Business Rate rise to increase BB cost!

It appears from a BBC news item that both BT and Virgin are being hit by a massive increase in Business rates ( 450%) to £743m.

My simple maths says that if this is all loaded on OR BB customers (20m) it equates to a £3.10 a month increase in wholesale cost.

A large amount of the revaluation is anecdotally due to the increase in fibre and street electronics but I cannot find evidence of the VOA methodology in the public domain.

I see no way BT could absorb such a huge increase in cost and Virgin will have the same issue.

If loaded purely onto fibre lines it would be £10.30 ( 6m lines) but this would slow the take up and thereby ROI on fibre so more likely to spread it over all lines.

So ditch it and you pay it in your community charge and income tax .

Note also that small (local?) businesses look set to benefit, reducing what you pay elsewhere.

In reply to a post by RobertoS:

So ditch it and you pay it in your community charge and income tax .

Note also that small (local?) businesses look set to benefit, reducing what you pay elsewhere.

Or the state just doesn't increase the tax specifically on telecomms. We're supposed to be getting some stimulus anyway.

You're basing your sums on rateable value rather than the business rates.

That's the rateable value. There's a multiplier of about 40%. Also, it will be attributed to all OR services. That includes all phone lines (not just BB ones, which is perhaps 25m or so). Also, leased circuits.

Then there is the fact that these are mostly prices regulated by Ofcom and whether they would permit OR to pass on the increased costs in full is a bit of an open question.

I wonder if BT have any properties that aren't Openreach ....

Plenty ...

Every metre of fibre, every street cabinet (PCP or DSLAM), every phone box, every pole ... business rates are charged on them all.

It's a flea-bite anyway.

In the three months to the end of June, the FTSE 100-listed company saw earnings before interest, taxes, depreciation, and amortisation (EBIDTA) jump 25% year-on-year to £1.8bn. Meanwhile revenue, excluding currency volatility and the impact of acquisitions and disposals, surged 35% to £5.78bn.

That's for the group, Apr-Jun 2016.

They certainly do (like the headquarters opposite St. Pauls cathedral). Also, a lot of exchange buildings also double up as offices for other BT departments.

However, it appears that the main hit of the rates review is going to be on the network infrastructure. All those roadside cabinets, poles and ducts all have a rateable value and it appears that this is the bit which is causing BT (and VM and other network operators) to complain loudly. Those are, of course, all attributable to OR. Presumably where exchanges are used as offices with other parts of BT then some form of allocation of business rate costs has to be done.

What we don't know yet is what the multiplier will be as this is a comprehensive review of rateable values and it's likely the multiplier will from the present level.