No-one in the UK should be in the same league as BT, but poorly executed strategy has kept rivals within touching distance and now the foundations are reportedly being sold off.

Rumours have emerged in the Financial Times to suggest BT is in private talks to offload a portion of the Openreach business unit. Australian bank Macquarie and an unnamed sovereign wealth fund have been linked in a deal which would value Openreach at £20 billion, providing cash to fuel the £12 billion broadband upgrade BT is committed to.

We’ve said this numerous times before, but no-one should be able to compete with BT. It has the largest mobile network, the biggest broadband network, five million public wifi spots, a content platform (albeit an average one) and a trusted brand which could theoretically be exported to other ventures.

This is a business with assets which could, and should, be embracing the convergence business models to obliterate competition and steal subscriptions easily, while investors roll around in cash.

But it is not dominant.

It failed to get ahead of fibre trends. It failed to build a competent content platform, instead throwing all its eggs into the sports basket. It failed to realise synergies from the £12.5 billion acquisition of EE. It failed to have the vision to create an all-encompassing connectivity giant.

There is still an opportunity to create this position, the Halo product is heavily driven by the convergence business model, but this should have been an established position years ago.

Then came COVID-19.

The coronavirus pandemic does not have the power to kill telcos, but it will expose weaknesses. BT should have been in a much more consolidated position by now but COVID-19 came at a time where it is in transition. A time where it needs to invest heavily in networks and marketing campaigns. A time where it should be enticing customers away from rivals to add valuable resources.

Yet the team is scrapping and scraping.

Share price is at its lowest since 2009. Market capitalisation has been slashed over the last two months. Dividends have disappeared for the next year. An O2 and Virgin Media presents a major competitive threat. Trading conditions are very tough right now, especially for a company which is undergoing a transformation programme to ensure competitiveness for the long-term.

Right now, selling a stake in the Openreach business would be a sensible means to source funds. BT needs cash to deliver on fibre promises and scale its 5G network, but diluting influence in its most profitable business unit which is critical for the future is not an ideal position to be in.

BT should be miles ahead of competitors and it should be in a secure enough position where it would not have to consider the sale of a stake in Openreach. But after years of content distractions, a G.Fast farce and a woeful attempt to integrate EE into the group, it is increasingly becoming a necessity.


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