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BT shareholders are breathing a sigh of relief this morning after OFCOM (UK Telecoms regulator) opted not to pull the rug out from under its key local network business. A favourable response to competition discussions sees the UK incumbent obliged to open up its Openreach network to competitors (Sky, TalkTalk; both shares muted) and consult on any investment, including plans to spend £6bn over the next three years. It avoids, however, going as far as calling for a full hiving-off of the business from the BT Group. This was always an extreme and almost certainly expensive possibility, so today’s less-bad news is being very well received. BT shares are topping the UK Index this morning, 5% to the good and still climbing.
The OFCOM ruling demands that Openreach become a distinct company with its own majority-independent board and accountable CEO. This is designed to give it more transparency as well as increased autonomy in terms of strategy, operations and budget. Politicians are sure to be smiling too this morning, the news hopefully helping speed up much-needed improvement to the UK’s digital infrastructure, in order to narrow an unacceptable gap with other advanced nations in terms of broadband coverage/speed and the availability of high-speed fibre-optic cable.
Mike van Dulken, Head of Research, 26 July
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