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BT rivals TalkTalk and Vodafone threaten Openreach broadband dominance

Openreach plans to replace the UK’s ageing copper lines with fibre optic cables to bring faster broadband to three million premises by 2020
Openreach
Some broadband providers are taking steps to reduce their reliance on Openreach

BT Group PLC’s (LON:BT.A) network division Openreach has long dominated the British broadband industry but it is facing competition for its plan to roll-out high-speed internet across the country.

Openreach plans to replace the UK’s ageing copper lines with fibre optic cables to bring faster broadband to three million premises by 2020.

READ: BT's Openreach to connect fibre broadband into 3mln premises by 2020

Many of BT’s rivals have relied on the Openreach network to supply phone and broadband services to customers.

Telecoms companies, including Sky PLC (LON:SKY) and Talktalk Telecom Group (LON:TALK), had complained that Openreach charged too much for the use of the network.

That prompted regulator Ofcom to order BT to separate from Openreach in 2016 and review its wholesale charges.

Now some of BT’s sector peers are laying down the gauntlet with telecoms Talktalk Telecom Group (LON:TALK) and Vodafone Group PLC (LON:VOD) announcing their own plans to roll out fibre.

TalkTalk has forged a joint venture with Infracapital, the infrastructure investment arm of M&G Prudential, to build a full fibre network for three million premises.

READ: TalkTalk announces sale of direct B2B unit as it reports 35% drop in profits

Vodafone has partnered up with CityFibre to provide fibre to as many as five million homes.

Since creating the joint venture, the planned fibre roll-out has received a boost after CityFibre agreed a £538mln takeover by a consortium of infrastructure investors.

READ: CityFibre agrees £538mln takeover by consortium to support fibre broadband roll-out

BT’s plans to upgrade the broadband infrastructure will also push up its costs, leading some analysts to revise their earnings guidance.

Earlier this week, Bernstein downgraded its underlying earnings (EBITDA) and revenue forecasts for 2019 and 2020.

It said “investors will have to be patient” as it does not expect a return to earnings growth until 2021. 



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