Openreach to stay part of BT

In reference to www.bbc.co.uk/news/business-36891446:

BT's Openreach division, which runs the UK's broadband infrastructure, should become a distinct company within the BT group, according to regulator Ofcom.

The media watchdog has resisted calls from BT's competitors to split Openreach off entirely.

So while not its own PLC the list of changes Ofcom proposes are pretty extensive

Indeed. I'd hate to think what the costs would be of a full split and the management time and effort involved. Perhaps Sky et al would have been happy to have paid for it all...

Perhaps they would, if Openreach is fashioned along the lines of Network Rail.

Network Rail was created when the previously privatised company (Railtrack) was put into admiistration following action by the then Transport Secretary (Stephen Byers). There then followed a lot of controversy and some compensation was paid to Raltrack shareholders.

The assets (and debts £7bn - since grown to approach £40bn) were transferred to Network Rail which is, to all intents and purposes, a nationalised company as its debts are recognised as part of the National debt.

Such a route is not open to the government as there is no sense in which BT or OR are insolvent. To turn OR into some sort of not-for-profit company as Network Rail is (some would say a perpetual loss making company) would require the payment of a lot of compensation to BT shareholders. Perhaps £20bn or so as the value of the network. Who on earth is going to fund that?

To turn OR into a non-profit making company whilst still maintaining the fiction that it was privately owned (who on Earth would buy shares in such a company) would be ludicrous and quickly invite legal action.

The clip of Sharon White at 8:17 on the Today programme is worth a listen for anyone who didn't hear it.

Or the full conversation at 7.09
http://www.bbc.co.uk/programmes/b07lfsrl#play

It sounds very much like Ofcom are trying to take control of OR's investment plans via the back door.

In reply to a post by TheEulerID:

.
Such a route is not open to the government as there is no sense in which BT or OR are insolvent.

There was no sense in which Railtrack was insolvent either, but the Government made it happen.

Your argument that it could not happen to Openreach just came off the rails.

Are the BDUK contracts with BT Group with BTOR being a subsidiary but not legally a separate entity from BT Group?

So now those and future BDUK like contracts will automatically be handled by BTOR?

I am sure BTOR will go through some kind of re-branding exercise as a result of this. What do you think they will rename BTOR to?

I suggest it will be We Like Copper.