Russian companies are paying the price for the Putin discount.

Vodafone yesterday responded to Alfa Group’s public expression of interest as if it had received an approach from an amorous bear. The mobile phone operator, which acknowledges that an Alfa executive came in for an exploratory if entirely fruitless conversation, went out of its way to distance itself from the Russian conglomerate controlled by Mikhail Fridman. “We are not in any sort of negotiations,” Vodafone said, effectively hanging up the phone.

The reaction in Newbury to Alfa’s interest is more revealing than the Russian eagerness to buy into the European mobile market. It reveals the profound and widespread suspicion that Corporate Russia’s intentions are not entirely honourable. (Alfa’s appetite in Europe is pretty indiscriminate: the company’s telecoms arm, Altimo, says that it wants to take a stake in Vodafone or, alternatively, France Télécom or Deutsche Telekom.)

Public companies and their shareholders have a number of concerns about Russian buyers. One is that Russian investments are driven by a doctrine in Vladimir Putin’s Kremlin of economic nationalism, a form of foreign policy conducted by corporate means. VTB, the state-owned bank, has taken a 5.4 per cent stake in EADS, the European aerospace company. The bank says it is purely a financial investment, but Andrei Kostin, the VTB president, waxes lyrical about a tie-up between Russian and European military aircraft manufacturers.

There are fears too that European investments are a form of oligarch insurance. Mr Putin swept aside the Yeltsin-era tycoons when he came to power and, with the Russian president’s term expiring in 2008, the present captains of Russian industry must be tempted to protect themselves from any future wave of political expropriations by tying themselves into established UK and European businesses. There is also discomfort at the prospect of being owned by a Russian proprietor with a storied past.

Russians may feel there is prejudice to this, but there can be no question that the Putin discount is crimping Russian capitalism. SeverStal’s Alexei Mordashov was affected by it in his bid for Arcelor, the steel company ultimately acquired by Mittal, and it has factored in the Corus decision to accept the Tata bid. (SeverStal has since been priced very cautiously for flotation.) Gazprom has never made any bid for Centrica, but even the idea of it has caused some consternation in Westminster.

There are two ironies to this. One is that Russia’s economic power has been fuelled by its natural resources, but this hesitancy towards Russian capital comes just as global energy prices are coming down and Russian oil production has fallen. The other is that Mr Putin is a business-minded president. His involvement in Russian business is limiting its ability to extend Russian influence abroad.

As the Alfa overture has demonstrated, European business is slapping a charge on Russian companies for roaming.

Tough call

Much to his credit, Charles Dunstone is a positive person. But he is insensitive to claim that the launch of his TalkTalk broadband/fixed-line service is a success. Numbers applying for the new service have been impressive, but if a third of them are waiting dissatisfied because Carphone Warehouse underestimated demand and understaffed the operation, it is liable to dent, not enhance, the group’s repution for customer service.

The phenomenal success of Carphone Warehouse has been based on the proposition that people can wander into its shops and get whatever type of mobile phone or contract they want, when they want it, without hassle. Add back the hassle, take away the choice of Vodafone and the group loses some of the lustre of its proposition.

Ahead of this difficulty, and ignoring the supposedly one-off launch loss, Carphone Warehouse sales and profits grew as impressively as ever. Both expanded by 40 per cent in the six months to end- September. As a further sickening 4 per cent share price fall suggested, however, investors now see more problems than opportunity and are questioning Carphone Warehouse’s place in the market.

The doubts are overdone but not ill-founded. Mr Dunstone, an enormously able man, is at a crossroads. Carphone Warehouse is battling on two fronts, both on the high street and online.

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