Eurobites: BT Shareholders Warm to Openreach Spin-Off – Report

Also in today's EMEA regional roundup: BT looks for TIP startups; UK rural broadband; Deutsche Telekom eyes cloud takeovers; Deutsche Bahn's fiber plan; MBNL extends Ericsson deal.

  • A number of BT Group plc (NYSE: BT; London: BTA)'s shareholders want its next boss to consider a formal break-up of the UK's former state-owned monopoly, according to a report from the Financial Times. Several shareholders told the UK newspaper that spinning off the Openreach access networks business could have merit. Under regulatory pressure, BT has started managing Openreach as a "legally separate" entity but has previously balked at a "structural separation" that would give Openreach new owners. BT's critics, including some rivals, believe structural separation would improve competition and spur broadband investment. BT is currently in the market for a new CEO after Gavin Patterson tendered his resignation earlier this year. (See Eurobites: 'Get Carter!' Says BT's Board – Report, BT's Next CEO: Odds Lengthen on Garfield, Swantee New Favorite and BT's Next CEO: The Candidates.)

  • Elsewhere at the UK incumbent... BT, Telecom Infra Project (TIP) and Facebook are once again looking for hot startups to join the UK's TIP Ecosystem Acceleration Centre (TEAC). The winners will "work with globally recognised scientists and engineers at the BT Labs, with access to BT's network facilities, hardware and testing capabilities," as well as connect with potential investors and other such benefits. In what is the second year of this programme, the organizers are looking for startups with innovative approaches to intent-based networking and rural mobile network deployments. Entries need to be in by September 24 -- see this announcement for more details. Unmanned Life, Zeetta Networks and KETS Quantum Security were last year's winners. (See BT, TIP, Facebook Seek More Hot Startups and UK's Zeetta Eyes £125M in TIP Funding.)

  • Yet more from Blighty... UK businesses in areas that have benefited from a government-backed broadband program have seen a £9 billion ($11.5 billion) increase in turnover as a result of faster connections, according to research commissioned by the Department for Digital, Culture, Media and Sport (DCMS). Around 5 million homes and businesses have gained access to "superfast" broadband under the program, adds the report, and more than 95% of the population can now access superfast connections (meaning speeds of at least 24 Mbit/s). BT secured most contracts under that program but has already returned more than £500 million ($637 million) to the government, said the DCMS.

  • Deutsche Telekom AG (NYSE: DT) has flagged interest in buying German cloud companies worth less than €100 million ($114 million) to strengthen its T-Systems International GmbH IT business, according to Germany's Die Welt. The operator believes the takeover of specialized cloud companies could help it to address the needs of particular clients, according to the report, which cites two sources familiar with the matter. Franz Strecker, who heads up the cloud business, is also reported to have told Bloomberg that the T-Systems strategy is not to "go to war" against the likes of Amazon Web Services Inc. and Microsoft Corp. (Nasdaq: MSFT) but instead to find ways of co-operating with those companies. The remarks suggest Deutsche Telekom has given up some of its efforts to challenge web giants in cloud-computing markets. In 2015, it said its goal was to double cloud enterprise revenues to around €2 billion ($2.3 billion) in the next three years by stealing business from Amazon and Google. T-Systems, which does not break out revenues from cloud services, made about €3.3 billion ($3.8 billion) in sales in the first six months. (See DT Takes Cloud Fight to Google, Amazon.)

  • Also in Germany, railway company Deutsche Bahn is said to be on the lookout for a telecom partner that could help to invest in fiber networks. Deutsche Bahn already uses fiber that runs alongside railways to control train traffic, but is apparently keen to expand this infrastructure, according to a report from Germany's golem.de website. The move could attract interest from mobile operators making fiber investments to support next-generation 5G services, as well as telcos rolling out all-fiber connections to homes and businesses. Deutsche Telekom is already partnering with public-sector authorities and private investors to extend broadband networks in Germany. (See DT Seeks Fiber Allies to Tackle Germany's Gigabit Lag.)

  • MBNL, a joint networks venture between the UK's EE and Three UK, extended a managed services contract with Sweden's Ericsson AB (Nasdaq: ERIC) until 2020. The new contract covers so-called "design, plan and deploy" projects for MBNL, according to a statement from the companies. Ericsson has been a managed services provider to MBNL since 2009 and last year signed an extension that covered central operations, network performance and optimization, field services and multi-vendor spare parts management.

    — Iain Morris, International Editor, Light Reading

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