BT share price: Openreach unveils wholesale broadband discounts

Former telecoms monopoly flags financial hit from move

BT share price: Openreach unveils wholesale broadband discounts

BT Group’s (LON:BT.A) network division Openreach has announced discounts on fibre broadband for telecoms firms going ‘beyond’ pricing controls set by industry regulator Ofcom. The former telecoms monopoly meanwhile expects the move to result in a hit to the division’s earnings and revenue this year.

Investors have reacted positively to the news, with BT’s share price having gained 1.16 percent to 224.83p as of 09:39 BST. The stock is outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.62 percent higher at 7,703.57 points.

Openreach unveils discounts for CPs

BT announced in a statement this morning that its network division Openreach was introducing a new offer encouraging communication providers (CPs) to upgrade a large proportion of the country's homes and businesses to the better broadband services it delivers nationwide. The offer covers Fibre-to-the-Premises (FTTP) and Fibre-to-the-Cabinet (FTTC) wholesale services and includes  access to long-term discounts in return for upgrading their customers from predominantly copper-based services.

“The discounts go beyond the regulator Ofcom’s pricing controls on Openreach’s superfast broadband products,” the company said in the statement.

FTSE 100 group flags hit to earnings

The former telecoms monopoly noted in a separate statement that it expects Openreach  new pricing structure for fibre broadband “to have an adverse impact in the order of high tens of millions of pounds” on the division’s revenue and EBITDA in 2018/19, with the final net impact at group level contingent on retail market dynamics. The FTSE 100 company, however, left its financial outlook for 2018/19 unchanged.

The news comes after Ofcom recently flagged concerns over BT’s involvement in developing Ofcom’s strategic plans. The former telecoms monopoly has moved to legally separate the division amid regulatory pressure to improve its performance.

As of 10:06 BST, Tuesday, 24 July, BT Group plc share price is 225.60p.

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