BT off hook as it escapes forced sale of Openreach
BT shares jumped 12¼p to 399¾p yesterday as it was ordered to ring the changes at Openreach but avoided a full breakup of the network business.
The telecoms giant welcomed proposals for a “distinct company” with its own board as part of media regulator Ofcom’s drive to boost broadband quality and provide the incentive for companies to develop the digital economy.
Rival internet service providers which have accused BT of under-investing in the network described the plans as a “step in the right direction”.
Ofcom chief executive Sharon White said the plan could be implemented within months rather than the years which a sale of Openreach could take.
Openreach would be required to formally consult customers such as Sky and TalkTalk on major investments and its staff would be employees of the new company to avoid any perceived conflict of interest.
Its board would comprise a majority of non-executive directors not affiliated to BT, who would be appointed and removed by the company in consultation with Ofcom.
BT would retain control of setting budgets.
Chief executive Gavin Patterson said: “We have listened to Ofcom and [the] industry and are introducing significant changes to meet their concerns. Openreach is committed to delivering better service, broader coverage and faster speeds.”
The company said: “We welcome Ofcom’s recognition that structural separation would be a disproportionate move. Our proposals provide Ofcom with every benefit they’re seeking but without any of the substantial and unavoidable costs associated with legal incorporation.” TalkTalk chief executive Dido Harding vowed to keep up the pressure for a full separation of Openreach.
She said: “Legal separation still means a highly complex web of regulation and BT has proven itself expert at gaming this system. There is nothing to suggest they will not continue to do so in the new system. Structural separation is cleaner, with less red tape – and removes BT’s ability to exploit loopholes.”