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The CEO of BT Group, Allison Kirkby, has hinted at the possibility that network access provider Openreach could be spun off into a completely separate company in the future. But this would only be considered once their roll-out of a national gigabit-capable Fibre-to-the-Premises (FTTP) broadband ISP network completes (i.e. after 2030).
Openreach is currently busy investing around £15bn to cover 25 million UK premises with their new full fibre network by December 2026 (inc. 6.2m in rural or semi-rural areas), which is then expected to reach up to 30m by 2030. But analysts at New Street Research have previously estimated Openreach’s current value to be about £30bn – more than BT Group’s current market value of £18.5bn.
However, Allison has previously expressed some frustration with the fact that the value of Openreach was not being properly reflected in the company’s share price (here), which in fairness is partly because that value is subject to many other factors that shareholders often have to consider (e.g. the state of the competitive market, declining broadband customers and network overbuild etc.).
According to a new interview with the FT (paywall), Allison suggested that, if the above situation didn’t change, the group would “absolutely have to look at options” and the time to “reconsider” whether to spin off Openreach might then come after its national roll-out of FTTP technology had completed. At that point, she expects that the company’s capital expenditure would naturally reduce to normal levels and its free cash flow should rebound. However, Allison also expressed that her preference was to get the value of Openreach’s fibre network reflected in BT’s shares, rather than spin it off.
In addition, Allison confirmed that she expected Openreach’s build rate for FTTP to fall from around 4 million+ per year today to about 1 million a year after 2026, which roughly aligns with the premises gap to their next target (30m). Most likely this would be a slow reduction over that four-year period (1m being more of an average), as stable network builds usually have ramp-up and ramp-down phases.
The same interview separately noted how BT Group’s forecast for future job loses, which is currently targeting a total labour resource of around 75-90k by 2030 (currently c.116k), might end up being wrong (note: many of these cuts will reflect engineers who are no longer needed for the FTTP build). “Depending on what we learn from AI … there may be an opportunity for BT to be even smaller by the end of the decade,” she said, albeit without being too specific about numbers (i.e. expect more use of AI for tackling internet challenges and customer support etc.).
Finally, Allison indicated that she would also be open to the idea of reaching a partnership with an alternative network for their BT retail (consumer) business in the future, but she added that this might only be considered for the minority of areas where Openreach’s own FTTP lines fail to reach (expected to reflect the final c.4 million premises – often remote rural premises). But we suspect they won’t even consider that until after 2030 and the market could be very different in five years’ time, after consolidation has had its way.
We should point out that Openreach is already a distinct “legally separate” company from BT, which is a requirement that stemmed from Ofcom’s original 2016 Strategic Review of Digital Communications (full summary). But Allison appears to be talking about a much fuller separation, although for now this is all very hypothetical talk.
