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BT and Ofcom have reached agreement on the separation of the telecommunications company’s Openreach network division paving the way for the transfer 32,000 employees and their pension rights to the new company.
Openreach will have its own branding, not featuring the BT logo.
Openreach, which builds and maintains the tens of millions of copper and fibre lines that run from telephone exchanges to homes and businesses across the UK, will assume greater independence under its own board of directors. The chief executive will report to a Openreach chairman but will be accountable to the BT chief executive for certain legal and fiduciary duties.
BT’s competitors in providing broadband, which must use Openreach networks to reach customers, had called for a complete separation of Openreach from BT, arguing it was unfair to force them to negotiate with a rival to gain access to the infrastructure needed for them to serve their consumers.
Instead, Ofcom last year called for Openreach to be a “legally separate” company within BT. The disagreement centred on the transfer of liabilities, which concern it could undermine BT’s Crown guarantee, agreed on privatisation in 1984, which holds the government liable for pension obligations if the company were to be wound up.