BT share price drops as it's hit with largest fine in UK telecoms history and forced to pay hundreds of millions to rivals

 
Oliver Gill
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Today's fine was the third imposed on BT by regulator Ofcom this year

BT has been slapped with a £42m fine by regulators and agreed to pay out around £300m to its competitors after it failed to pay compensation for broadband installation delays.

The fine is the largest ever imposed by telecoms watchdog Ofcom. Shares in BT dipped by 1.5 per cent at the open.

An investigation found that, between January 2013 and December 2014, BT’s Openreach subsidiary had “misused” contract terms to reduce the compensation owed to other firms for failing to deliver ethernet broadband services on time.

Openreach, which owns and operates the majority of the UK’s telecoms infrastructure, acknowledged the findings and “wholeheartedly” apologised for the mistakes.

Read more: BT-owned Plusnet handed near £1m fine for overcharging

Most of the UK’s internet providers, such as TalkTalk, Sky and Vodafone, run their services on telecoms infrastructure owned by Openreach.

As part of the so-called communications providers' agreement to use the infrastructure, Openreach must maintain and update connections. It is liable to pay penalties to the firms if it fails or is delayed in doing so.

BT chief executive Gavin Patterson said: “The investigation into historical deemed consent practices at Openreach revealed we fell short of the high standards we expect in serving our communications provider customers.

We take this issue very seriously and we have put in place measures, controls and people to prevent it happening again.

Triple-whammy

Today’s fine includes a 30 per cent discount (£18m) from Ofcom for BT admitting its liabilities and agreeing to compensate its communication providers in full.

It completes a triple-whammy of penalties imposed by Ofcom over the last few months. In January, mobile subsidiary EE was fined £2.7m for overcharging customers and last week cut-price internet provider Plusnet was slapped with a £880,000 fine for charging customers after they had cancelled contracts.

Read more: Ofcom slaps EE with £2.7m fine for overcharging thousands of customers

BT has yet to tot up the final costs to be paid to firms but its current estimate stands at £300m.

Earlier this month BT came to an agreement with regulators after they called for Openreach to be made independent of the FTSE 100 telecoms giant.

Openreach boss Clive Selley said since he had started at the firm in February 2016 the BT subsidiary had “made improvements”. He added:

We will make sure the same mistakes aren’t repeated in the future.

This shouldn’t have happened and we fully accept Ofcom’s findings.

Ofcom also fined BT a further £300,000 for failing to provide “accurate and complete information under the Communications Act 2003”.

BT said it didn’t agree with all of these findings specifically but had agreed to “accept it in the interests of reaching a swift and final resolution”.

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