UK regulator Ofcom concerned by BT's involvement in Openreach's planning process

(Reuters) - Britain’s media regulator Ofcom said it was concerned by the involvement of broadband and mobile provider BT Group Plc in developing the strategic plans of its networks business Openreach, despite splitting the operations.

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In a report on Thursday, Ofcom said the progress toward the legal separation of BT and Openreach has been "broadly satisfactory", but some steps were yet to be completed such as the transfer of Openreach employees to the new Openreach Ltd due to complexities with BT's pension scheme.

Last year, BT resolved a two-year broadband battle by bowing to industry and regulatory pressure and agreeing to legally separate its national network, as the government sought to deliver faster broadband speeds for millions.

Many changes in governance have been implemented with Openreach, the country’s national broadband infrastructure provider, now being a separate legal entity from BT and having its own independent board, the regulator said.

However, BT has been “significantly involved” in the financial and strategic planning of Openreach, the report said, citing interviews with senior staff and emails exchanged between executives.

“We are also concerned that BT’s newly established Investment Board reviewed Openreach’s investment proposals to be included in its strategic plans before the final draft plans were presented to the Openreach Board for approval”, Ofcom said in its report.

Telecom companies relying on Openreach have asked for more transparency in its decision-making and are uncertain about the ability of Openreach to “act with greater independence and treat all its customers equally in practice”, the Ofcom report noted.

BT said in a statement the company was “absolutely committed” to the strategic independence of Openreach.

“BT welcomes Ofcom’s confirmation that we have made good progress toward implementing the status of Openreach determined by the Digital Communications Review,” it said.

BT Group said earlier in June its chief executive Gavin Patterson would step down this year, after its chairman Jan du Plessis stated a new leader was needed to restructure Britain’s biggest broadband and mobile provider.

Reporting by Kanishka Singh in Bengaluru; Editing by Alison Williams