BT Group’s (LON:BT.A) network unit Openreach is in talks with Vodafone (LON:VOD) about a ground-breaking joint investment in new ultrafast fibre-optic broadband for British cities, The Telegraph has reported. The talks come amid increased regulatory pressure on the former telecoms monopoly to improve Openreach’s performance.
BT’s share price has been little changed in London this morning, having added 0.01 percent to 293.00p as of 08:42 BST, as compared with a 0.11-percent dip in the benchmark FTSE 100 index. Vodafone’s share price meanwhile is 0.16 percent better off at 221.30p.
Industry sources told The Telegraph last night that BT’s Openreach and Vodafone were in ‘early but serious’ discussions about combining their financial strength to build large-scale new infrastructure to replace ageing copper telephone lines. It is also understood that Openreach and Ofcom have held early talks over how the regulations could be relaxed to allow Vodafone to invest. Sources further suggested to the newspaper that given pressure from the Government for Britain to catch up with European economies with better internet infrastructure, the industry watchdog was likely to be flexible.
The talks have reportedly been spurred by Openreach’s new independence, after BT agreed with Ofcom earlier this year to make the division a legally separate subsidiary with its own board and more autonomy to conduct confidential discussions with industry players.
“We’ve said before that a new, more independent Openreach is open to co-investment models,” a spokesperson for Openreach told The Telegraph, adding that the company was “currently consulting with all of our wholesale customers on the case for a large-scale ‘full fibre’ broadband network”.
The news comes after BT recently teamed up with Dell EMC to look for new ways to manage network traffic. The collaboration will be focused on exploring how disaggregated switching can create flexible networks which are more responsive to customer needs.