Acas chief Barber joins Openreach amid BT battle with Ofcom

Sir Brendan Barber, the former head of the TUC, is to join the board of BT's infrastructure division amid ongoing pressure from rivals and the industry regulator to formally separate it from the FTSE-100 telecoms group.

Sky News has learnt that BT will announce on Wednesday that Sir Brendan will become an independent non-executive director of Openreach.

Sir Brendan, who chairs the employment relations service Acas, has been recruited by Mike McTighe, the former telecoms executive who was hired as Openreach's first chairman last November.

The move will form part of efforts by BT and Mr McTighe to establish an independent governance framework at Openreach which assuages the concerns of rivals - including Sky plc (Frankfurt: 893517 - news) , the owner of Sky News - about future access to, and investment in, Britain's broadband infrastructure.

However, it comes as BT faces its most challenging period for years, with the deepening of an accounting scandal at its Italian corporate services business last week prompting the company to take a £530m writedown.

The crisis, which sent shares in BT down sharply, may raise broader questions about corporate governance which make it harder to strike a deal with regulators over the future of Openreach, according to analysts.

Sources said that Sir Brendan's appointment would be announced alongside that of another non-executive director, and would be hailed by BT as evidence that it was delivering on its commitment to establish a more independent Openreach.

The unit's new board is understood to have met formally for the first time on Tuesday.

A fourth non-executive, meaning that independent directors will comprise a majority of the board, will be appointed shortly.

BT and Ofcom, the industry regulator, have been locked in discussions since the latter's announcement more than two months ago that it would pursue legal separation of Openreach - a move that would fall short of a full structural break-up of BT.

Ofcom is said to have been informed about Sir Brendan's appointment, although it is expected to respond by saying the board changes do not go far enough towards delivering an independent legally incorporated Openreach.

Nevertheless, his recruitment introduces a heavyweight name into the battle over the shape of the UK's technological infrastructure.

The general secretary of the TUC from 2003 to 2012, he was reappointed to another three-year term at Acas in December.

Sir Brendan is also deputy chairman of the Banking Standards Board, and served on the Court of the Bank of England during the 2008 financial crisis.

Openreach provides access to fibre broadband to more than 26m homes and businesses across the UK, but BT's competitors have complained bitterly that they suffer a conflict of interest created by the existing ownership structure.

They have argued that Ofcom's latest proposals for reform fail to go far enough.

Negotiations between BT and Ofcom have hit a series of stumbling blocks in recent months, including the pensions of thousands of Openreach employees and where the division's assets legally reside.

BT has one of the largest pension deficits among blue-chip UK companies, with the shortfall widely estimated to have hit £10bn.

A further valuation is due to take place this summer.

BT has argued that billions of pounds of investment in the UK's broadband infrastructure would be jeopardised by an order to fully separate Openreach.

Earlier sticking points included the question of the reporting line for Clive Selley, Openreach's chief executive.

BT has proposed resolving that issue by making Mr Selley directly accountable to Openreach's chairman, but with a 'dotted line' structure reporting to Gavin Patterson, BT Group (Other OTC: BTGOF - news) 's chief executive.

The newly constituted Openreach board is expected to have full control of its budget and strategy, although the prospect of a voluntary deal with Ofcom is said by some analysts to be receding, rather than getting closer.

In a ten-point plan published last year by Sky, TalkTalk and Vodafone‎, the companies called for "robust and swift' reform of Openreach.

As well as calls from rivals, MPs (BSE: MPSLTD.BO - news) have raised the prospect of an enforced break-up, with the Commons Culture, Media and Sport Select Committee saying last year that BT was guilty of "significantly underinvesting" in Britain's broadband infrastructure.

The unit has historically been dogged by poor customer service performance, and MPs suggested that BT should be split unless it put its "house in order".

BT has pledged to invest an additional £6bn in Openreach over a three-year period to improve the coverage of its ultrafast fibre and mobile broadband networks.

On Tuesday, shares in BT closed at 303.85p, giving the company a market value of £30.42bn.

The shares have fallen by more than 37% during the last 12 months.

BT declined to comment on Tuesday.