Shares in under-pressure telecoms giant BT Group (LON:BT.A) rallied today helped by news of new board appointments to its regulatory-challenged broadband infrastructure business, Openreach.
The FTSE 100-listed firm revealed that Brendan Barber - chairman of employment relations service Acas and a former Trades Union Congress boss - and Edward Astle - a former board member of National Grid PLC (LON:NG.) - will become non-executive directors of Openreach.
BT said Barber and Astle will be independent members of the infrastructure’s company’s newly-formed board – which met for the first time yesterday - to “oversee strategy, investment and service delivery”.
At the end of November, regulator Ofcom ordered BT to make Openreach a separate company, although it stopped short of forcing the firm to diverge ownership of the subsidiary completely as most of its rivals had wanted.
Sky PLC (LON:SKY) and Talk Talk Group PLC ((LON:TALK) both use BT’s broadband infrastructure and have been consistent complainants about the service they receive.
The regulator said BT had not addressed the competition concerns it spelt out in July and as a result it wanted Openreach to become a distinct company with a separate board and its own chairman.
Re-build trust and credibility…
Former telecoms executive Mike McTighe was appointed independent chairman of Openreach around the same time.
In a statement accompanying news of the new appointments, McTighe said Openreach needs “to do more to re-build trust and credibility”.
He added: “This will be the board's focus and we are currently in consultation with BT Group about agreeing the plan to deliver better service, broader coverage and faster speeds for consumers and businesses across the country.”
McTighe also said: “We are determined to meet our customers' expectations and to strengthen the autonomy, governance and transparency of Openreach to facilitate the delivery of better outcomes for everyone that has a stake in our business.”
New board central ..
BT also confirmed that Clive Selley, Openreach chief executive, Clare Sadlier, Openreach chief finance office, and Simon Lowth, BT Group finance director also make up the Openreach board.
AJ Bell’s investment director Russ Mould said: “Establishing the new board is central to governance reforms that Openreach has been implementing and part of a reorganisation programme to give it increased operational and management independence.”
The Openreach moves come after BT shares plunged last week on the deepening of an accounting scandal at its Italian corporate services business, which prompted the company to take a £530mln write-down in its third-quarter results.
In early morning trade today, BT shares were up 2%, or 6.25p at 310.10p.