BT share price: Telco could face rural broadband challenge

Government officials thought to be mulling over market shake-up

BT share price: Telco could face rural broadband challenge

BT Group (LON:BT.A) faces a new challenge on rural broadband networks, with the government considering a radical shake-up of the market, The Telegraph has reported. The news comes after Ofcom recently unveiled that it would ease price controls on the telco’s network division Openreach.

BT’s share price has fallen into the red in London this morning, having given up 0.54 percent to 238.10p as of 10:15 GMT. The stock is underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.07 percent lower at 7,219.54 points. The group’s shares have lost a little over 30 percent of their value over the past year, as compared with about a 1.6-percent drop in the Footsie.

Telco faces new challenge

The Telegraph reported over the weekend that the rights to build new ultra-fast ‘full-fibre’ broadband networks could be packaged up and bid for as regional franchises, with government officials understood to be considering a radical shake-up of the market.

Industry and Westminster sources indicated to the newspaper that broadband franchises are being seriously considered as a way to accelerate the roll-out of full-fibre broadband, offering faster, more reliable and future-proof internet access. Two sources, however, further told The Telegraph that advocates of a bigger outlay faced opposition from Tim Höttges, the chief executive of Deutsche Telekom, which is BT’s largest shareholder and faces similar pressure in Germany.

BT arguing against franchising

BT meanwhile is arguing against franchising which could see it lose sway over large areas of the country to upstart broadband infrastructure builders such as CityFibre. The newspaper notes that instead of franchises, the former telecoms monopoly wants the Government to consider whether Openreach should be allowed to charge more for broadband in rural areas to justify investment where returns are lower.

As of 10:44 GMT, Monday, 12 March, BT Group plc share price is 238.55p.

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