BT can’t be forced to split off Openreach, insists chief
BT’S chief executive Gavin Patterson has said EU regulations mean it cannot be forced to break up Openreach, the broadband network it controls, as it unveiled a boost in sales and profits.
“Last time I looked we were still part of the EU,” he said. “After taking a lot of legal advice, there’s nothing in the Eu- ropean framework mechanism that would allow a forced separation of any company in telecoms.”
This week, Ofcom told BT to overhaul its Openreach division or face a structural split, saying the network division should become a “distinct company” within BT, with control over its own cash flow and an independent board.
Openreach maintains the poles and ducts that deliver broadband to UK homes, and is used by BT and its rivals to deliver internet services.
“We’ve got a lot of common ground,” said Mr Patterson, who hopes to agree a revised set of proposals in the next two months. “I’m not denying that there are issues to work through, but we’ll attempt to find a way forward on the areas where we differ.”
BT posted a 35pc lift in revenues to £5.78bn in the three months to June 30 on an underlying basis, thanks in part to its takeover of mobile network EE. The FTSE 100 group’s pre-tax profits increased 16pc to £802m on an adjusted basis. On a reported basis, they rose 13pc to £717m. EE contributed revenues of £1.24bn.
Openreach’s revenues were flat at £1.25bn. Under Ofcom’s proposals, Openreach would have control of its £1.4bn cash flow, an independent board and the ability to form large-scale investment plans without BT’s input.
Mr Patterson added that Openreach had reduced missed appointments by a third over three months. He also said that EE – which has recently faced Ofcom scrutiny over customer service – would now handle all its complaints in UK and Ireland call centres.
The only division to lose sales was BT’s wholesale and ventures arm, where revenue fell 10pc to £518m.
BT said it was on track to deliver fullyear forecasts, with analysts predicting revenues of £23.9bn and pre-tax profits of £3.47bn in the year to March 31, 2017. The shares rose 3pc to 414.4p.