Regulators have imposed temporary price caps and other restrictions on BT Group (LON:BT.A), The Telegraph has reported. The move came after a court rejected a plan to allow rivals to take control fibre-optic lines.
BT’s share price has fallen deep into the red in London this morning, having given up 1.43 percent to 245.45 as of 09:35 GMT, underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.23 percent lower at 7,400.09 points. The group’s shares have lost more than 31 percent of their value over the past year, and are down by a little over a third in the year-to-date.
Temporary price caps
The Telegraph reported yesterday that industry regulator Ofcom would take the unusual step of imposing temporary price caps, access requirements and quality standards on BT in the business market while it designs new dark fibre rules.
The watchdog explained that the ‘exceptional’ circumstances warranted the use of emergency powers following the defeat of its ‘dark fibre’ proposals by the former telecoms monopoly at the Competition Appeals Tribunal (CAT). The measure was meant to allow mobile operators and rival business telecoms providers connect their own equipment to high-capacity fibre optics operated by the FTSE 100 group’s network division Openreach. The CAT, however, rejected Ofcom’s proposals, saying it had wrongly defined markets, forcing regulators back to the drawing board.
A BT spokesman told the newspaper that the company was “very surprised by Ofcom’s decision and disappointed”.
The news marks another blow for BT, which has had a difficult year, marked by an accounting scandal at its Italian division. The former telecoms monopoly further faces a row with its trade union over plans to overhaul its pension scheme.
Analysts on BT
Goldman Sachs, which sees the telco as a ‘neutral,’ set a price target of 330p on the shares this month. According to MarketBeat, BT Group currently has a consensus ‘hold’ rating and an average price target of 331.76p.