BT Must Put House In Order Or Face Split: MPs

BT is "significantly under investing" in its infrastructure network Openreach and offering poor service - and should be broken up if it fails to make changes needed, MPs have said.

The telecoms group was criticised in a report by the Commons Culture, Media and Sport Committee headlined "BT must put its house in order or face split".

It (Other OTC: ITGL - news) said that, based on research by independent experts, it had concluded that BT's shortfall in investment could potentially be hundreds of millions of pounds a year.

The report centred on the Openreach network that provides the final mile of network connection to consumers and businesses, and is used by rival operators as well as BT.

MPs said the company had exploited its position to make strategic decisions that "favour the group's priorities and interests" at the expense of shareholders and customers.

"Capital (Other OTC: CGHC - news) investment in Openreach has been broadly flat since 2009 until this year, and quality of service remains poor," the report said.

It also claimed that BT had "stifled local competition and thwarted other network providers' planning" through its lack of transparency on Openreach costs.

The report backed plans by Ofcom to establish greater separation between Openreach and BT group (LSE: BT-A.L - news) , but added that if BT fails to "offer the reforms and investment assurances necessary to satisfy our concerns", that the regulator "should move to enforce full separation of Openreach".

However, BT said a split would mean that there would be less investment, not more.

The committee said that in the past, Ofcom had not placed enough emphasis on improving Openreach's quality of service but that the prospect of stiffer penalties "should also encourage BT to voluntarily invest more in infrastructure".

BT said in a statement: "We are disappointed to be criticised for having invested more than £1bn a year in infrastructure when the UK was emerging from recession and rival companies invested little."

It said the report was "largely historic" given that Openreach investment is now 30% a year higher than it was two years ago and would grow again this year.

BT acknowledged that service must improve but said it was making "significant progress" with thousands of engineers recruited and repairs carried out and new lines installed more quickly than ever before.

The statement added: "Separating Openreach from BT would lead to less investment, not more, and would fatally undermine the aims of the committee."

Earlier this year, Ofcom said that Openreach must be opened up to more competition, though it stopped short of recommending a split from BT.

In May, BT announced a £6bn investment in broadband and 4G coverage.