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BT and Ofcom reach agreement on future governance of Openreach

Fibre

BT and Ofcom have reached agreement on a long-term regulatory settlement that will see Openreach, BT’s local access division, become a distinct, legally separate company with its own Board, within the BT Group. The agreement is based upon voluntary commitments submitted by BT that the regulator has said meet its competition concerns.

The implementation of the agreement is subject to the satisfaction of certain conditions, including those relating to pensions.

Once the agreement is implemented:

  • Around 32,000 employees will transfer to the new Openreach Limited following TUPE consultation, and once pension arrangements are in place.
  • Openreach Limited will have its own branding, which will not feature the BT logo.
  • The Openreach CEO will report to 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.

Openreach, which builds and maintains the tens of millions of copper and fibre lines that run from telephone exchanges to homes and businesses across the UK. Hundreds of telecoms companies already use Openreach and its national network on an equivalent basis, and many others are competing with them.

Under the agreement, Openreach will manage and operate its assets and trading but ownership of those assets and trading will remain with BT. The agreement builds on changes that BT has already made to the governance of Openreach in recent months. These include the creation of an Openreach Board with a majority of independent members. 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 commitments that BT has notified to Ofcom are available at: http://www.btplc.com/UKDigitalFuture/

Gavin Patterson (BT Chief Executive) said: “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 and support further investment in the UK’s digital infrastructure.”