Ofcom launches digital communications probe – BT share price in focus

BT Group Plc (LON:BT.A) has fallen under investigation by Ofcom, as the UK’s telecoms regulator launched a probe into the UK’s digital communications markets. The company’s rivals have argued that the market incumbent needs to be broken up, to improve the market for consumers, in the largest review of the industry in a decade.

Ofcom today said in a statement that it would investigate whether there is scope for deregulation in some areas as it looks into incentives for private investors and examines the level of competitiveness in a sector that has been transformed over the past decade. This is Ofcom’s first major probe into the market since 2005, when BT was obliged to open its network to competitors on equal terms for phone and broadband services.
BT’s rivals have welcomed Ofcom’s announcement, calling for the regulator to go the distance by forcing BT to spin off its infrastructure arm Openreach. Sky (LON:SKYB) chief executive Jeremy Darroch wrote in a response to the announcement of the probe that the structural separation of the UK’s sole nationwide broadband infrastructure would lay the groundwork for a more sustainable industry which is likely to attract investors, broaden access and provide lower prices for customers.
According to Darroch, Ofcom “must now take the opportunity to address Openreach’s conflict of interest as a subsidiary of BT or risk extending the problems that are affecting the industry and its customers today”.
TalkTalk (LON:TALK) boss Dido Harding said that the current structure of the market was not fit for purpose, claiming that BT’s proposed acquisition of EE, the UK’s largest mobile operator, would only make matters worse, should the deal go through. Harding explained that it would “further starve Openreach of the focus and capital it needs and will extend BT’s dominance of the market”.
As of 14:21 GMT, BT‘s shares were trading 0.11 percent down at 446.00p. The group’s stock has climbed over 11 percent since the turn of the year.
BT Group plc has it that the company will outperform the market. The median target of the 18 analysts offering 12 month price targets is 480.00p with a low estimate of 355.00p and a high estimate of 615.00p.
As of 10:55 GMT, Saturday, 14 March, BT Group plc share price is 451.80p.