BT Openreach separation agreed but still part of BT Group March 10, 2017

This morning it was announced that BT and Ofcom have reached agreement on a long-term regulatory settlement that will see Openreach become a distinct, legally separate company with its own Board. However, the new entity will still report to the BT Group and ultimately the BT CEO Gavin Patterson.

The new company, Openreach Ltd, will have its own separate logo without BT and report to an independent board. It will also transfer over 32,000 employees to the new company however their pension rights etc. will be upheld.

The BT Announcement stated:

“This Board will set Openreach’s medium term and annual operating plans and determine which technologies are deployed, within a strategic and financial framework defined by BT. Openreach will be free to explore alternative co-investment models in private with third parties.

The Openreach CEO will report into the Openreach Chairman, with accountability to the BT Group Chief Executive with regards to certain legal and fiduciary duties that are consistent with BT’s responsibilities as a listed company.”

The question will be exactly what does this mean in terms of independence, and what benefits it will bring. TalkTalk responded favourably in a statement this morning but did reinforce that Ofcom’s job is not over yet.

Dido Harding, Chief Executive Officer, TalkTalk commented:

“We welcome the agreement to create a legally separate Openreach. The new company will be better placed to deliver the improved investment and service that consumers and businesses deserve. This deal will require robust Ofcom monitoring and enforcement to ensure it delivers the improvements the regulator expects. We hope this is the start of a new deal for Britain’s broadband customers, who will be keen to see a clear timetable from Openreach setting out when their services will improve.” 

In essence, this seem a very positive move and we hope it brings what BT Gavin Patterson stated:

“I believe this agreement will serve the long-term interests of millions of UK households, businesses and service providers that rely on our infrastructure. It will also end a period of uncertainty for our people and support further investment in the UK’s digital infrastructure.