Basking in the glow of BT Sport screening two of the most exciting Champions League semi-finals for many a year, BT Group has decided to indulge in a little game playing of its own.
Amid speculation that a dividend cut was in the offing to fund the broadband investment Britain desperately needs, Philip Jansen, in his first full year results run-out as team captain, said he could pull off a trick shot.
BT can keep the dividend and score for Britain, with 4 million premises getting ultrafast fibre broadband by 2021, up from 3 million. The number might get to 15 million by the mid-2020s, up from 10 million, “if the conditions are right, especially the regulatory and policy enablers”.
Jansen saying that is a bit like Jurgen Klopp telling Liverpool fans he can win the Champions League if conditions are right, “especially the referee and linesmen enablers”.
The backdrop to this is that OfCom is currently fixing up its regulatory framework for 2021-2026. BT would also like the government to grant it some relief on the business rates it has to pay on the fibre it lays. If it sounds odd that the taxman charges the company for these, remember those cables represent real moneymaking businesses even if their premises are holes in the ground.
If Jansen gets what he wants, maybe the “ambition” to connect 15 million homes and businesses by the mid-2020s will turn into a firm target with a less woolly date attached to it.
Let’s be clear here. The company has a right to make a return on its investment, but its past history in this area isn’t all it might be. It’s open to the charge that it has used the infrastructure monopoly it has long enjoyed in large parts of the country to fund a fat dividend for investors at the expense of the national interest.
This has put an unnecessary brake on the economy and left the UK lagging behind its competitors. It is one of the reasons regulators forced the semi-separation of OpenReach, BT’s infrastructure arm that is a big contributor to BT’s payout, from the rest of the group. Many critics argued that didn’t go far enough. They wanted the company broken up.
Right now BT and its referees are playing nice because nothing’s been finally decided. There’s a lot of positive talk about constructive discussions, etc.
OfCom is likely to set out different rules for BT in different areas of the country, depending on whether there’s competition or not.
This makes sense. New companies have moved in to join it and Virgin, and some of them are even having a go at connecting rural areas, where the lack of reliable broadband seriously hampers the economic outlook. They’re having a beneficial impact. The rate of fibre connection has doubled nationwide.
But there’s still about a third of the country where BT is the only game in town.
The market took an equivocal view of the numbers – revenues and profits were similar to last year’s – with the shares falling a little bit. It looks like shareholders are preparing to sit back and watch the match to see if Jansen can find the back of the net before deciding on whether or not to renew their season tickets.
But shareholders and BT’s corporate views shouldn’t be at the forefront of its refs’ thinking. They need to be clear that they won’t accept any nonsense.
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