Strategic partnerships and more media deals to bolster the television channels that are shown over BT’s broadband network could be considered in future, according to Sir Mike Rake.
He also refused to rule out a bid for Channel 4, the publicly owned UK broadcaster, if it were privatised next year. People close to BT have told the Financial Times that the group has spoken about the broadcaster with shareholders at investor conferences.
“We continue to look [at] what is out there,” says Sir Mike. “The company’s covenant is much stronger than it was, our pension deficit is manageable, and we will be in a strong position to continue to look at the opportunities carefully.”
BT will complete its £12.5bn acquisition of EE next month. As part of the deal, Deutsche Telekom, which co-owns the mobile operator, will have a 12 per cent stake in the UK telecoms group.
BT will come close to completing its plans to extend its fibre network to meet government targets to cover 95 per cent of the UK with superfast broadband in the next two years.
However, there are challenges looming, in particular the prospect of regulatory restraints being placed on the business. Ofcom is conducting a once-in-a-decade review of the UK telecoms market that could result in the formal split of BT Openreach, the division that owns and operates the national fixed-line and broadband network.
Sir Mike warns that such a decision would lead to “huge practical issues” that would delay the rollout of superfast broadband for several years at a time when the government has promised to finish covering the rest of the UK with such services.
“Functional separation has been hugely successful. Why would you stop something that is successful?” he says. “And in practice, who is going to buy it? How long would it take? With that level of uncertainty we have a fiduciary duty over the level of investment we can make in that period.”
He describes BT’s fibre rollout as the most important decision taken in the last 10 years, adding that it has been critical “for the country and its competitiveness”.
The company needs to improve its customer service, however, with Sir Mike describing it as the company’s “Achilles heel”. He blamed the decision to offshore such functions, and says this is being corrected by bringing call centres back to the UK.
BT will also need to integrate EE, Sir Mike says, hoping that BT will “keep as much top level management as we can”.
As part of the deal, Deutsche Telekom, which co-owns EE with Orange of France, will get a 12 per cent stake in BT.
Sir Mike shrugs at suggestions that the German group could mount a takeover of its UK partner, despite analysts and investors in both groups widely discussing the issue.
“We live in a global world and the UK is one of the most open economies in the world. But who knows?,” he says. “There is no golden share and we will do the right thing by our shareholders. There is a three-year standstill. We will get on with integrating EE.”
Sir Mike is one of the best connected power brokers in the City, swinging between board positions at FTSE 100 companies and business and government advisory roles. The deputy chairman of Barclays is a former international chairman of KPMG, the professional services group, and previously led the CBI, the UK employers’ organisation.
So it is little surprise that the conversation alights on two key themes close to his heart: UK competitiveness, and specifically the City of London; and how important it is for Britain to remain in the EU in this context.
Sir Mike is a prominent Europhile and insists that the majority of businesses in the UK do not want Brexit.
“On the economic side it owns every argument,” he says. “About two-thirds of CBI members think we need to stay in, constructively engage and get it right. What we can’t do is keep quiet on that issue.”
At 67, Sir Mike acknowledged that he has only a few more years juggling his wide range of non-executive positions. A skiing accident ended his participation in polo, and he no longer breeds ponies for the sport in the UK.
But BT, he says, will keep him busy for some time to come.
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