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BT may or may not be in talks to sell a stake in Openreach - UPDATED

The news today is whether BT is really in talks with potential stake holders which could result in an injection of cash that will therefore allow Openreach to race on with its 20 million premises passed by full fibre.

The Financial Times is believed to be the original source of the public side of the news but while this reports that Macquarie (an Australian bank) is in talks with BT and a sovereign wealth fund whose identity is unknown is also involved in the talks.

Reuters has a source telling it that Macqarie is not in talks with BT or Openreach.

The positive for BT would seem to be that with external funding it make it easier to manage to take on the increased numbers of staff to build its full fibre network. The downside would depend on what those putting down the stake of multiple billions of pounds were to expect back and over what sort of time frame.

Most of the talk of take-overs or sell-offs of Openreach ended when Ofcom finalised the fate of Openreach a couple of years ago. This left BT retaining ownership of Openreach rather than a fully standalone Openreach but Openreach was to have its own board and greater control of its direction. At the time the various divorce options that could be imposed were been considered once a full standalone Openreach was considered ripe for a takeover, either for asset stripping that would make existing sweating of copper assets look very mild or someone keen to spend to build a world leading full fibre network.

If the talks are happening and do produce a lump of cash to build a FTTP network easily there are numerous regulatory issues that will arise and even if agreement was reached on terms by the end of May 2020 it may take a year or more for clearance from finance regulators. A bigger hurdle may be institutional shareholders of BT Group who will want reassurances about the future.

There are many who still see Openreach in the light of decisions made a decade ago by BT Group, but since the settling of the dust around the degree of legal separation that Ofcom settled on in 2017 things have signficantly changed and in April 2018 the FibreFirst programme was announced with premises passed starting to increase significantly by December 2018. 

Update 3:15pm The Register has published an exert from a memo sent to staff by Openreach boss Clive Selley who has spoken to BT Group CEO Philip Jansen with the short summary being the story that surfaced in the evening of 14th May is inaccurate.

Comments

@thinkbroadband Not sure how this fits with the £12Bn 20 million homes pledge from last week.

  • @amwalker44
  • comment via twitter
  • 17 days ago

@thinkbroadband I so hope they are! @WeAreOpenreach needs an owner who regards infrastructure as its core business. @bt_uk

  • @PeterMSGodfrey
  • comment via twitter
  • 17 days ago

@thinkbroadband BTW when did @WeAreOpenreach drop ‘BT’ from its branding? I’ve only just noticed

  • @PeterMSGodfrey
  • comment via twitter
  • 17 days ago

@PeterMSGodfrey they were ordered to split in late '16, been getting less and less BT branding since

  • Hewitt96
  • 17 days ago

Denied internally by the company, no intention to sell a stake in Openreach or to sell Openreach. They say they are trying to correct the media.

  • _Mike_B_
  • 17 days ago

Bear in mind Macquarie are also involved with KCom and they've restructured that into core/non-core businesses, and are well aware of the regulatory burden. Taking on Openreach is a big endeavour, but shouldn't be a big deal for them.

The rumours are coming because BT is 80% down on its shares, but anything to wrest Openreach from BT would be good. OR needs to have assets reallocated, that pension liability completely absolved, a very brutal reorganisation and proper independent direction with independent money in the interests of both CPs and consumers.

  • zzing123
  • 17 days ago

@zzing123 I disagree with that, its direction is fine. They absolutely do want to rollout FTTP to most of the country, that’s their direction and what they are trying to do.

The issue is not direction but funding. If BT can find the funding then in the long term they will reap the benefits, and the share price will recover. Selling a percentage of Openreach might make sense.

  • _Mike_B_
  • 16 days ago

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