BT share price: Ofcom introduces price margin rule for company’s broadband

on Mar 19, 2015
Updated: Oct 21, 2019

The UK’s communications regulator Ofcom has confirmed a new pricing rule that will require BT Group Plc (LON:BT.A) to maintain a sufficient margin between its wholesale and retail superfast broadband prices, after taking into account comments from the European Commission. The watchdog said today in a statement:

“From 1 April, a pricing rule will mean BT must maintain a sufficient margin between its wholesale and retail superfast broadband charges, in order to allow other providers profitably to match its prices.” The regulator noted that the margin currently maintained by BT was sufficient under the new rule and described the measure as a safeguard, which limited the company’s ability to “reduce retail margins in future, and ensures that any increases in BT’s costs must be reflected in its prices”.
Ofcom published a draft version of its plan to monitor BT’s prices in January, but the initial variant was met with some criticism from the European Commission (EC). The commission argued that the proposed measures, which suggested that BT’s sports channels should be considered part of the company’s wholesale costs, lacked “the necessary flexibility in particular with regards to the treatment of costs for BT Sports”.
Ofcom said that following the comments by the EC, it would adopt a more flexible approach in case of “a material change in circumstance”.
In today’s trading, BT shares were up 0.2 percent at 459.70p, as of 13:31 UTC. The stock has risen 14.6 percent since the start of the year. The company’s market capitalisation currently stands at £38.9 billion.
As of 15:12 GMT, Thursday, 19 March, BT Group plc share price is 460.05p.