BT confirms Openreach legal separation agreement with Ofcom

10 Mar 2017

British fixed line incumbent BT and local telecoms regulator Ofcom have reached an agreement on a long term regulatory settlement that will see Openreach, the former’s network arm, become a distinct, legally separate company with its own board, albeit operating within the BT Group. The telco revealed that the agreement is based upon voluntary commitments that it previously submitted, with the regulator confirming that these measures had addressed its competition concerns.

Once the agreement is implemented a number of changes will take place: around 32,000 employees will transfer to the new Openreach Limited; Openreach Limited will have its own branding, which will not feature the BT logo; Openreach will manage and operate its assets and trading, but ownership of those assets and trading will remain with BT; and 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.

As the company building and maintaining the tens of millions of copper and fibre lines that run from telephone exchanges to homes and businesses across the UK, the new setup will reportedly allow Openreach to assume greater independence. Further, it has been claimed that the agreement, when in place, will provide BT and other companies with greater regulatory clarity and certainty considered to be ‘vital for investment’.

Commenting on the matter, BT chief executive Gavin Patterson said: ‘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 … This has been a long and challenging review where we have been balancing a number of competing interests. We have listened to criticism of our business and as a result are willing to make fundamental changes to the way Openreach will work in the future.’

United Kingdom, BT Group (incl. Openreach), Ofcom, Openreach