling off Fox's entertainment assets, such as its film studio, to Walt Disney.

He retained Fox News, while News Corp dominates newspapers in Australia, owning the biggest-selling dailies in Sydney and Melbourne and the national title, The Australian.

The Wall Street Journal and the New York Post are also part of his stable.--BBC

INVESTORS DIARY 2019

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Cellphone:      <tel:%2B263%2077%20344%201674> +263 77 344 1674

Alt. Email:       <mailto:info at bulls.co.zw> info at bulls.co.zw  

Website:         <http://www.google.com/url?q=http%3A%2F%2Fwww.bulls.co.zw&sa=D&sntz=1&usg=AFQjCNH8LYgdY55h-XKseuM8Kpr-JKdfhQ> www.bulls.co.zw 

Blog:            <http://www.google.com/url?q=http%3A%2F%2Fwww.bulls.co.zw%2Fblog&sa=D&sntz=1&usg=AFQjCNFoIy6F9IXAiYnSoPSgWDYsr8Sqtw> www.bulls.co.zw/blog

Twitter:         @bullsbears2010

LinkedIn:       Bulls n Bears Zimbabwe

Facebook:      <http://www.google.com/url?q=http%3A%2F%2Fwww.facebook.com%2FBullsBearsZimbabwe&sa=D&sntz=1&usg=AFQjCNGhb_A5rp4biV1dGHbgiAhUxQqBXA> www.facebook.com/BullsBearsZimbabwe

Skype:         Bulls.Bears 

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