Looks like BT is now on John McDonnellās shopping list, offering government bonds in exchange for BT shares.
Would any shareholders here be happy with that?
As a long time labour supporter (not always voter) Iām struggling to find any credibility in these outlandish ambitions.
Iām surprised the stock price is only down less than 1% (at the time of writing).
I guess thatās the marketās measure of the likelihood of that plan ever happening?
Free broadband would be quite a stimulus to the country. You could imagine a lot of new companies, services, capabilities and economic activity unlocked by it.
(Itās another question whether nationalising a company is right way to implement a policy like that - there may well be other ways to achieve it, like grants. Itās also another question whether free broadband would be the best use of 100bn or whatever it will cost.)
Seems like a hare brained idea to meā¦
I understand the principle of ensuring everyone has equal access to high quality broadband and nobody is disadvantaged by lack of access, but I donāt think the means to achieve this is to destroy the market.
The idea of central government running a national broadband infrastructure provider and balance the massive investment costs alongside NHS, DWP budgets can only lead to lack of investment and poorer service levels. Free broadband would also decimate the telecoms sector and inevitably lead to loss of jobsā¦
If Central Government are insistent on free broadband, I think they would be better to legislate for existing companies to offer a free basic package (capped speed / usage) at a standard cost paid for by the government. Companies could then offer additional services for a premium; such as faster speeds, lower latency, VPN, etcā¦
As a shareholder Iām not too keen on swapping stock for government bonds which invariably wouldnāt pay the level of dividend income that we have been accustomed to with BTā¦
The radical proposal would cost a one-off Ā£20bn, funded by Ā£5bn already committed by the Government and an extra Ā£15.3bn from Labourās Ā£250bn Green Transformation Fund.
Annual running costs would be around Ā£230 million a year, paid through a new tax on multinationals - including internet giants like Amazon, Facebook and Google .
The marginal costs are low. But whatās interesting about these plans is it would allow ISPs to continue leasing capacity from Openreach. Last year Openreach provided Ā£2.2bn in revenue for BT. Effectively those who want to pay for bundled services/higher speeds will be subsiding those who canāt afford to.
Government research suggests Cap and Opex for Fibre conversion is more like Ā£43bn, but even that same report suggests it would cost Ā£12bn more than under a āenhanced competitionā model (Section 8):
Those estimates in the article are gross underestimates.
It will cost Ā£20-Ā£30 billion to rollout nationwide fibre. This is on top of the costs to nationalise Openreach who donāt actually own the telephone network (and some other parts of BT that Labour want as well) but also comes with a large pension deficit.
Also, the annual maintenance and CapEx costs of the network once complete would be a lot higher than Ā£230m/year.
The idea of central government running a national broadband infrastructure provider and balance the massive investment costs alongside NHS, DWP budgets can only lead to lack of investment and poorer service levels. Free broadband would also decimate the telecoms sector and inevitably lead to loss of jobsā¦
Do you believe therefore that Germany, Japan, Sweden, France and Austria have poorer healthcare and social security systems because their governments own large stakes in their broadband networks?
In fact, BTās largest shareholder is Deutsche Telekom, of which the German State is the largest shareholder.
Itās long been said that in the UK we have no issues with government based ownership. So long as itās not the UK government doing the owning!
Thatās a reasonable question to ask and TBH I donāt know how those countries fund or manage their health and social care systems.
Out of interest, have Germany, Japan, Sweden, France and Austria nationalised their telecoms infrastructure? Or have their governments chosen to take a stake in publically listed companies? Do they provide free broadband for all? and where does the money require to invest and innovate come from?
Itās clear to me that there needs to be massive investment now and ongoing to build and maintain broadband infrastructure and keep up with the pace of technological change.
As the funding of the NHS and social benefits is highly politicised in the UK I think Labour would lean towards funding those over funding innovation and growth in the telecoms industry. I can see that this sort of political conflict arising with nationalisation, where government departments squabble for funding.
More speculation than fact but should give this tired stock a much needed boost tomorrow:
BT Group board on alert for Ā£15bn takeover approach | Business News | Sky News