BT’s rivals could be forced to help to shoulder the telecoms company’s huge pension deficit after a review by the regulator.
Ofcom will begin an investigation soon into BT’s pensions costs, to see whether it should take them into account when billing rivals for using its network.
The watchdog said that it “considers it right to consult with stakeholders on whether deficit payments should be factored in when considering how wholesale regulated charges are calculated”.
If the move is approved, the charges could ultimately be passed on to customers of groups such as Cable & Wireless and Carphone Warehouse. BT pays £525 million each year into its pension pot.
The move to review pension charges won immediate backing from unions. Andy Kerr, deputy general secretary of the Communication Workers Union, said: “To disregard the pensions liability would be to ignore a significant cost to Openreach [the division that oversees BT’s network], with implications for workforce, terms, conditions and resourcing levels. It would also severely impair Openreach’s potential to invest in new infrastructure.”
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BT will release second-quarter figures today that are expected to show that its pension deficit has narrowed to about £6 billion, from £8 billion in June. Profits for the three months to September 30 are expected to fall to £236 million, down 52.2 per cent on the same time last year, on revenues of about £5.1 billion.
Ian Livingston, the company’s chief executive, is also likely to raise his forecast for savings from his present target of “well over £1 billion” for this financial year.
Companies pay BT for the right to rent lines from it. The amount that BT can charge is set by the regulator and reviewed periodically.
A so-called “fully unbundled” line — where a communications provider takes over the line to provide broadband and telephone services — costs £86.40 per year. The charge is calculated using myriad factors, including the cost of copper and inflation. Until now pension costs have not been taken into account.
Electricity and gas network operators are already permitted to pass on pension costs in the charges they are allowed to levy for using their wires and pipelines. However, Ofgem, the energy regulator, last year launched a review of the rules.
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A BT spokesman said: “There is good regulatory precedent for pensions deficit costs to be recovered in this way in other industries — Royal Mail and water — and they are a real cost of providing service.”