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Ofcom Slap BT for Missing Info on Regulatory Financial Statements

Monday, November 30th, 2015 (2:12 pm) - Score 637

The national UK telecoms regulator has ruled that they have “reasonable grounds” for believing that BT contravened 13A.8 and 8A.8 of their Significant Market Power (SMP) conditions, which means that the operator has not provided all of the information that it is required to supply.

The rules essentially require BT to prepare and publish a “reconciliation report which sets out changes to the Regulatory Accounting Methodology and the impact of such changes on the Regulatory Financial Statements, and Material Errors corrected in the Regulatory Financial Statements and the impact of such Material Errors” on their Regulatory Financial Statements.

Ofcom deems BT to have SMP in the United Kingdom and imposes a number of strict regulator controls on the operator, but keeping track of every change isn’t easy. In this case BT is required to publish the related reconciliation report and a corresponding audit opinion within 4 months of the financial year to which they relate, but apparently the operator has been a bit slow to do this.

Ofcoms Statement

Ofcom notes BT’s reasons for delay in preparing the reconciliation report and corresponding audit opinion, and its intention to publish both by 4 December 2015. We also note the various arguments BT put forward in mitigation. Having considered BT’s representations, however, we take the view that BT was required to publish those documents on 31 July 2015. On this basis, we are satisfied that BT has contravened, and is continuing to contravene, SMP conditions 13A.8(vi) and 8A.8(vi).

Ofcom has therefore issued a decision under section 96C of the Act (a “Confirmation Decision”) confirming the imposition of requirements in accordance with the Notification. This means that, in order to comply with the requirements of SMP conditions 13A.8(vi) and 8A.8(vi) and to remedy the consequences of the contravention, BT must publish the reconciliation reports and corresponding audit opinions forthwith, and in any event no later than 4 December 2015.”

In the grander scheme of things this is not a big breach and you can read the latest update on Ofcom’s website (here). On the other hand now is perhaps not the time for BT to be coming up short on such commitments, especially while the regulator’s on-going Strategic Review is busy mulling over their future.

Leave a Comment
4 Responses
  1. Avatar TheManStan says:

    Hi Mark,

    Are these under the new reporting requirements that OFCOM outlined last May? i.e. this is the first time BT has had to provide this particular report?

    1. Mark Jackson Mark Jackson says:

      I’ve been trying to find that out, but we might have to wait for the non-confidential version of Ofcom’s position to be published (soon).

    2. Avatar NGA for all says:

      I think there are elements of the new arrangements still out for consultation so I cannot see how it can be the new requirements. The new I think are aligning with the conclusion of other consultations on business connectivity. Next years accounts I should imagine.

    3. Avatar themanstan says:

      Looks like the new reporting arrangements are live, however there are additional aspects of costings that are up for revision… p12 looks interesting, Ofcom’s “Directions for Regulatory Financial Reporting” dated 30 March 2015, which kind of suggests that BT only received complete information on how to provide information the day before it presented it´s annual accounts.

      http://www.btplc.com/Thegroup/RegulatoryandPublicaffairs/Financialstatements/2015/CurrentCostFinancialStatements2015.pdf

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