Industry regulator Ofcom is concerned by BT Group’s (LON:BT.A) involvement in developing the strategic plans of its networks business Openreach, despite splitting the operations, Reuters has reported. The comments came after the former telecoms monopoly moved to legally separate the division amid regulatory pressure to improve its performance.
BT’s share price has fallen deep into the red in today’s session, having given up 1.59 percent to 210.70p as of 13:36 BST. The stock is underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 1.03 percent in the red at 7,685.55 points.
Ofcoms flags concerns over Openreach
Reuters reported this morning that industry regulator Ofcom had said in a report that while the progress toward the legal separation of BT and its network division Openreach had been ‘broadly satisfactory,’ some steps were yet to be completed such as the transfer of the division’s employees to the new Openreach Ltd due to complexities with the FTSE 100 group’s pension scheme.
The watchdog further pointed out in the report that the former telecoms monopoly had been ‘significantly involved’ in the financial and strategic planning of Openreach.
“We are also concerned that BT’s newly established Investment Board reviewed Openreach’s investment proposals to be included in its strategic plans before the final draft plans were presented to the Openreach Board for approval,” the regulator said in the report.
BT ‘absolutely committed’ to unit’s independence
BT meanwhile said that it was ‘absolutely committed’ to the strategic independence of its network division.
“BT welcomes Ofcom’s confirmation that we have made good progress toward implementing the status of Openreach determined by the Digital Communications Review,” the former telecoms monopoly pointed out, as quoted by the newswire.