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Reports suggest the BT empire is beginning to crumble

No-one in the UK should be in the same league as BT, but poorly executed strategy has kept rivals within touching distance and now the foundations are reportedly being sold off.

Rumours have emerged in the Financial Times to suggest BT is in private talks to offload a portion of the Openreach business unit. Australian bank Macquarie and an unnamed sovereign wealth fund have been linked in a deal which would value Openreach at £20 billion, providing cash to fuel the £12 billion broadband upgrade BT is committed to.

We’ve said this numerous times before, but no-one should be able to compete with BT. It has the largest mobile network, the biggest broadband network, five million public wifi spots, a content platform (albeit an average one) and a trusted brand which could theoretically be exported to other ventures.

This is a business with assets which could, and should, be embracing the convergence business models to obliterate competition and steal subscriptions easily, while investors roll around in cash.

But it is not dominant.

It failed to get ahead of fibre trends. It failed to build a competent content platform, instead throwing all its eggs into the sports basket. It failed to realise synergies from the £12.5 billion acquisition of EE. It failed to have the vision to create an all-encompassing connectivity giant.

There is still an opportunity to create this position, the Halo product is heavily driven by the convergence business model, but this should have been an established position years ago.

Then came COVID-19.

The coronavirus pandemic does not have the power to kill telcos, but it will expose weaknesses. BT should have been in a much more consolidated position by now but COVID-19 came at a time where it is in transition. A time where it needs to invest heavily in networks and marketing campaigns. A time where it should be enticing customers away from rivals to add valuable resources.

Yet the team is scrapping and scraping.

Share price is at its lowest since 2009. Market capitalisation has been slashed over the last two months. Dividends have disappeared for the next year. An O2 and Virgin Media presents a major competitive threat. Trading conditions are very tough right now, especially for a company which is undergoing a transformation programme to ensure competitiveness for the long-term.

Right now, selling a stake in the Openreach business would be a sensible means to source funds. BT needs cash to deliver on fibre promises and scale its 5G network, but diluting influence in its most profitable business unit which is critical for the future is not an ideal position to be in.

BT should be miles ahead of competitors and it should be in a secure enough position where it would not have to consider the sale of a stake in Openreach. But after years of content distractions, a G.Fast farce and a woeful attempt to integrate EE into the group, it is increasingly becoming a necessity.


Telecoms.com Poll:

Should BT sell a stake in Openreach?

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29 comments

  1. Avatar Grem 15/05/2020 @ 2:35 pm

    Unfortunately this doesn’t surprise me. From the customer’s position BT have always managed to be behind the competition in terms of their offerings… ten years ago Broadband and Telephony were billed separately, whereas others were offering bundles. Then BT charged for separate services and add-ons, whereas the competition introduced bundles on fixed monthly payments. Current situation is that they can make a bundle monthly fee, but that doesn’t include mobile calls to non BT-Mobile users, unlike the competition. Now we have FTTP, not available to most of BT’s competitors, but because of the high monthly fee for this most users are just waiting for the chance to move away.
    From a service and support perspective I had a priority SOHO FTTC business line from BT and our domestic line from EE. Despite BT’s claims, any failures (and they always failed together) were always resolved on the EE line faster, by some days.
    It’s a real shame. Having worked with BT in the ’70s and with vendors to BT in the 80’s and 90’s they have an amazing wealth of talent. It’s just that from the business side they have always been slow to react to customer requirements.

  2. Avatar Stephen Brown 15/05/2020 @ 3:48 pm

    Selling the family jewels again

  3. Avatar Paul Daniels 15/05/2020 @ 4:03 pm

    Amazing – 71% think it’s strategic value is too important to sell … Well, just hope the taxpayer won’t have to fund their mess!

    • Avatar Daniel 17/05/2020 @ 7:45 am

      …and that’s exactly it… Taxpayer won’t be happy to buy them out of the problems and at the same time doesn’t want them to sell the part of the business that Ofcom have tied their hands on.

      It all started going wrong when BT had to be told to seperate Open Reach, they have never been competitive enough and the whole company has got complacent. They know just like Royal Mail that if it goes to the wall the business can’t be allowed to fail so someone will always bail them out.

      Selling off Open Reach is the only way to secure BTs future as until its privatised it will continue to drag its arse all the way to the bank to ask for money. There are heads of BT that should be brought to question on how they’ve let it die a death and why just like any other business they didn’t do anything to set up a strategy to resolve their issues.

      … And then we trust them to roll out high speed fibre, at what cost?

  4. Avatar Steven Stewart 15/05/2020 @ 10:35 pm

    BT is IMPORTANT to the security of National Security. Government, armed forces, police and NHS on the Network. Must be protected

  5. Avatar Paul Hemming 16/05/2020 @ 2:47 am

    BT has been on the slide for many years.
    The combination of a woeful record in their international business (now a minor asset base compared to what it once was) and being out-flanked in their domestic market (despite their power of incumbency being perpetuated by the Duopoly Review in 1991) leaves the company on the slippery slope to permanent mediocrity.
    Overmanning, bloated middle management tiers, organisational silos, uninspiring leadership teams, legacy systems, ‘me-too’ innovation strategies, the list goes on.

    • Avatar Robert Catto 17/05/2020 @ 11:16 am

      Not sure that’s true. Virgin provides BB to the NHS. As far as strategic interest goes. This is a bogus argument. OK if you nationalise the lot and go to war, else it is a company prime for takeover by a giant U S conglomerate. There is no control over how many different interests own the shares.

      • Avatar Openreach engineer 19/05/2020 @ 8:19 am

        You’re not quite correct there. I have installed many Ethernet and fibre circuits to numerous hospitals and MOD sites. It’s a national security issue if any is sold off at all.

  6. Avatar John Thomas 16/05/2020 @ 8:39 am

    They went from terrible customer service to a situation where the CEOs BlackBerry would get involved in individual customer complaints.

    Then Verwaayen left.

  7. Avatar Alan Pryde 16/05/2020 @ 8:59 am

    Why would they sell off openreach to meet their fibre commitment? They wouldn’t have anything to do with the network if they didn’t have openreach!
    More doom & gloom about BT to drive the share price even lower, about time the media gave up on trying to destroy our few remaining British companies..

    • Scott Bicheno Scott Bicheno 16/05/2020 @ 9:08 pm

      The share price went up mate.

      • Avatar Bob Pratt 17/05/2020 @ 12:41 am

        When did the share price go up? It’s been on the slide for the last five years due to poor management and incessant unnecessary changes. Losing all the knowledge of the older generation of workers to employ people with no experience and less knowledge on cheaper contracts. False economy, and now paying for it.

        • Scott Bicheno Scott Bicheno 18/05/2020 @ 8:54 am

          After this news broke

  8. Avatar Chandan Jha 16/05/2020 @ 10:52 am

    Covid-19 epidemic would shift the working culture across industry post quarter and yearly outcome gradually.They would be bounded to have strong backbone collaboration at various front with telecom sector. Enhancing features like 5G and super speed may required after 5 yrs but as of moment just connectivity of each door either wireless or FTTP is the need of time with high availability and low cost to run any industry and services.

  9. Avatar Robert Thomson 16/05/2020 @ 2:21 pm

    Neither I or any of my friends would even contemplate BT as a first choice. They have been committing suicide for years. As a former BT Engineer and Manager it hurts to see what Senior Management have done to what should be a world leader. Only a maniac would dare call their helpdesks, one with a day to spare and no hope of resolution. When I was still working there, the helpdesks were a standing internal joke but Senior Management took no notice and showed no interest. We would only call them on works time, knowing how long it would take. When I left, my friends joked “who’s going to answer the phone now you’re gone?”

  10. Avatar Gerry O'Connor 16/05/2020 @ 8:25 pm

    As an ex employee who left due to the absolutely shocking and outdated management structure which consists of promoting complete morons into management positions who then bully and harass the engineers who actually do the job well, until they leave. As previously said openreach and BT should be miles ahead but they aren’t because of the mentality of the directors who look out for the biggest buck and are probably in bed with the companies looking to buy BT and openreach.

    • Avatar Murray Hutchison 17/05/2020 @ 12:35 pm

      Gerry O’Connor I recognise exactly what you say. Its a mirror of British Gas. 440,000 customers lost last year alone. Management turnover and appointing over paid under qualified people as directors. The CEO should have been sacked by the Chairman, instead he fell on his sword with a fair old payoff. Rebellion ensued and the Chairman resigned. They have now appointed an accountant from Glasgow as CEO. He previously was finance director ie promoted from within= FATAL.He must have have been part of the problem or at least never spoke up. The non execs are equally to blame. They are there to bring balance and an outside view. Failed. Speak to any time served engineer in BG those with 15-20 years have had enough and are retiring early thus losing the very people they need like you. The only good move is all the call centres are back in the UK I believe.

  11. Avatar Graham Bell 16/05/2020 @ 8:33 pm

    No suprise being an employee I can tell you at first hand the incompetence that is rife in all lines of management. The downfall was accelerated by the corrupt Liv Garfield who certainly knew how to cook the books, Gavin Patterson who cared more for hair products and now Philip Jansen who unsurprisingly has just bought two million shares at £1 each, insider dealing or just legalised theft?

  12. Avatar William Bidwell 16/05/2020 @ 9:14 pm

    I don’t deal with bt I’m on sky broadband dont get many problems but sky is a little expensive but it’s our company for this lockdown

  13. Avatar John chance 16/05/2020 @ 9:42 pm

    Worst company for customer service
    Gone way down hill

  14. Avatar Paul Duggan 16/05/2020 @ 9:47 pm

    I have worked for BT,Openreach for over 40yrs,and unfortunately nothing has changed, the powers above sometimes listen to the front end customer facing engineers but very rarely,if ever,take it onboard. That says it all.

  15. Avatar Rich Trolemce 16/05/2020 @ 10:58 pm

    Worked there for close to 30 years. They mis manage every contract they have. They are pompous as well. This is no surprise..

  16. Avatar Andy Coffin 17/05/2020 @ 12:34 am

    Openreach/BT would have done 100% full fibre over 20 years ago but the government stopped them for “competition” reasons ie they wanted american style cable tv/broadband in the uk. They would also be dominant except the government’s watchdog ofcom wont let them as its “unfair” to all the other isp’s, dictates what price they can charge and so slap them down at every turn.

    Very poor reporting by someone who i suspect doent know their history

  17. Avatar Mat 17/05/2020 @ 7:02 am

    BT is a good company with good core values and service in my opinion.

    Openreach is also a great company .There engineers are hardworking ,working hard through all weather’s and working on the network improvements and to maintain and give people connectivity during the whole Vivid crisis.

    I Personally use BT and think there service is good and far more premium than most providers.

    But I also know several controlling restrictions have been put on the company by powers that be and ofcom.
    Forcing separation from openreach,pricing limitations. Also having to share the underground network with competitors which does not help the power of a company.
    Although I have heard from BT sources that this story and other similar ones are fake news !

  18. Avatar Stuart Clarke 17/05/2020 @ 8:21 am

    I’m not surprised at all. I was waiting for 7 week to be turned on.making excuses after excuses. Finally. When I was turned on couldn’t get any channels because they attached me to copper promised I would get all my programs. Not none did I get.

  19. Avatar Arnold Beal 17/05/2020 @ 8:32 am

    I’ve had enough of them and I will be leaving at the end of my contract which is in November.

  20. Avatar Roger Banks 17/05/2020 @ 8:45 am

    Liv Garfield should be on crimewatch.

  21. Avatar Jack 17/05/2020 @ 10:21 am

    Virgin Cabled my street last year and I couldn’t be happier since I switched to them.. Actually think I’ll cut my old overhead BT line down and coil it up at the post.

    20+ years using a BT based services and I think it had 2 speed increases in that time, 12M ADSL > 38M VDSL > 76M VDSL and its been on 76 from around 2012.

    Virgin Straight away offered me 500M and I get a consistent reliable connection at faster than the advertised speed (520M) and will be able to get Gig fibre from next year .

    BT is stuck in the dark ages best thing they could do would be to sell openreach.

  22. Avatar Brendan clancy 17/05/2020 @ 2:53 pm

    I noticed he just bought shares..must be a good time to do similar????

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