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Openreach to become legally separate from BT

James Pearce
July 26, 2016

Ofcom opts not to force BT to sell off infrastructure arm, but proposes “major reforms” on telecoms giant

Openreach will become a separate legal entity from BT with its own distinct board, Ofcom has proposed.

As part of what the regulator claims are “major reforms” of the UK’s biggest telecoms provider, BT will not be forced to sell off its infrastructure division. Instead, Openreach will be given more independence and more control over investment plans.

Ofcom chief executive Sharon White
Ofcom chief executive Sharon White

Ofcom said Openreach should be run as a legally separate company within BT Group, with its own board, an independent chairman and its own brand.

But chief executive Sharon White dismissed calls from rivals to force BT to sell the division, saying it would take too long.

Rivals, including the likes of Vodafone, TalkTalk and Sky, have claimed BT has underinvested in Openreach, something echoed last week by MPs in the Committee for Culture, Media and Sport.

“This is a practical plan that can be implemented within months, unlike a sell-off of Openreach which would take years,” White told BBC Radio 4’s Today programme.

“This could bring about significant change. It will mean you have faster, more reliable broadband. It will mean engineers turning up on time and getting the job done first time. And crucially for the UK it will mean more investment in fast fibre to the doorstep.”

BT response

BT claimed the proposed re-organisation will deal with a number of the concerns raised by MPs last week. These included concerns around underinvestment in Openreach, autonomy of the infrastructure division, and fair access for BT’s rivals.

BT chief executive Gavin Patterson
BT chief executive Gavin Patterson

BT Group chief executive Gavin Patterson said: “The UK is the most digitally advanced nation in the G20 and further investment is required if it is to keep and extend that lead. That’s why we are poised to invest a further six billion pounds in our UK networks over the next three years”.

“We have listened to Ofcom and industry and are introducing significant changes to meet their concerns. These changes will make Openreach more independent and transparent than it is today, something both Ofcom and industry have requested.

“Openreach is committed to delivering better service, broader coverage and faster speeds and these changes will enable it to do just that. Our proposals can form the basis for a fair and sustainable regulatory settlement and we believe they can also enable Ofcom to bring its Review to a speedier conclusion.”

More to follow

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