BT share price: Group’s rivals turn to Ofcom over Openreach independence
Sky (LON:SKY), TalkTalk (LON:TALK) and Vodafone (LON:VOD) have joined forces to pile pressure on BT Group (LON:BT.A), with a call for its network division Openreach to face radical reform, The Telegraph has revealed. The news comes after the former telecoms monopoly announced plans earlier this month to invest £6 billion to upgrade its broadband and mobile network.
BT’s share price has fallen deep into the red in today’s session, having lost 1.66 percent to 432.85p as of 10:24 BST, as compared with a 0.23-percent dip with the benchmark FTSE 100 index. The group’s shares have lost more than six percent of their value over the past year, and are down some eight percent in the year-to-date.
The Telegraph reported over the weekend that BT’s rivals, together with groups representing dozens of smaller broadband operators, were set to write to Sharon White, the head of industry regulator Ofcom, pressing her to implement a 10-point plan. The letter, seen by the newspaper, calls on Ofcom’s chief to cut BT off from Openreach’s £1.4-billion cash flow to “deliver a the step-change in effectiveness that customers need”.
The proposals, signed by Sky chief executive Jeremy Darroch, Baroness Harding of TalkTalk and Vodafone’s UK boss Jeroen Hoencamp, are designed to steer the regulator’s thinking as it implements a review of the communications market. While Ofcom has stopped short of recommending BT’s break-up, it has demanded an overhaul of the group’s Openreach division. The Telegraph noted that the letter will say that for a break-up of the former telecoms monopoly to be avoided, the division must be established as a separate legal entity with its own company rules requiring it to act in the interests of all its customers.
BT’s rivals are set to call for the new subsidiary to have an independent, Ofcom-appointed board, with full control over Openreach’s budget, meaning that profits would be paid to BT as dividends approved by the independent board, rather than allowing the FTSE 100 group full access to the division’s cash flows.
Ofcom is expected to finalise its proposals for the future of BT’s Openreach division over the summer.
As of 10:57 BST, Monday, 16 May, BT Group plc share price is 432.85p.
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