BT Group Stocks Under Pressure Amid Ofcom’s Investigation

  • October 16, 2020 09:59 AM BST
  • Team Kalkine
BT Group Stocks Under Pressure Amid Ofcom’s Investigation

 

  • An investigation has been launched by the Office of Communication to find whether BT Group PLC is fulfilling its obligations under USO
  • Ofcom seeks to determine whether an accurate cost is being provided by BT, though it said that being in remote regions can lead to the cost of some connections being high
  • BT has expressed its commitment to support community broadband projects; it wants a greater level of government support

 

An investigation has been launched by the Office of Communication (Ofcom) to find whether the leading telecommunications and network provider of the UK, BT Group PLC (LON: BT.A),  is fulfilling its obligations as a broadband provider designated under the Universal Service Obligation (USO).

Ofcom seeks to determine whether an accurate cost is being provided by BT.  It is BT's job to assess the costs of providing a connection. However, the company has been under the allegation to quote higher price estimates. Some reports have also surfaced of applicants being quoted more than £500,000 for a connection in the most remote parts of the country.

The regulator said that being in remote regions can lead to the cost of some connections being high. However, the authority is concerned that BT might not be following the regulatory conditions correctly and is, therefore assessing excess costs for a given connection. This could end up in some customers being quoted higher for a connection than necessary.

Also Read: BT Group’s View Gets SMF Affirmation-British Government to Miss 2025 Deadline to Fibre Up The UK

 

What is the Universal Service Obligation?

 

The USO permits a broadband connection of at least 10Mbps to anyone in the UK to demand. BT accesses whether an applicant is eligible or not within 30 days of receiving the request. As soon as the identification is over, the company must provide the connection as possible. Coverage of cost up to a limit of £3,400 is taken care of by BT, after which the applicant is asked to pay the remainder. In order to bring the cost down, neighbours can club together to make joint applications.

 

BT Disputes the Allegation

 

BT refused the allegation to be true, saying that in some cases the cost of connection is simply just too expensive. Though the company is working hard to support community broadband projects, it wants a greater level of government support.

The company is fully obligated to working with both Government and Ofcom to find fairer ways to connect the hardest to get. One BT official showed disappointment on the opening of an investigation, saying that they strongly disagreed with Ofcom’s assessment of their delivery of the USO.

The company sends USO quotes to customers on request from them, assessing that for the most remote properties some of these can be unaffordable. BT is working hard to enable communities to be able to share the costs of a USO connection to help drive down costs for individuals and is likely to launch this as soon as possible. Even after sharing the costs, the price for some communities will remain out of reach.

BT can connect 400,000 properties without decent connectivity using 4G. But with the help of the USO scheme, the company is already in progress of building connections to 4000 premises for properties where this isn’t suitable.

To connect the most difficult places representing 0.5 per cent of the country is the most challenging part and is yet to overcome. There is a change required in the existing USO programme, as well as a new plan should be in place for reaching out to the remotest places. This has to be brought to notice across the industry, the Government and Ofcom and tried to be achieved. 

Do Read: BT Group Plc Introduces A Set Of New Services, Products And Skills Programmes For The UK

BT Group PLC

Financial Highlights

For the year ended 31 March 2020, BT Group reported revenue of £22,905 million, which was down by 7 per cent due to the impact of the coronavirus pandemic. There was a decline of 7 per cent in the Adjusted EBITDA of £1,813 million, resulting from the fall in revenue with reported profit before taxation of £2,353 million. However, the company was in the track of delivering a strong operating performance, remaining committed to supporting its customers and colleagues. Openreach continued to roll out 3 million FTTP premises in rural areas, aiming to achieve 4.5 million by March 2021.

Stock Perfomance

The stocks of BT.A was trading at GBX 100.60 on 16 October 2020, at 1:41 PM, down by 1.66 per cent from its previous day close of GBX 102.20. The stock’s 52-week low/high price was reported to be GBX 97.86/209.20. It had a market capitalisation (Mcap) of £10,135.19 million. The company recorded a negative return on price, which was 47.87 per cent on YTD (Year to Date) basis.

Also Read: BT And Ofcom’s Plan for UK Broadband, as Nation’s ranking Slips To 47 in Speed

 

 

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