ALEX BRUMMER: The idea of BT, Britain’s national telecoms company, hiding behind closed doors in private equity ownership ought to be anathema
When seasoned industrialist Jan du Plessis took the reins as chairman of BT in November 2017, he was in no doubt about priorities.
Britain’s legacy telecoms group had lost its way and needed to be refurbished as a national infrastructure champion.
He wanted better relations with telecoms regulator Ofcom, a chief executive focused on ultra-fast broadband roll-out and was unenthusiastic about BT’s efforts to be a broadcaster. To this end, the incumbent chief executive Gavin Patterson, who presided over a devastating accounting fraud in Italy, was jettisoned, and tech-wizard Philip Jansen drafted in.
Bad sign: The removal of the dividend may have been sensible but it was all that was holding up a weak share price
Jansen had demonstrated rare alchemy at Worldpay with the help of private equity. He was recruited to drive broadband roll-out and a sagging share price.
In the midst of lockdown, Jansen unveiled a bold plan to speed up BT’s broadband revolution, pledging to build out next generation ‘fibre-to-the-premises’ to 20m properties by the mid to late-2020s.
The five-year plan for a ‘simpler and more agile’ BT would partly be paid for by suspending the dividend.
Investors were unimpressed. The share price cratered and anyone who has encountered BT during lockdown will be deeply disappointed. It required a specific request to suspend the direct debit for sport, even when the Premier and Champions leagues were off the air.
In the London suburbs, even with an expensive business subscription, the signal was as erratic as ever. An engineer called to the premises suggested a costly rewiring. This was described as totally unnecessary when a second engineer came to do the work and spent the day engrossed in the green exchange box.
Acquaintances in Brighton were persuaded by a BT sales person to switch from Sky services only to find interference on the phone line and a garbled signal from the BT box. Needless to say, they have switched back to Sky.
Jansen’s intentions may be good but, as with a series of previous chief executives since privatisation, the culture inside BT remains as impenetrable as before.
The removal of the dividend may have been sensible but it was all that was holding up a weak share price.
Du Plessis and Jansen, both of whom have form for selling great companies to the highest bidder, should not be allowed to defenestrate BT.
The idea of Britain’s national telecoms company hiding behind closed doors in private equity ownership ought to be anathema.
Anything that private equity can do, such as spinning out Openreach and selling the serially disappointing global networks, could be done in the public arena.
If the UK is to shine in the post-Covid, Brexit world it must have ultra-fast broadband as in South Korea and Spain.
The late-2020s is too late. Selling out to the big investor, Deutsche Telekom, which acquired its stake as a result of the complex purchase of mobile provider EE, should not be an option either.
The saving grace is the BT pension fund. Even though the deficit dropped sharply in the last quarter, no buyer would contemplate taking this on until the outcome of the 2020 triennial review is known and the full buy-out costs established. On a sum-of-the-parts basis, BT is clearly worth two to three times its sub-octane market value of £10.8billion.
Giving away the upside to private equity or an overseas buyer would be a betrayal of broadband investment prospects and loyal investors who have kept the faith.
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