UK Edition
Mobile World Congress: Vodafone makes final plea for BT to be broken up
The chief executive of Vodafone has joined last-ditch pleas for BT to be broken up over what he described as the “extra profits” it makes from its Openreach network unit.
Vittorio Colao made a final push for a split at Mobile World Congress in Barcelona, as Ofcom prepares to unveil the findings of a wide-ranging probe of the telecoms sector on Thursday.
The future of Openreach is the keystone of the once-a-decade review. Mr Colao criticised the current “functional separation” model, by which BT retains control of its network but is obliged to let rivals use it on level terms with its own retail unit.
“A model which was supposed which was supposed to be neutral and separated has actually been creating extra profits for the company that owns it," Mr Colao said,
“It’s a model that allows equal access but a price higher than most European countries.”
Vodafone has been part of the campaign by BT’s rivals to force a split, fearing the strength regained by the former state telecoms monopoly in recent years as the broadband market has boomed. Along with Sky and TalkTalk, Vodafone has also complained about Openreach’s record on repairs and installations, as well as its failure to make plans to replace its copper wires with fibre-optic links.
Vodafone is attempting to break into the British broadband market via BT’s infrastructure, in contrast to markets such as Germany and Spain, where it has spent billions to buy and build its own fixed-line networks.
Mr Colao said Ofcom’s chief executive, Sharon White, faced a key decision.
He said: “I hope she is going to say either that she really supports considering the split of Openreach or at least that she will put much tighter obligations on Openreach, both in terms of performance and pricing.”
The Italian’s 11th-hour appeal came after Jeremy Darroch, the chief executive of Sky, made a similar intervention.
The two companies are seeking to keep the pressure up on Ms White despite the fact that it is understood she will stop short of supporting a break-up of BT in favour of new governance and pricing controls. Full separation of Openreach is likely to remain on the table as a backstop to encourage BT to negotiate, however.
Ms White is also at odds with large sections of the telecoms sector over Hutchison’s attempted merger of Three and O2. The regulator has campaigned for the deal to be blocked by the European Commission, arguing it will lead to higher prices.
However Vodafone, Sky and Virgin Media have called for the deal to be approved, in part to provide stronger mobile opposition to BT.
BT's own £12.5bn takeover of EE was waved through by British competition regulators unhindered.