BT investor calls for talks over Openreach arm
A major BT shareholder, Aviva Investors, has called for the telecoms giant to open discussions about a possible sale of its infrastructure arm Openreach.
BT has been fighting for control of its network division for the past 18 months, following repeated calls from its rivals that Openreach should be split out of the group.
Aviva is the first City institution to publicly suggest BT could volunteer to hive off Openreach as investor frustration over the ongoing question mounts.
“We haven’t called for talks on Openreach being split off, but we will discuss the options around it when we see BT’s financial director,” Trevor Green, Aviva’s head of UK equities, told City PM
BT chairman Mike Rake hit back at the suggestion, saying the group had a constant dialog with it shareholders over the structure of the company.
“We are continuously talking to investors about the future of BT and Openreach and we are convinced it is best for BT customers, investors, and the future of the UK’s broadband infrastructure that Openreach remain part of BT,” Rake told City PM
An Ofcom consultation on the future of Openreach closed in early October after attracting over 75,000 responses. Ahead of the consultation the watchdog recommended the division become legally separated within the group, but remaining under the BT umbrella.
Some have criticised the recommendation, saying it doesn’t go far enough. Former business minister Anna Soubry rallied against the recommendation, saying Ofcom was “too soft” and slamming BT for “failing to deliver” the required broadband infrastructure.
BT rivals TalkTalk, Sky, and Vodafone – which rely on Openreach to serve their own broadband customers – have called for further action from Ofcom.
However, the potential separation of Openreach from BT has sparked concerned among investors that it could cause significant issues for the group when it comes to negotiating the future of BT’s £7.6bn pension scheme deficit.
A triennial valuation of the scheme – which has the largest deficit in the FTSE 100 – is due next year.