BT CEO May Consider Spinning Off Openreach After UK Full Fibre Build
The CEO of BT Group, Allison Kirkby, has hinted at the possibility that network access provider Openreach could be spun off into a completely separate company in the future. But this would only be considered once their roll-out of a national gigabit-capable Fibre-to-the-Premises (FTTP) broadband ISP network completes (i.e. after 2030).
Openreach is currently busy investing around £15bn to cover 25 million UK premises with their new full fibre network by December 2026 (inc. 6.2m in rural or semi-rural areas), which is then expected to reach up to 30m by 2030. But analysts at New Street Research have previously estimated Openreach’s current value to be about £30bn – more than BT Group’s current market value of £18.5bn.
However, Allison has previously expressed some frustration with the fact that the value of Openreach was not being properly reflected in the company’s share price (here), which in fairness is partly because that value is subject to many other factors that shareholders often have to consider (e.g. the state of the competitive market, declining broadband customers and network overbuild etc.).
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According to a new interview with the FT (paywall), Allison suggested that, if the above situation didn’t change, the group would “absolutely have to look at options” and the time to “reconsider” whether to spin off Openreach might then come after its national roll-out of FTTP technology had completed. At that point, she expects that the company’s capital expenditure would naturally reduce to normal levels and its free cash flow should rebound. However, Allison also expressed that her preference was to get the value of Openreach’s fibre network reflected in BT’s shares, rather than spin it off.
In addition, Allison confirmed that she expected Openreach’s build rate for FTTP to fall from around 4 million+ per year today to about 1 million a year after 2026, which roughly aligns with the premises gap to their next target (30m). Most likely this would be a slow reduction over that four-year period (1m being more of an average), as stable network builds usually have ramp-up and ramp-down phases.
The same interview separately noted how BT Group’s forecast for future job loses, which is currently targeting a total labour resource of around 75-90k by 2030 (currently c.116k), might end up being wrong (note: many of these cuts will reflect engineers who are no longer needed for the FTTP build). “Depending on what we learn from AI … there may be an opportunity for BT to be even smaller by the end of the decade,” she said, albeit without being too specific about numbers (i.e. expect more use of AI for tackling internet challenges and customer support etc.).
Finally, Allison indicated that she would also be open to the idea of reaching a partnership with an alternative network for their BT retail (consumer) business in the future, but she added that this might only be considered for the minority of areas where Openreach’s own FTTP lines fail to reach (expected to reflect the final c.4 million premises – often remote rural premises). But we suspect they won’t even consider that until after 2030 and the market could be very different in five years’ time, after consolidation has had its way.
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We should point out that Openreach is already a distinct “legally separate” company from BT, which is a requirement that stemmed from Ofcom’s original 2016 Strategic Review of Digital Communications (full summary). But Allison appears to be talking about a much fuller separation, although for now this is all very hypothetical talk.
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on X (Twitter), Mastodon, Facebook, BlueSky, Threads.net and Linkedin.
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But how would the BT group defined benefit pension liability be split up between successor companies?
#elephantintheroom
The trustees have already suggested their goal is an insurance buyout for BTPS.
not just the DB pension deficit of course, but the entire BT debt pile, plus ticking timebombs like the sale and leaseback of exchange buildings in the early 2000s. This is mitigated but not eliminated by the desire to get down to around 1000 exchanges total.
which is probably why BT’s share price never reflects reality, no matter how profitable they are. (no “EBITDA positive” nonsense like the altnets use)
I’d also wonder how many premises end up getting an altnet but not Openreach FTTP, and whether that is worthwhile for BT’s retail arms to pursue access to an altnet. Though spinning off Openreach changes the optics and economics considerably (and since BT is effectively the “anchor tenant”, would be hugely worrying for OR)
@Ivor alternatively if BT had a relatively small number of widely dispersed customers that weren’t covered by Openreach they could always sign up with something like Zen’s fibre hub and gain access to multiple networks in one hit. Whether these fibre hubs could work for a large scale provider is open to question.
Its a meaningless comment, as CEOs play musical chairs, she wont be the CEO of BT in 2030.
The direction of the company is decided collectively by the Board. Stratagies typically continue beyond the term of any one Director.
Glad to.leave a sinking ship
Openreach might be a limited company, but it can hardly be classed as ‘separate’ from BT, as it is owned 100% by BT. Also the network infrastructure is only ‘managed’ by Openreach, as BT still owns the assets directly. Oh, and as an Openreach customer you still actually pay your invoices directly into a BT bank account.
Unless you are supplying goods or service to Openreach you are not an Openreach customer. Your c contract will be with the ISP you use
Not sure what your point is there Bob.
eg, TalkTalk pay BT and not Openreach?
20ish years ago – not long after VOIP was invented and made calling the other side of the world cheap and easy – many businesses spent millions on moving their calls centres overseas.
Were they any good? That’s open to debate; they certainly weren’t as popular. “Premium” providers such as BT then spent millions more bringing those jobs back to the UK and Ireland, and now proudly advertise that all calls are answered over here.
BT are now spending millions on developing AI systems to talk to their customers. Will they be as capable as a human? Probably. Will they be as popular? Time will tell, but I’m willing to predict that in 20 years time BT will be advertising that all calls are answered by a human.
Not sure AI will be answering calls any time soon but I think they can work quite well for email. Octopus Energy say their AI is answering about 50% of customer emails. I believe it. A year or so ago I switched my Electricity to a new smart tariff but they also switched my Gas tariff which I did not want. I emailed them and literally within 5 minutes I had a reply and it was fixed. I could tell it was handled by AI because a) speed, b) that distinctive way agentic AI’s reply when you ask them to do something. If AI’s work well and get you a solution within minutes instead of hours or days I don’t think people will complain. Of course the AI’s also need to know when they can’t handle a situation and pass it on to a human without a fight. AI’s can be quite “arrogant” if prompted badly.
Should have done it years ago to be honest, taking the BT name off their vans don’t fool us, it is still the same company.
As I have said before, the Openreach part should never have been privatised.
Incorrect. Openreach is a desperate wholly owned BT company, It has its on board and P&L
That is what I said, Openreach is still owned by BT, no matter how they try to tell us it is separate.
We are told that BT/EE ISP are not favoured above other providers by Openreach. MMM,
In my experience, companies broken off by the main company operate at arms length for most “normal” stuff, like operating procedures and policies. Where they can get away with it, there is “cross partnership” or “synergy” for fundamental decisions, mostly by head staff meeting for coffees outside the business etc and not official meetings that are recorded. It’s never truly separate.
Openreach makes more profit than the business and consumer segments combined. Given the market restrictions placed on Openreach due to its dominant position it would make sense to consider splitting the company. That may mean regulation is reduced in each part of BT allowing them to generate more revenue.
Unthinkable for a flag carrier not to have a nationwide local network. Not unthinkable for Openreach to be competing with Quinns, Telent etc. For build and maintain work on networks.
Yes, seems like a mad choice. Guess it will juice the share price for a bit before BT goes to the wall in a decade as a shriveled husk.
Investors clearly think that Allison’s promised land is going to lead to a lot more free cash flow in under a decade rather than any husk.
BT were the second highest climber on the FTSE100 today and anyone who bought BT shares on day 1 of Allison’s tenure as CEO are looking at very large gains.
I can see her logic without her stating truthfully, she’s unlikely to get the share price increased in Openreach post mass FTTP deployment.
Get the fibre installed as you already have trained the staff etc. Then release the value by flogging it off (she can then get a golden handshake and depart for another company).
BT don’t want ongoing costs after the FTTP deployment to Openreach, as they are likely to be the responsible parent for it on paper as well. All those staff they don’t need, and usual employee liabilities. Shed it and pay for work when you need it, is the approach.
The sell-off will likely come anyway – it simplifies the business in preparation for a sale of the business and fits with the “own-nothing” model that BT has been adopting.
I would hope that first, some restructuring would happen with EE infrastructure rolled into Openreach in full. That would allow the split-out of the consumer division to operate as an independent, again simplifying the business model and facilitating ISP consolidation in the UK market.
The bulk of what would remain would be a high-value business services company that would be of interest to the likes of IBM or HPE to fill out their business services offerings.
It would also help remove much of the regulatory justification for Ofcom’s headcount in the Telecoms sector. 🙂
They could sell EE, like they sold Cellnet (which became O2). And then a couple of years later start another mobile business.
EE is the primary consumer brand for multi-play offerings; it is not a physically separate entity and does not only offer wireless services.
BT was forced to sell Cellent following Brown’s machinations to fund his “No more boom and bust” promises.
Openreach should start working for Alt nets
I’m not a cowboy so I’d show them up. Wouldn’t work for them if it was the last job on earth
Quote :- NE555 says:
June 17, 2025 at 12:00 pm
They could sell EE, like they sold Cellnet (which became O2). And then a couple of years later start another mobile business.
BT didn’t sell Cellnet – they split the company into two – Cellnet taking the mobile (Cellular phone part) with the BT name taking the fixed line and the debt on the orders of ‘the City’ much against the wishes of the small shareholders (who understood the Telecoms market). That was following Gordon Brown’s ideas on costing the 3G spectrum. The split also gave both wireless operating licenses owned by BT to O2 which meant when they realised what they had done ’cause they could no longer operate a wireless network – hence the purchase of EE.
I’M CURRENTLY EXPERIENCING AND APPALLING CUSTOMER SERVICE FROM BT & OPENREACH REGARDING INSTALLATION OF FIBRE BROADBAND BOTH ARRANGE INSTALLATION APPOINTMENT DATES AND CANCEL AT SHORT NOTICE WITH NO EXPLANATION IT TIME FOR A LOOK AT WHERE THEY ARE TODAY REGARDING CUSTOMER SERVICE AND OPENREACH ATTITUDE TO CUSTOMER SERVICE
@Mr R Mcbride: l know you must be annoyed but shouting isn’t going to help. 🙂 Remember you are entitled to automatic compensation from BT if they fail to connect you on the set date, now that will help.