BT Scraps Hunt For Openreach Partner
BT has scrapped its hunt for an Openreach partner, citing a 15% fall in FTTP rollout costs. The company is now targeting Dazn as its preferred partner for the network, as FTTC saves PS250m a year in a margin-challenged ISP market.
BT scraps hunt for Openreach partner
BT has scrapped plans to find a joint venture partner for its fibre rollout programme. The British telecoms giant, owned by billionaire investor Patrick Drahi, is focusing on its own investment plans as the rollout costs continue to fall. Openreach's fibre network is now covering nearly six million premises, and its costs have dropped by 15% - to between PS250 and PS350 per premises passed. It has also increased the speed of its fibre rollout plans, aiming to connect 20 million homes by 2026.
The move to scrap the hunt for a partner for Openreach comes at a time when BT has accelerated its PS2 billion cost-saving targets and lowered its forecast for peak spending. The company has also opted to retain complete control of its full-fibre broadband investment plans. It is unclear what the intentions of its largest shareholder are, but the move shows that the telecoms giant is determined to keep the control of its network.
The move to slash the cost of fibre rollouts in areas with large number of households is expected to have a positive impact on the economy and society. By providing faster and more reliable services, residents will be happier and have more time to spend with their families and friends. Openreach is the UK's largest broadband network and supports BT, Plusnet, Sky, TalkTalk, Vodafone, and Zen customers. Although it can't serve everyone, it supports businesses in rural areas where 100Mbps broadband isn't available.
FTTP rollout costs fall by 15 percent
FTTP is an innovative broadband technology that allows businesses to receive their Internet service through an existing telephone line. Companies such as CenturyLink are experimenting with new technologies and using existing utility poles to extend fiber to the premises. Executives at CenturyLink are monitoring the costs of FTTP rollouts and are working to reduce them. The company has also partnered with the University of Louisiana to trial a new micro trenching technique in cities like Seattle and Minnesota.
FTTP deployment has been driven largely by facilities-based competition. For example, Sweden's national regulator has ruled out upgrading its copper network to VDSL, arguing that it will only be effective in densely populated areas where FTTP will be installed. While Sweden is among the most expensive countries to roll out FTTP, the speed with which the technology was introduced has played a role in reducing the costs.
Openreach's current target is to connect four million premises with FTTP by March 2021, and it aims to reach 15 million by around 2025. If conditions are right, the company could achieve this goal sooner than expected. However, despite this promising news, the company is still facing a number of challenges. The company's debt is growing, and it needs to compete with a burgeoning market of alternative networks.
Dazn is BT's preferred suitor
While there is no concrete evidence that Dazn has made a firm bid for BT, a number of investors are interested in the British telecom giant's fibre network. In a recent article, the Mail on Sunday reported that private equity firms valued the BT infrastructure unit at 53 billion pounds, more than the entire market cap of the group. It's possible that BT is looking to sell off some or all of its infrastructure business to raise additional capital for the rollout.
In April last year, BT confirmed it was selling BT Sport, which has attracted a number of prospective suitors. However, sources have indicated that DAZN is likely to land the contract. The deal is expected to be concluded this month. While Discovery had been rumoured to be interested in the deal, the two companies have not commented publicly.
BT is currently investing heavily in its fibre broadband network rollout as well as its 5G next generation wireless network. The sale would remove future sports rights payments from BT's books, allowing it to focus on its core telecoms business. Analysts have noted that BT has spent billions on sports rights in an effort to attract subscribers. However, the value added by BT Sport is difficult to quantify. In addition, some investors balked at the prospect of bidding for the expensive rights that BT Sport has.
