BT agrees to make Openreach a separate company

The newly minted Openreach outfit will ditch all BT’s branding from its distinctive vans although the board, led by chairman Mike McTighe, will still report to BT’s board, soon to be led by chairman Jan du Plessis.

It will have complete jurisdiction on how it runs its assets.

He added: “Most consumers won’t be bothered whether or not “a BT Group business” is written on the side of Openreach vans, what matters is the UK’s digital infrastructure actually getting better in practice”.

BT’s shares rose 4.13% to 343.80p in morning trading.

TalkTalk, another longstanding critic of BT, has also welcomed today’s announcement, as it believes the reformed Openreach will be “better placed to deliver the improved investment and service that consumers and businesses deserve”.

“Hundreds of telecoms companies already use Openreach and its national network on an equivalent basis, and many others are competing with them”.

BT CEO Gavin Patterson has told CNBC how “extremely angry” he is about the accounting scandal in his company’s Italian arm, adding that “that type of fraud has no role to play in our business at all”. “In private, [rivals] should be more than satisfied with the changes Ofcom has pushed through”. BT Group will be able to veto the appointment of the Openreach CEO, but only on notification to Ofcom.

Thinkbroadband.com editor Andrew Ferguson cautioned that there was still a lot of hard work to be done, particularly with regard to what will be one of the largest Tupe transfers in history.

Openreach will directly employ its 32,000 staff – about a third of the telecoms group’s workforce – who will be transferred across from BT.

BT’s pension fund had been seen as a stumbling block to splitting the two companies.

Assets will be controlled by Openreach alone.

It’s not a full structural separation – as some have called for – but is a step further than the functional separation imposed by the regulator just over 10 years ago. Only two per cent of the United Kingdom receives ultrafast broadband via fibre-optic lines – compare that to Japan’s 70 per cent. As the report acknowledges, BT’s investment has made the United Kingdom a broadband leader among the major economies in Europe’.

Then in July, a committee of MPs said that BT is “significantly under-investing” in Openreach, warning that it should put its house in order or face a full split between Openreach and BT Group.

Patterson also revealed the Ofcom negotiations were “multifaceted” and included discussing matters with both pension trustees and the Pensions Regulator.

How significant the arrangement will prove remains to be seen, of course.

These rivals rely on BT’s network to provide their own services, with Openreach handling control of the infrastructure, including connectors, wires and even the pipes themselves.

The great British broadband divorce is a go. That, it says, will continue with enhanced safeguards to ensure all Openreach’s customers are treated equally. But it is a matter not only of importance to them.