BT share price: Group told to put ‘house in order’ or face break-up

on Jul 19, 2016
Updated: Oct 21, 2019

BT Group (LON:BT.A) needs to put its ‘house in order’ or face a split, MPs have warned. The comments came as the Culture, Media and Sport Committee unveiled a new report which says that the former telecoms monopoly is ‘significantly underinvesting’ in its network division Openreach.

BT’s share price has fallen into the red in today’s session, having shed 0.53 percent to stand at 392.90p as of 13:29 BST. The shares are slightly underperforming the benchmark FTSE 100 index which has slipped marginally lower and is currently 0.15 percent worse off at 6,685.47 points. The telco’s shares have lost nearly 18 percent of their value over the past year, and are down by more than 16 percent in the year-to-date.

MPs on the Culture, Media and Sport Select Committee said today that they had concluded that the shortfall in BT’s investment could potentially be hundreds of millions of pounds a year.
“The Committee is demanding that BT invest significantly more in Openreach, and allow Openreach much more autonomy over what it invests,” the MPs said, adding that while they supported Ofcom’s plans for establishing greater separation between the division and the parent, they made clear that if the telco failed to “offer the reforms and investment assurances necessary to satisfy our concerns,” the watchdog should move to enforce full separation of Openreach.
Earlier this year, Ofcom fell short of recommending the break-up of the former telecoms monopoly in a review of the UK’s digital market. The regulator, however, left the option on the table unless the telco complies with a series of demands to improve the independence and governance of Openreach.
BT said in a statement today that it was ‘disappointed to be criticised’, but agreed that the service needed to improve.
“We are in discussions with Ofcom about increasing the autonomy of Openreach and we’re hopeful that a settlement is possible that will meet the concerns of the committee,” the former telecoms monopoly pointed out.
As of 14:01 BST, Tuesday, 19 July, BT Group plc share price is 393.50p.

Copy expert traders easily with BROKER_NAME_LINK. Invest in stocks like Tesla & Apple. Instantly trade ETFs like FTSE 100 & S&P 500. Sign-up in minutes.