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No let-up in BT’s broadband war

For the first time, the telecoms group is facing competition in its infrastructure division
August 13, 2018

It’s not easy to build a fibre-optic broadband provider, particularly in a country where the market is dominated by one enormous company. Virgin Media’s attempts to take on the incumbent – BT (BT.A) – have run into difficulty. Set-up costs have risen from £575 per property in the third quarter of 2017 to between £615 and £620, causing the group’s owner to curtail its ambitious investment plans. Broker Numis thinks that’s great news for BT, which is only spending between £300 and £400 per property on its own fibre network.

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But we’re not convinced that it’s right to be optimistic about the future of the beleaguered telecoms giant. If Virgin Media is experiencing cost increases, surely it’s only a matter of time before BT does as well. Moreover, BT is facing a hostile regulatory environment that favours newer players – at the end of July the government launched a new plan to encourage investment in faster full-fibre broadband in the UK. But BT is still in the process of upgrading its ageing copper cables – surely a foolish investment when neither customers nor regulators want copper broadband.