BT share price rallies as investors welcome Openreach deal with Ofcom

on Mar 10, 2017
Updated: Oct 21, 2019
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Shares in BT Group (LON:BT.A) have jumped more than four percent in London in today’s session, as the former telecoms monopoly reached a deal with industry regulator Ofcom over the legal separation of its network division Openreach. The solution removes one of the challenges for the FTSE 100 group, whose fortunes came under pressure earlier this year following an accounting scandal at the company’s Italian unit.

As of 09:02 GMT, BT’s share price had added 4.19 percent to 344.05p, outperforming the broader London market, with the benchmark FTSE 100 index currently standing 0.42 percent higher at 7,345.92 points. The group’s shares have lost more than 23 percent of their value over the past year, and are down by just under six percent in the year-to-date.
BT announced in a statement this morning that it had reached an agreement with Ofcom over the legal separation of Openreach. The deal will see about 32,000 employees transfer to the network division, which will have its own branding, not featuring the BT logo. The Openreach CEO will report to the division’s chair with accountability to BT’s boss in relation to matters consistent with the group’s responsibilities as a listed company.

“This has been a long and challenging review where we have been balancing a number of competing interests,” BT’s chief executive Gavin Patterson commented in the statement. “We have listened to criticism of our business and as a result are willing to make fundamental changes to the way Openreach will work in the future.”
Ofcom boss Sharon White meanwhile told BBC Radio 4’s Today programme that “we can now expect better service from Openreach”. The watchdog had previously threatened to force BT to legally separate the unit.
TalkTalk’s (LON:TALK) outgoing chief executive Dido Harding welcomed the agreement, noting that it would “require robust Ofcom monitoring and enforcement”.
“We hope this is the start of a new deal for Britain’s broadband customers, who will be keen to see a clear timetable from Openreach setting out when their services will improve,” she added.
As of 09:40 GMT, Friday, 10 March, BT Group plc share price is 344.05p.

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