BT has said it will legally separate its Openreach division in a deal which should bring further investment and competition to the UK’s broadband industry.
BT has held a near monopoly over the UK’s network infrastructure since it was privatised in 1984. While Openreach does already offer competitors such as Talk Talk and Vodafone use of its network, there have long been claims of favouritism, expensive fees, and a lack of investment.
Telecoms regulator Ofcom had threatened to force BT to split off Openreach, after two years of negotiations the firm has decided to make the legal separation voluntarily. The new firm will have an independent board and make its own investment decisions, but BT chief executive Gavin Patterson admitted that BT would set its overall budget, and its new boss would report to him on legal, fiduciary and regulatory issues.
Sky welcomed the announcement in a statement, saying:
“A more independent Openreach is a step towards delivering better service to customers and the investment that the UK needs. It’s important that today’s agreement is now implemented by BT in good faith and without delay.”
Upon news of the separation, shares in BT jumped 4.6% to 345.6p in morning trading in London.