BT share price jumps as Ofcom eases Openreach charge controls

Forer telecoms monopoly nevertheless anticipates adverse impact

BT share price jumps as Ofcom eases Openreach charge controls

Shares in BT Group (LON:BT.A) have advanced in London in today’s session, with investors reacting positively to news that Ofcom will ease price controls on the telco’s network division Openreach. The former telecoms monopoly nevertheless expects the latest measures, aimed at encouraging more investment in full-fibre networks, to adversely impact the division’s revenue.

As of 13:10 GMT, BT’s share price had added 4.17 percent to 242.05p, outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.14 percent lower at 7,242.51 points. The group’s shares have lost nearly 27 percent of their value over the past year, as compared with about a 0.4-percent dip in the Footsie.

Ofcom eases price caps

Industry regulator Ofcom unveiled a package of measures intended to increase investment in full-fibre broadband, including requiring BT to make its telegraph poles and underground tunnels open to rivals. The telco’s network division Openreach meanwhile will be required to repair faulty infrastructure and clear blocked tunnels where necessary for providers to access them, and will have to ensure there is space on its telegraph poles for extra fibre cables connecting homes to a competitor’s network.

Ofcom, however, also disclosed that it had decided not to regulate the prices of Openreach’s fastest wholesale superfast broadband products, including its new full-fibre services. The regulator has further decided to ease the wholesale price control for the division’s 40-megabits-per-second broadband package from £11.23 to £11.92.  

BT responds to changes

BT commented on the measures in a statement, noting that the price changes in Ofcom’s Wholesale Local Access will have a year on year adverse financial impact on Openreach’s revenue and profit in 2018/19 of between £80 million and £120 million. The telco anticipates further year-on-year impacts in each of the successive two financial years in the range of low to mid tens of millions of pounds. 

“The net impact at the Group level will depend on the retail market dynamics,” the former telecoms monopoly concluded.

As of 13:54 GMT, Friday, 23 February, BT Group plc share price is 242.79p.

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