Threat of nationalisation continues to hover over BT

The prospect of a Labour Government over the next couple of years seems to be an increasing possibility, which could be bad news for BT and other telcos in the UK.

This is not the first time the nationalisation conversation has swirled around former state-owned monopoly BT, but now sources in the office of Labour Leader Jeremy Corbyn suggest the concept is once again being considered. Corbyn has managed to avoid any form of commitment, a position which increasingly seems to be the norm, but is now reportedly considering a proposition drawn up by the Communication Workers’ Union (CWU).

Although there have always been voices lurking in the darker corners of Westminster suggesting the prospect of taking BT back into public ownership, rarely have these individuals been in positions of genuine power. Now it seems these whisperers are pulling the party strings, and it could be bad news for BT.

While Corbyn is still keen to sit on the fence on any decision which might indicate some political thought, rumours also suggest Shadow Chancellor of the Exchequer John McDonell is considering the actions. This would seem to be a proposition much more suited to McDonell considering his political heritage, and if you believe some of the condescending voices, he is the Labour puppet master.

Renationalisation is quite a popular topic at the moment, though the telcos have been largely protected from the debate. Most of the focus has been directed towards the rail, energy and water companies who are proving to be more inadequate than telcos. It might sound like a wonderful idea for those feeling the sharp-end of the stick, but you have to wonder where the money is going to come from.

As it stands, BT’s market capitalisation is £19.45 billion. Considering the UK has been operating under the cloud of austerity over the last few years, where is a potential Labour Government going to find £19.45 billion to renationalise BT? It has also promised investment to reduce class sizes in schools, put more police back on the street, introduce free childcare and revolutionise A&E departments in hospitals. A lot of money is being spent already.

What you also have to consider is whether this is a good idea in the first place. If the supporters of nationalisation are basing complaints on the rural divide and network rollout plans, they should realise a nationalised BT would have less potential to borrow than a privatised BT; this would certainly impact capital investment plans. You also have to appreciate BT was privatised in the first place to correct inadequacies.

There are of course numerous complications with such an idea. We cannot imagine BT would welcome such a move and would of course do everything in its power to block renationalisation. The telcos can be very effective when it comes to being stubborn on the legal landscape, and this is assuming there is any truth to the rumours.

With Brexit on the horizon and Boris Johnson (BoJo) the favourite to become the next Prime Minister, there might be a few disillusioned Brits turning to the Labour camp before too long. BoJo has a tendency to alienate and insult large swathes of people on a regular basis, while ‘remainers’ might switch political allegiance in the event of a ‘no-deal’. The next General Election is to be held on 5 May 2022 with the result potentially dictating the future of BT.