BT urges UK government to cut business rates on new fibre lines to hit broadband target

The UK government needs to cut business rates on new fibre lines in order to hit its target of connecting 85 per cent of the country to “gigabit” speed broadband, according to BT.

Philip Jansen, chief executive of the telecoms group, said that the government needed to deliver on promises to remove barriers such as onerous planning laws and business rates linked to fibre rollout to accelerate network upgrades across the industry.

He argued that exempting fibre lines from business rates — with an existing relief programme set to end — would free up about £1bn, which could be used to connect a further 3m homes.

“If we get that then there is a good chance of getting to that target,” he said of the government’s broadband pledge, urging it to move faster given slow progress over the past year. “Time is passing by,” he warned.

Boris Johnson, the UK’s prime minister, pledged to connect the whole country to gigabit speed broadband by 2025 as part of his election campaign and launched a £5bn stimulus fund to tempt more companies to invest in new cables in the countryside.

However, the target was lowered to 85 per cent last year and only a quarter of the fund is set to be freed up during this parliament, developments that recently provoked a stinging rebuke from the public accounts committee.

BT said on Thursday that it had upgraded 4.1m homes to full fibre and was adding 42,000 new premises a week. About 17,000 customers are signing up to the faster speeds each week with greater homeworking and streaming pushing more people to upgrade.

BT has set itself a target of connecting 20m homes to full-fibre lines by the end of the decade but Mr Jansen said that the speed of the infrastructure build was dependent on government action and an Ofcom market review set to be announced this quarter that will establish what rate of return it can make.

He added that the company, via its Openreach networking unit, could “build like fury” if Ofcom delivered a pro-investment regulatory framework and the government backed its plan with business rate relief.

BT and its rivals have long pushed for changes to business rates on new fibre lines, which they see as a disincentive to invest given that the new infrastructure is effectively taxed at a higher rate than the copper lines it is replacing.

Mr Jansen’s comments came as BT raised its cash flow guidance for the year despite a decline in its third-quarter revenue due to the impact of Covid-19, boosting confidence that dividend payments will be restored as promised.

Revenue fell 5 per cent to £5.5bn while adjusted earnings before interest, taxation and depreciation dropped 5 per cent to £1.9bn in the three months to the end of December. The consumer business was hit by the closure of pubs and clubs that show its sports channels and lower roaming revenue at its EE mobile division as fewer people were able to travel.

Shares were down 2.3 per cent to £1.26 in morning trading.