Openreach, the infrastructure arm of UK telco giant BT, looks set to prioritize existing projects rather than starting new buildouts of its fiber broadband network as it seeks to control costs amid surging inflation.
Following government pledges to roll out full-fiber broadband access to all areas of the country by 2025, Openreach and other network service providers have been investing in new infrastructure across the UK over the past several years.
However, a report in the Financial Times has claimed that Openreach is now limiting its investment in fiber to curb costs. This appears to be based on a letter the company sent out to its suppliers informing them that Openreach intends to tighten investment to a just-in-time approach, and would not be committing capital to projects further than six months out, according to the FT.
We asked Openreach for its response, and the company denied that it was cutting back on investment in its fiber broadband rollout.
“We expect to build ultrafast full fiber broadband to more homes and businesses next year, not fewer, so we’re speeding up not slowing down,” a spokesperson told us.
So which is correct? Is Openreach cutting back on fiber expansion or not?
Well, it depends on how you look at it. A spokesperson at Openreach’s parent company BT told us the plan is to prioritize investment in those areas where network buildout has already begun, rather than on starting on new builds in new areas.
So while it may be true to say that Openreach is continuing to invest in expanding its fiber network in the exchange areas it has already started building in, it is also true that it may put a halt on expanding into areas where it does not currently have fiber infrastructure – at least not for now.
In its results for the six months to the end of September, BT Group said that its FTTP build had “passed 8.8 million premises, including 2.8 million in rural areas” with initial build under way on a further 6 million premises. It is these 6 million premises where Openreach is expected to focus its efforts for the near future.
“As our recent results show, we’re investing £200 million [$238 million] more than we expected to this year on the build, and orders for Full Fiber services are at record levels,” the spokesperson claimed.
“In fact, 9 million homes and businesses can already order our Full Fiber service from a large range of service providers, so it makes sense for us to put more resources into upgrading customers and fulfilling orders as quickly and smoothly as possible. We’ve also partially built the new network to a further six million premises, so we’re focused on completing that work,” Openreach added.
But BT Group is determined to cut costs amid the worsening economic outlook as CEO Philip Jansen detailed when the company announced its results earlier this month.
As we reported, Jansen said that BT Group is upping cost savings targets “from £2.5 billion to £3 billion by the end of FY25.”
At the same time, BT has been stuck in a damaging industrial dispute with staff over pay that has seen 26,000 Openreach engineers and call center personnel walk out on eight separate occasions, taking its toll on the organization’s business operations.
The company announced earlier this month that the UK government’s price cap on energy bills could give it the financial “wiggle room” to offer more money to staff and bring an end to the dispute. ®