BT is planning to scrap its Wholesale unit and fold the business into Openreach. The group has appealed to Ofcom for permission for BT Wholesale, which reported sales of £2.4bn last year, to be absorbed into by the network division.
Approval from Ofcom would be a boost to BT’s cost-cutting programme as Openreach and Wholesale sell some of the same services to other telecoms companies, although under an agreement with unions there would be no redundancies. Costs would be slashed further because currently Wholesale must buy network access from Openreach as outside parties do, requiring a layer of administration within the BT group.
James Barford, head of telecoms research at Enders Analysis, said “The main concern for competitors would probably be that the merger might make it easier for BT to wholesale bundles of services at a loss with regard to regulated input prices but then recoup its margin via Openreach.”
A BT spokesman said: “We are always looking at ways in which we can better meet the needs of our customers and reflect market changes.
“One question we are examining is how we can better serve our wholesale Communications Provider customers currently addressed by Openreach and BT Wholesale.”
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