BT shares leap as Ofcom rejects Openreach split

Ofcom stopped short of ordering BT to sell off Openreach

Gareth Fuller/PA Wire

25 February 2016

BT must open its broadband network further to competitors like Sky and Vodafone, and provide a better service to them, the telecoms regulator ordered today.

But Sharon White, chief executive of Ofcom, stopped short of the nuclear option of ordering BT to sell off its networks business Openreach.

Shares in BT rose 3%, or 15p, to 475p, on her recommendations, which follow months of investigation and bitter accusations between rival telecoms firms.

White (pictured) said there was clear evidence Openreach “still has an incentive to make decisions in the interests of BT, rather than its competitors”. She said she would make the governance of Openreach more open and give more access to how costs and assets are allocated between it and BT.

She added: “People need affordable, reliable phone and broadband services. Coverage and quality are improving but not fast enough. So we’ve announced fundamental reform of the market with more competition, a new structure for Openreach, tougher performance targets and a range of measures to boost quality of service.”

White also said she wanted to bring in automatic compensation for consumers who suffered any loss or reduction in service. She said: “It’s a big deal but we already have automatic compensation for electricity, water and gas and consumers deserve it for telecoms. We will have new rules for quality of service in April and I want compensation to come in as soon as possible after that.”

BT will have to open its network, making it easier for competitors to use its ducts and telegraph poles to build their own fibre network if they want.

Gavin Patterson, chief executive, was not prepared to declare today’s decisions a victory for the former telecoms monopoly.

“I would call it a step on the road to clarity,” he said. “But there is still an awful lot to be sorted out. We see this as an encouragement for investment and for doing more when it comes to service and we will do that. There is an awful lot we can do without adding huge cost, which a full spin-off would have meant. The fact is that ultimately the wholesale cost of ultrafast broadband in the UK is very competitive.”

A Sky spokesman said: “We welcome Ofcom’s recognition that the current Openreach model is not working and that fundamental change is required. BT must now be held to account for improving service and enabling delivery of fibre to Britain’s homes and businesses.”

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