Oftel rejects BT pleas

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The Independent Online
BT LOOKS likely to lose its battle with Oftel over the new price structure proposed by the telecommunications industry watchdog.

BT has failed to convince Oftel of the case against a new pricing regime that could reduce its profits by pounds 100m a year. Last year, it made pounds 3bn pre-tax.

BT's board, which includes Lord Tebbit, will meet on Tuesday to decide whether to accept Oftel's wide-ranging controls or opt for referral to the Monopolies and Mergers Commission.

It faces its shareholders two days later at the annual meeting, when it is expected to reveal first-quarter pre-tax profits down to between pounds 550m and pounds 600m, from pounds 825m last time.

So far, Oftel has refused to budge on its decision that BT must limit price increases on a basket of basic services to inflation minus 7.5 percentage points, against the present cap of inflation minus 6.25 points.

Oftel is also insisting BT agree to the accounting separation of its local and long-distance businesses to ensure fair play for competitors wanting to deliver calls over BT wires. BT claims separation would be complicated and expensive. Oftel also seems to be sticking to its plan to cut charges for new connections from pounds 163.75 to pounds 99 and to limit price rises on all line rentals to inflation plus two percentage points.

BT has also objected to Oftel's demand that bulk discounts for big customers should be taken out of the basket of basic services.