Rivals call for BT break-up in review of UK telecoms sector

(Adds BT reaction)

By Paul Sandle

LONDON, March 12 (Reuters) - Broadband providers Sky (LSE: SKY.L - news) and TalkTalk have called on Britain's telecoms regulator to break up BT, the market leader whose network they rely on, in the biggest review of the sector for a decade.

BT's rivals have stepped up their charge against the country's dominant fixed-line group ever since it announced its planned acquisition of EE , Britain's biggest mobile operator, at the end of last year.

Regulator Ofcom said on Thursday it would examine a range of issues including whether there was enough competition in a market that has seen rapid change in recent years.

Its first major review of the market, which concluded in 2005, resulted in BT opening its network to competitors on equal terms to offer phone and broadband services to consumers. Ten years on, its rivals want Ofcom to go further by forcing BT to spin off its infrastructure business Openreach.

"There is no case for structural separation, with the UK leading the EU's five biggest economies for superfast broadband," BT said in response.

"The current Openreach model has served the UK very well resulting in high levels of investment, intense retail competition, very high levels of coverage and take up and low prices."

Sky (Other OTC: BSYBF - news) said the structural separation of Britain's only nationwide broadband infrastructure would create a sustainable industry that would encourage investment, widen access and deliver lower prices for customers.

"Ofcom must now take the opportunity to address Openreach's conflict of interest as a subsidiary of BT or risk extending the problems that are affecting the industry and its customers today," Sky Chief Executive Jeremy Darroch said.

TalkTalk said it was increasingly clear the current market structure was not fit for purpose, and BT's proposed acquisition of EE would only make a bad situation worse.

"It will further starve Openreach of the focus and capital it needs and will extend BT's dominance of the market," TalkTalk Chief Executive Dido Harding said.

"The larger group will have nearly 40 percent of the entire consumer telecoms market and nearly 70 percent of the wholesale market." (Reporting by Paul Sandle; Editing by Kate Holton and Vincent Baby)