The United Kingdom telecoms giant BT can retain ownership of its wholesale division Openreach, the regulator Ofcom has ruled. The company, which owns the BT Mobile and EE mobile networks, had faced being broken up due to its position within the market.
BT operates in a wide range of sectors in the UK, including fixed-line telephone services, fibre optic broadband, sports television rights and TV subscriptions. The primary concern for Ofcom, however, was the independence of the Openreach division.
In addition to supplying BT, Openreach also supplies BT’s rivals – such as Sky and TalkTalk – with access to the UK’s wired telecoms infrastructure.
Although Openreach is a separate division of BT Group, Ofcom has said that it must now operate from a position of much greater independence.
Ofcom has set out a series of proposals, with the aim that Openreach should become ‘a legally separate company within BT Group’.
The corporate governance of Openreach should change, according to Ofcom’s model. This should result in a board being established which includes a majority of non-executive directors, who do not have any association with BT.
BT will be able to appoint the non-executive directors, although they must do so in consultation with Ofcom.
Openreach will also need to work more closely with BT’s rivals in the future. When planning major investments, Ofcom wants Openreach to consult with companies like Sky and TalkTalk.
Ofcom has outlined an eight-point plan, designed to ensure Openreach operates with a much greater level of independence from BT. The regulator has invited responses from interested parties, which must be submitted by 4 October.
By not recommending that Openreach is split from BT, Ofcom has not gone as far as BT’s rivals wanted. However, the regulator has issued a warning over what the future might hold, if BT fails to take sufficient action to ensure Openreach’s independence.
“It [the eight-point plan] is designed to ensure that Openreach acts more independently from BT Group, and takes decisions for the good of the wider telecoms industry and its customers,” Ofcom said in a statement.
“If it cannot achieve this, Ofcom will reconsider whether BT and Openreach should be split into two entirely separate companies, under different ownership.”