The head of BT Group on Thursday accused the German government of protectionism towards Deutsche Telekom over its plans to invest heavily in a network upgrade.

Ben Verwaayen, the Dutch chief executive of BT, hit out as signals began to emerge from the talks between Germany’s two main political parties that the newly formed government would back the German incumbent’s request to exempt its €3bn ($3.5bn) network upgrade from the current regulatory regime.

“The government there [in Germany] is looking to protect Deutsche Telekom . . . something that is unheard of in the UK,” Mr Verwaayen said. BT is planning to spend as much as £10bn ($17.5bn) upgrading its entire network in the UK to a new Internet Protocol platform but Mr Verwaayen said this would all be done within the context of the recent settlement with Ofcom, the combined telecoms and media watchdog.

“This is Europe for you. There are general principles and local translations of those principles,” he said. But he insisted he had no intention of complaining to Brussels.

The comments came as BT reported a slide in second- quarter pre-tax profits to £489m for the three months to the end of September, against a profit of £571m for the same period last year. Interim profits were up slightly at £988m.

The results, which were in line with expectations, were hit by a £70m charge to establish a new independent business unit – set up as part of the regulatory settlement earlier this year – weaker margins and higher costs from its ongoing voluntary redundancy programme.

Group earnings were hit in spite of growing revenues by 5 per cent in the second quarter to £4.82bn.

Additional reporting by Gerrit Wiesmann in Frankfurt

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