BT to oppose Ofcom on pension deficit payments

Telecom giant says it will take action on the issue

BT still spoiling for a fight with Ofcom

BT is to oppose Ofcom’s recommendation in its latest consultation on BT’s pension deficit.

The regulator recommends that the telco should not move increased wholesale charges for services it provides to other ISPs, to partially offset the cost of its pensions deficit payments.

Although BT has said the money at stake is only tens of millions of pounds a year, BT chief executive Ian Livingston said the company would fight Ofcom’s recommendation.

"We think Ofcom has come to the wrong decision, and will be looking at whatever action we need to take on that issue," added Livingston.

Ofcom recently opened its second consultation on BT’s pensions costs with the recommendation that it would continue to disallow pension deficit payments and ignore pension holidays when setting regulated charges.

This means BT will be forbidden from increasing wholesale service charges to ISPs to reduce the pension fund deficit.

Normal pensions contributions laid out in BT’s accounts are already accounted for by BT when setting wholesale service charges.

Ofcom also pointed out that there was a broad consensus in support of its position, and will therefore "continue to base the ongoing service costs on pension costs reported in the statutory accounts".

The latest consultation on BT’s pension problems was opened up recently by Ofcom, which invited comments from interested parties.

The consultation will close on 15 October, with Ofcom ready to deliver its findings before the end of the year.

BT announced its Q1 2010 financial results this week, with revenue down four per cent to £5bn, and profits at £446m.

BT’s pension fund deficit has improved significantly since December 2008’s valuation of £9bn. It now stands at £6.6bn as of March 2010.