BT to invest £6bn in network upgrade in bid to see off threat of Openreach split
BT has pledged to spend £6 billion on faster mobile and broadband services across the UK over the next three years to see off the threat of a forced split of its network arm.
The telecoms giant - which now owns mobile phone group EE - said it was the first phase under plans to extend ultrafast broadband to 12 million homes and businesses by 2020 and lay fibre optic lines to around two million premises , while also improving coverage of 4G mobile services.
It is hoping the plans will appease regulator Ofcom, which has threatened to break up BT if it does not open up its Openreach fixed-line network arm.
Details of BT's multibillion-pound plan came as it announced a 15% rise in pre-tax profits to £3.03 billion for the year to March 31 after seeing revenues rise by 6% to £18.9 billion.
But rival broadband provider Sky said BT's plans to extend fibre optics direct to premises did not go far enough and renewed its call to split off Openreach.
Under the three-year initiative, BT will look to lessen its reliance on ageing copper wire with aims to roll out fibre optics direct to two million homes and businesses - mainly in new housing developments, high streets and business parks.
It also announced a raft of customer service improvements across the group to reduce the standard time to fix line faults by 24 hours as well as pledging to handle 90% of customer calls in the UK by March next year.
The group added that Openreach will hire another 1,000 engineers this year to help improve its service.
But Gavin Patterson , group chief executive at BT, said the group wanted reassurance from Ofcom that it will be able to keep control of Openreach and "give us some confidence that our shareholders are going to make a fair return".
Ofcom told BT earlier this year that it must open up its Openreach network to competitors in its first significant review of the telecoms sector for a decade.
It also wants BT to cut prices charged for high-speed lines, install more business lines and improve business services.
Andrew Griffith, group chief operating officer and chief financial officer at Sky, said BT's plans were a "limited ambition".
He said: "Despite BT's claims, it is clearer than ever that their plans for fibre-to-the-premises broadband will bypass almost every existing UK home.
"This limited ambition has been dragged out of BT by the threat of regulatory action, demonstrating once again why an independent Openreach, free to raise its own long-term capital, is the best way for the UK to get the fibre network it needs."
But BT shares rose 3% after its full-year results, which showed a boost from demand for its broadband and TV services.
The group, whose takeover of mobile giant EE was cleared by regulators in January, saw sales rise 8% to £1.19 billion across its BT Consumer business, which supplies broadband, telephone and TV services.
It said the number of customers for its TV service surged by 28% to 1.5 million over the year.
Audiences for its sports coverage jumped by 45% thanks to its live coverage of Champions League and Uefa Europa League matches.
Mr Patterson said the integration of EE was "going well" and announced plans to increase annual cost savings from the merger to £400 million from £360 million.