Ofcom has told Openreach to withdraw a wholesale fibre discount scheme, ruling it could let the BT Group (LON: BT.A) subsidiary undercut smaller rivals unfairly.
The UK telecoms regulator published its final decision earlier today, confirming the concern it first raised in a July consultation.
The blocked offer, called Incremental New to Openreach, gave internet service providers a discount of up to £9.50 per customer for as long as 30 months when they signed up new full-fibre customers to Openreach’s network. Openreach is BT’s wholly owned wholesale access business, which supplies more than 700 UK communications providers over its fixed-line infrastructure and holds significant market power status, triggering extra regulatory obligations that ordinary rivals do not face.
BT-A.LSE shares were up 0.33% in early trading at 197.2p against Friday’s close of 196.55p, having ranged between 196.8p and 198.85p on volume of around 293,000 shares, a muted move consistent with a narrow regulatory decision rather than a broad pricing curb.
Ofcom’s reasoning centred on scale: it found other reasonably efficient operators could not match the discount while still covering their costs, and that limiting it to new customers risked stopping smaller altnets, rival fibre network builders, from growing their own customer bases. That risk matters because roughly half of UK households with full-fibre access available have still not signed up, a pool of customers Openreach and its rivals are all competing to win.
Crucially, Ofcom’s decision was not a blanket restriction. It reviewed several other commercial offers Openreach had notified and cleared them, finding their discounts too small to raise competition concerns, so Openreach can proceed with those unchanged.
The ruling removes one customer-acquisition tool from Openreach without touching the wider fibre business. In its last full year to 31 March, Openreach revenue grew 1% and adjusted EBITDA rose 5%, as fibre-to-the-premises mix improved and CPI-linked price rises fed through. Full-fibre customers passed 9 million, a 39% take-up rate, out of roughly 23 million premises now passed by the network, leaving substantial room for Openreach to keep signing up customers through the pricing levers Ofcom has left untouched. The shares remain within their 52-week range of 165.70p to 235.03p, trading modestly below both the 50-day and 200-day moving averages.