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BT reaches deal with regulator Ofcom to legally separate Openreach BT reaches deal with regulator Ofcom to legally separate Openreach
(about 1 hour later)
BT has finally agreed with telecom regulator Ofcom to a legal separation of its Openreach division paving the way for the transfer 32,000 employees and their pension rights to the new company.BT has finally agreed with telecom regulator Ofcom to a legal separation of its Openreach division paving the way for the transfer 32,000 employees and their pension rights to the new company.
The deal means Openreach, which builds and maintains the tens of millions of copper and fibre lines that run from telephone exchanges to homes and businesses across the UK, will assume greater independence under its own Board of Directors.The deal means Openreach, which builds and maintains the tens of millions of copper and fibre lines that run from telephone exchanges to homes and businesses across the UK, will assume greater independence under its own Board of Directors.
The BT logo will also be removed from Openreach's branding.The BT logo will also be removed from Openreach's branding.
Openreach is the division of BT Group that develops and maintains the UK's main telecoms network used by providers such as Sky, TalkTalk, Vodafone and BT's retail business. BT’s rivals that use open reach to provide their broadband have long been unhappy over the performance of Openreach.
BT faced growing calls from rivals to hive off Openreach. Companies like Vodafone, Sky and TalkTalk have called for the business to be spun off from its parent. However, BT would fiercely resist that and OfCom has long said it believes that legal separation will achieve its aims more quickly and without the need for a messy legal battle.
Last year, Ofcom proposed a legal separation of Openreach, a move that BT has resisted.
However, the telecoms giant has now bowed to the regulator’s demand, meaning that Ofcom will not need to resort to legislation to introduce the change.However, the telecoms giant has now bowed to the regulator’s demand, meaning that Ofcom will not need to resort to legislation to introduce the change.
Under the agreement, it is expected 32,0000 BT staff will  transfer to Openreach later this year once consultation processes and pension arrangements had been completed.Under the agreement, it is expected 32,0000 BT staff will  transfer to Openreach later this year once consultation processes and pension arrangements had been completed.
Sharon White, Ofcom chief executive, said this was a "significant day" day for phone and broadband users.Sharon White, Ofcom chief executive, said this was a "significant day" day for phone and broadband users.
"The new Openreach will be built to serve all its customers equally, working truly independently and taking investment decisions on behalf of the whole industry - not just BT," she said."The new Openreach will be built to serve all its customers equally, working truly independently and taking investment decisions on behalf of the whole industry - not just BT," she said.
"We welcome BT's decision to make these reforms, which means they can be implemented much more quickly. We will carefully monitor how the new Openreach performs, while continuing our work to improve the quality of service offered by all telecoms companies," she added."We welcome BT's decision to make these reforms, which means they can be implemented much more quickly. We will carefully monitor how the new Openreach performs, while continuing our work to improve the quality of service offered by all telecoms companies," she added.
Gavin Patterson, BT chief executive, said: “I believe this agreement will serve the long-term interests of millions of UK households, businesses and service providers that rely on our infrastructure. It will also end a period of uncertainty for our people and support further investment in the UK’s digital infrastructure.Gavin Patterson, BT chief executive, said: “I believe this agreement will serve the long-term interests of millions of UK households, businesses and service providers that rely on our infrastructure. It will also end a period of uncertainty for our people and support further investment in the UK’s digital infrastructure.
“This has been a long and challenging review where we have been balancing a number of competing interests. We have listened to criticism of our business and as a result are willing to make fundamental changes to the way Openreach will work in the future.”“This has been a long and challenging review where we have been balancing a number of competing interests. We have listened to criticism of our business and as a result are willing to make fundamental changes to the way Openreach will work in the future.”