BT Chairman Confirms Offer of Independent Openreach Board

The Chairman of BT Group, Sir Michael Rake, has today confirmed that the operator is in the process of making a legally-binding offer to the national UK telecoms regulator that could result in Openreach creating a largely independent board with greater control over future investment and strategy.

The move is part of an attempt by BT to avoid an outcome from Ofcom’s recent Strategic Review that might result in their network access division, Openreach, being completely split from the operator’s control. However that would be a complicated solution, which is also bitterly opposed by BT, and as such the regulator had instead been seeking a middle of the road fix that BT could voluntarily support.

Sir Mike Rake told BBC Radio:

“We need to improve the transparency, we’re absolutely willing to form an Openreach board that would have an independent chairman, a majority of independent directors. We’re willing to give more authority to Openreach in determination of its capital investment programme.”

The review itself, which was published in February 2016, claimed to have found “evidence” to show that Openreach “still has an incentive to make decisions in the interests of BT, rather than BT’s competitors, which can lead to competition problems“. Ofcom also said that “other telecoms companies have not been consulted sufficiently on investment plans that affect them.”

Since then a cross-party Select Committee inquiry has further accused BT of not investing enough into its national broadband infrastructure (here) and the regulator supports the view that BT has been under-investing by “hundreds of millions of pounds“.

Ofcom intends to publish what could be its final statement on the matter tomorrow, which will confirm whether or not BT’s offer has been accepted. We’ll have deeper analysis once the outcome and details are known.