Yahoo News BT to name McTighe as Openreach chairman as Ofcom deal looms
BT Group (Other OTC: BTGOF - news) will take a potentially decisive step towards averting an enforced break-up this week when it names a former director of the telecoms regulator Ofcom as the first independent chairman of its broadband infrastructure unit Openreach.
Sky News has learnt that BT plans to name Mike McTighe, a heavyweight former telecoms industry executive, to the post months after announcing a plan to strengthen Openreach's governance and accountability.
The appointment of Mr McTighe is expected to be announced in the coming days, and possibly as early as Tuesday.
Sources close to Ofcom said the recruitment of Mr McTighe, who stepped down from the regulator's board in 2015 after eight years' service, would represent a significant step towards a voluntary agreement between the two sides.
A former executive at global telecoms companies including Motorola and Cable & Wireless, he has also chaired the set-top box maker Pace (LSE: 4031.L - news) and the retailer JJB Sports.
He is now chairman of companies including IGas Energy (LSE: IGAS.L - news) .
A source who worked with Mr McTighe at Ofcom said:
"He has a fierce streak of independence, and he will be no pushover for BT's board or management."
Mr McTighe's recruitment by BT comes at an acutely sensitive for the former state monopoly, which is trying to persuade its regulator that its existing group structure should remain intact.
BT has argued that billions of pounds of investment in the UK's broadband infrastructure would be jeopardised by an order from Ofcom to fully separate Openreach.
The FTSE-100 company's rivals - including Sky (Frankfurt: 893517 - news) , the owner of Sky News, Vodafone and TalkTalk - have called on Ofcom to pursue a full separation, warning that BT benefits from a huge conflict of interest based on the fact that its own retail division is also a key customer of Openreach.
BT and Ofcom have been in discussions for months about a new set of undertakings related to Openreach, and a deal is now said to be potentially just days away.
Earlier sticking points during the talks have included the question of the reporting line for Clive Selley, Openreach's chief executive.
That issue is said to have been resolved, with Mr Selley being directly accountable to Openreach's chairman, but with a 'dotted line' structure reporting to Gavin Patterson, BT Group's chief executive.
In addition to Mr McTighe, three further independent directors are expected to be appointed to Openreach's board in the coming months.
The newly constituted board would have control over Openreach's budget and strategy under the proposals being discussed by BT and Ofcom, insiders said.
Other key issues under discussions include BT's vast pension deficit, which stood at almost £10bn at the end of 2015, a figure which is likely to have worsened since then.
It is unlikely that the commercial providers which use Openreach's service will be appeased by the announcement of a slate of independent directors.
In a ten-point plan published this 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 earlier this 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 Monday, shares in BT closed down nearly 2.4% at 350.3p, giving it a market value of £35.73bn.
Both the company and Ofcom, whose board members include Ben Verwaayen, a former BT chief executive, declined to comment.
