BT comes under pressure from digital minister

Billy Bambrough
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BT’s chief executive Gavin Patterson was yesterday forced to defend the firm’s fibre investment
BT’s chief executive Gavin Patterson was forced to defend the firm’s fibre investment (Source: Getty)

The minister for digital policy has said the government is committed to improving competition in the UK broadband market as watchdog Ofcom weighs the case for breaking up BT.

Minister of state for digital and culture Matt Hancock said the government wanted to ensure “a fair market in which all providers can compete for business”.

The comments were made during a speech at the Broadband World Forum where Hancock reiterated the government’s stance that BT’s infrastructure arm Openreach could still be broken out from the group, adding nothing will stand in the way of the UK getting fast fibre-based connectivity.

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BT chief executive Gavin Patterson hit back during the conference, saying the fibre network investment case would not add up if BT was forced to spin off its Openreach.

Patterson also warned breaking up the group would require a long, difficult, and costly separation of the group’s pension liabilities, which, according to analysts at UBS, have ballooned to more than £14bn, up from £10bn in a little over a year.

Hancock’s comments, as well as the UBS analyst note, sent BT shares down by more than one per cent today.

Communications regulator Ofcom is currently considering responses to a public consultation on BT’s control of Openreach that closed earlier this month after it suggested so-called legal separation of the division, leaving it under the BT Group umbrella but assigning it a separate governing board.

Read more: TalkTalk boss says Ofcom's plans for BT and Openreach are not enough

BT’s rivals have rallied against the recommendation, claiming they will continue to suffer mistreatment by Openreach.

The likes of Sky, TalkTalk, and Vodafone rely on Openreach to connect broadband customers, though there are plans to open up its ducts and poles across the country, allowing competitors direct access.

TalkTalk boss Dido Harding, one of Openreach’s fiercest critics, said: “The new minister is spot on: the UK needs a pure fibre future and only a competitive market will deliver this.”

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