BT to upgrade fibre network in latest stage of transformation

By Kate Holton
The BT communication tower is seen from The View gallery at the Shard, western Europe's tallest building, in London January 28, 2014. REUTERS/Suzanne Plunkett

The BT communication tower is seen from The View gallery at the Shard, western Europe's tallest building, in London

The BT communication tower is seen from The View gallery at the Shard, western Europe's tallest building, in London January 28, 2014. REUTERS/Suzanne Plunkett

By Kate Holton LONDON (Reuters) - The revival of the once staid British telecom monopoly BT picked up pace on Friday when it launched a drive to upgrade its fibre network ahead of a key football rights auction and a deal to buy mobile operator EE. Getting its finances in order ahead of the two pivotal events, BT also agreed a new deal with its pension trustees to tackle a deficit that has hit 7 billion pounds , up from 3.9 billion pounds three years ago. The 169-year-old firm will now pay 2 billion pounds into the scheme over three years, down from the 2.6 billion pounds it paid in the three previous years. The trustees accepted the company now had a stronger financial future and would be able to shoulder repayments over a longer period. "These (announcements) reflect the strengths of the business and the confidence we have in the future, and the fact that the technologies and services we provide are very much in demand," Chief Executive Gavin Patterson said on Friday. Shares in the group were down 2 percent following a strong run ahead of Friday's news and as investors started to focus on how much BT would have to pay in the auction for coveted English Premier League broadcast rights. The group also reported third quarter results in line with forecasts. QUEST FOR TOP SPEED With the pension payments agreed and results showing strong cash flow generation, BT said it would upgrade its fibre broadband network to achieve ultrafast speeds of up to 500 Mb across most of the country within a decade. It did not say how much this would cost but said it would achieve this broadly within its capital spending plans. Aiming to join the ranks of Japan and South Korea in broadband speeds, BT will trial a new technology called G.fast, which increases the speeds that can travel over the copper wires that connect premises to BT cabinets on their streets. Two pilot trials will start this year and it hopes to deliver initial speeds of a few hundred megabits per second to millions of homes and businesses by 2020. It hopes to increase this to 500 Mb to most of the country within a decade. BT's fibre network, which currently boasts speeds of up to 76 megabits, currently passes 22 million premises, with 3.7 million now connected after a record quarter for fibre additions. BT has rolled out its fibre service across much of Britain and while it has seen strong take-up by both BT Retail customers and those of other service providers, some customers have wanted more and complained they are not getting the maximum speeds advertised. The pension settlement and broadband plan mark the latest developments in what is turning into a transformational year for BT. The firm is in talks to buy EE for 12.5 billion pounds to return to the mobile market and in February it will go head to head with arch rival Sky in the football auction. CEO Patterson said the due diligence on EE was progressing well but declined to give a date on when the deal could be signed. He also told reporters the pension payment plans would not hinder the group when it comes to bids for the next round of Premier League rights due to be submitted in early February. (Reporting by Kate Holton; editing by Neil Maidment)