BT Group PLC (LSE:BT.A)’s pleas to the government to continue offering tax breaks for full-fibre broadband rollout will probably fall on deaf ears, judging by recent analyst commentary.
Between 2017 and 2022, UK broadband and 5G operators benefitted from a 100% relief on business rates for fibre investments as part of a government push to upgrade Britain’s date copper infrastructure.
Another so-called ‘super deduction’ on new plant and machinery asset expenditure is due to expire on April 5 as the tax year comes to a close.
BT's chief financial officer Simon Lowth has pleaded with the government to commit to "a much more competitive system of capital allowances” for operators rolling out broadband and 5G networks.
Comments from Deutsche Bank researchers suggested BT is in a bind.
With the hundred or so alternative network suppliers (altnets) on one side and main competitor Virgin Media O2 on the other, “BT has to continue to invest in full-fibre at pace regardless of the tax regime”, noted the team Robert Grindle, head of European TMT research.
Competition in the fibre-to-the-premises (FTTP) industry is such that the incentive for the government to further encourage “already massive fibre deployment” may be limited.
Subsidies for full-fibe roll out would be beneficial for BT shares, but with the likes of Ukraine and public sector pay tugging at the chancellor’s purse any tax mitigation in next month’s budget would be “highly unexpected”.