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Patterson unhappy at regulator

BT boss warns Ofcom of legal action over ‘split’ call

Gavin PattersonTelecoms regulator Ofcom is facing tough resistance, including possible legal action, over calls to break up BT.

Ofcom last week opened a consultation into whether BT’s Openreach service should be split off into a separate company.

Gavin Patterson (left), chief executive of BT, has told a Sunday newspaper that any an attempt to force him to sell Openreach, the wholesale division that provides access to broadband and telephone lines, would be met with litigation.

Mr Patterson says in an interview with the Sunday Telegraph that he would respond to attempts at splitting up BT by stopping investment in the network and turning to the courts.

“This is a commercial enterprise and if there’s uncertainty we will defend the rights of our shareholders, undoubtedly. It puts that investment very much at risk,” he tells the paper. “At the end of it, and if we’re meant to be looking at the next ten years, what do you want to look back on? Do you want to look back at 10 years of litigation and arguments?”

Most internet service providers offer services through a fixed-line network controlled and maintained by BT, however rivals led by TalkTalk and Sky have complained that Openreach does not fix faults or install new lines fast enough. Sky welcomed the consultation, arguing that the existing structure does not deliver the innovation, competition and quality of service needed.

Following Ofcom’s last strategic review 10 years ago, BT was obliged to create Openreach through which it provided access to its telephone and broadband network to competing providers at wholesale prices. Ofcom, however, feels the network has evolved in recent years, with the growth of fibre optic cable services, enabling companies to sell bundles of television, telephone and superfast broadband internet services.

Mr Patterson rejected claims that his company holds a monopoly over internet service provision, saying that BT brands have less than a third of the market. Patterson said 88% of the country has received superfast broadband and the key to the delivery of that, was the scale that a company the size of BT could offer.

Ofcom will seek evidence and responses to the discussion paper until early October, before publishing its proposals for the next decade of communications regulation.

BT is awaiting the outcome of a Competition and Markets Authority investigation into its £12.5bn takeover of mobile phone operator EE. If the takeover goes through it would create the largest mobile phone network in the country and give BT the ability to offer “quad play” mobile phone services, in competition with Virgin Media and Sky.

BT reported a pretax profit of £2.65bn for the year to the end of March, below expectations, while a revenue decline to £17.98bn from £18.29 billion was partially offset by a reduction in operating costs of 7%. The company attributed the fall in revenue to declines in UK public sector revenue in its BT Global Services division.

BT’s pension deficit has almost doubled to £7bn, leading the telecoms giant to commit to pay £2bn into the scheme over the next three years, putting pressure on cash flow.

 

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