BT Accelerates High-Speed Launch

BT Group Plc (BT - Analyst Report) selected 69 locations in the East of England, London, Scotland, Wales and Yorkshire where it intends to roll out high-speed fiber broadband by the summer of 2010. The identified areas cover 1.5 million residential units.

The plan calls for a doubling of the originally targeted pace of deployment. It intends to provide broadband-related services to 10 million homes by 2012 with a capital expenditure of £1.5 billion (approximately $2 billion). BT will allow service providers to license its equipment on a wholesale basis to support the spirit of a competitive market.

Super-fast broadband can be delivered in a number of ways, with fiber, cable, copper wires, mobile, fixed wireless and satellite each having a role to play. A number of companies have already announced plans to invest in and roll out super-fast broadband in the UK over these networks. These include Virgin Media (VMED), which already offers super-fast broadband and plans to extend this offer across its entire network, and BT, which plans to upgrade its copper access network with fibre-optic cable.

Communication providers, such as BT, will have the freedom to price wholesale super-fast broadband products themselves without any regulatory intervention. This will allow investors to make an appropriate return on their investment, based on their risk but pricing will be done at a level that the market can bear, given the ready availability of alternative broadband services.

BT Group Plc is an incumbent phone company providing fixed-line and data services to the United Kingdom. It owns or has stakes in operations in North America, the Asia/Pacific region, and Western Europe. For strategic purposes, BT differentiates its business into two distinct markets: Traditional business lines and New Wave business lines, such as Broadband, Information and Communications Technology (ICT), Mobility and Managed Services.

We continue to maintain our Hold recommendation on BT.