Vodafone CEO Colao calls for BT and Openreach separation


He says regulators should make the change following confirmation of BT’s £12.5 billion purchase of EE, claiming the market would be uncompetitive and that it could be tempted to restrict the market

Vodafone CEO Vittorio Colao has called on regulators to force BT and its fixed line wholesale division Openreach to separate, following its capture of EE.

Colao (pictured), who was responding to questions from Mobile News discussing the firm’s Q3 financial results, claims the market would be uncompetitive and that it could be tempted to restrict the market, to the detriment of its competitors.

Openreach, which is BT’s national grid of cable infrastructure, had revenues of £1.25 billion in Q3 2014.

“I’m in favour of consolidation provided that that doesn’t turn in to restriction of competition,” Colao said. “Regardless of whether I am at one end or the other end of the story, it is obvious that the technology is pushing for consolidation.

Regulators to remedy

He added: “If you have access to exclusive services, you have the temptation not to give it to others.

“BT will have this temptation, so it is important that the regulators look at this and remedies are put in place.

“The fracture or separation of Openreach would be a good remedy. If that does not happen, very tight regulation on equivalence of input and margin squeeze is the minimum that the British regulator should do to make sure that the other players have fair access.”

Colao was speaking following Vodafone’s Q3 results, which showed UK revenue of £1.53 billion for the three months ending December 31, up 0.9 per cent year-on-year.

Direct sales on the up

Vodafone CFO Nick Read also revealed the demise of Phones 4u has benefited the operator, with an increased number of direct sales going through over the Christmas period, whilst indirect was, as expected down.

Despite his claim, Vodafone added 185,00 customers in Q3, down from 191,000 compare to last year, while trading with Phones 4u.

Read, who refused to discuss specifics, said: “We are happy with the sales throughput we achieved at Christmas, and generally uplifted our share.

“What was important was that the mix of direct sales as opposed to indirect sales was also lifted.

“In terms of overall store estate, that takes us to 540 stores. That was our target over a longer term, but the collapse of Phones 4u accelerated our direct plans.”