Britain’s opposition Labour Party plans to nationalise BT’s broadband network to provide free internet for all if it wins power, making a radical election pledge to roll back 35 years of private ownership that caught both the company and its shareholders by surprise.
Labour’s proposed overhaul of the telecoms infrastructure, an addition to its already broad nationalisation plan, would be paid for by raising taxes on tech firms such as Alphabet’s Google, Amazon and Facebook and using its Green Transformation fund.
The announcement by Labour, which is currently lagging Prime Minister Boris Johnson’s Conservatives in opinion polls ahead of the Dec. 12 election, sent BT’s shares down as much as 3.7%, wiping nearly half a billion pounds off its market value. The share was down 1.7% at 1410 GMT.
Labour plans to nationalise Openreach – the fixed-line network arm of the country’s biggest broadband and mobile phone provider – as well as parts of BT Technology, BT Enterprise and BT Consumer to create a “British Broadband” public service.
“A Labour government will make broadband free for everybody,” Labour leader Jeremy Corbyn said in a speech. “This is core infrastructure for the 21st century. I think it’s too important to be left to the corporations.”
“We’ll tax the giant corporations fairly – the Facebooks and the Googles – to cover the running costs,” said Corbyn, adding the public had been forced to pay far too much for “rip-off broadband” and the party would transform the British economy.
BT, with roots in an 1846 telegraph company, was once one of Britain’s national champions and the flagship of Margaret Thatcher’s privatisation policy when it was floated by her Conservative government in 1984.
Labour’s announcement brought into sharp relief the election stakes: Johnson who promises to deliver Brexit in January or Labour which says it wants to be the most radical socialist government in British history.
The relatively muted market reaction indicates investors do not expect Labour to win, analysts said. BT also retained the right to show UEFA Champions League soccer games, helping to support shares.
Johnson derided Corbyn’s plan, saying it would undermine the world’s fifth largest economy and cost taxpayers dearly. He has promised to roll out full-fibre broadband to all homes by 2025.
“We are funding a huge programme of investment in our roads, in telecoms, gigabyte broadband, unlike the crazed, crazed Communist scheme that was outlined earlier on today,” Johnson told Conservative Party activists.
The Conservatives said Corbyn’s plans would be illegal under EU rules governing state aid.
Labour said the cost of nationalising parts of BT would be set by parliament and paid for by swapping bonds for shares.
‘VERY, VERY AMBITIOUS IDEAS’
In what would amount to the biggest shake-up in British telecoms since Thatcher’s privatisations of the 1980s, Labour said few would lose out while millions would benefit.
The national Openreach network is also used by BT’s rivals, including Sky, TalKTalk and Vodafone, to provide broadband to their own customers. Its only competitor with widespread coverage is Virgin Media, owned by Liberty Global.
TalkTalk said on Friday a deal to sell its FibreNation business had stalled after Labour’s announcement.
Labour’s second most powerful man, John McDonnell, suggested that the owners of the networks that compete with Openreach, such as Virgin Media’s cable network and new fibre providers, could come to an arrangement or be nationalised too.
“We’ll come to an agreement with them. It will either be an agreement of access arrangements, or working alongside us, or if necessary they can come within the ambit of British Broadband itself,” McDonnell said.
Labour, led by 70-year-old socialist Corbyn, has been open about its plans to nationalise the rail, utility and water companies as well as to increase taxes on the wealthy, but has never previously suggested nationalising BT’s assets and the company was taken by surprise.
“These are very, very ambitious ideas and the Conservative Party have their own ambitious idea for full fibre for everyone by 2025 and how we do it is not straightforward,” Chief Executive Philip Jansen told the BBC.
Corbyn’s BT plans would be illegal under EU law, Conservatives say
British opposition Labour Party leader Jeremy Corbyn’s plans to nationalise part of BT (BT.L) to offer people free internet would be illegal under European Union state aid rules, the Conservative Party said.
“Their intervention will almost certainly fly in the face of EU state aid rules under EU law,” the Conservatives said. “Corbyn’s broadband plan will almost certainly be illegal under EU law.”
They added in a statement: “Corbyn’s Labour won’t be able to introduce their scheme unless they ditch their plan to extend Britain’s membership of the EU and abandon their plans to hold a chaotic second referendum.”