Vodafone chief executive Vittorio Colao on Tuesday launched a scathing attack on the state of the U.K. telecoms market, accusing BT’s networks business of exploiting consumers for profit and calling for strong regulatory controls on the incumbent’s planned acquisition of mobile operator EE.
His comments came in a U.K. radio interview, after the publication of the telecoms group’s fiscal first half results, which showed a return to growth in revenue and EBITDA, and an easing of pressure in Europe.
"Openreach is clearly…not working to help competition and choice," Colao told BBC Radio 4’s Today programme.
The unit is "making extra profit out of what they charge to the British consumers and instead they should be an independent company really bringing next-generation networks…to the homes of the British citizens," he said.
U.K. Internet users are stuck in "slow lanes", he said, noting that in the U.K. much of the broadband discussion is about rolling out 10 Mbps services, while speeds are much faster elsewhere.
"In Southern Europe I am selling, with Vodafone, 100 Mbps, 200 Mbps, 300 Mbps," Colao said.
Splitting Openreach from BT would avoid the biggest risk in the market: "remonopolisation," the executive said.
He pointed out that Deutsche Telekom is set to become a major shareholder in BT, presuming the EE deal goes ahead.
"Companies like these…like to use what they have, which is the copper network, and modernise it to basically reduce competition. And companies like us, but also Sky or TalkTalk or other companies, are forced to use it," Colao said.
"It might be working financially for Gavin Patterson and BT…They are overcharging consumers and now they want to use taxpayers’ money to bring Internet to the rural areas," he added. Meanwhile, Vodafone customers face "delays, delays, delays" because half of the access lines it requests from Openreach are delivered late.
BT’s dominance will grow with the acquisition of EE; the combined entity will control 90% of the lines accessing mobile sites in the U.K. and 60% of the 4G-ready frequencies, Colao claimed.
The Communications and Markets Authority (CMA) gave its preliminary approval to the tie-up two weeks ago, ruling that it will not harm competition in the retail or wholesale markets.
"We are unwinding 30 years of competition," Colao warned. "If [the EE deal] happens, it should happen with strong regulation," addressing in particular the combined company’s dominance in the fixed-line market and its strong presence in the content space, he said.
Vodafone had 75,000 fixed broadband customers in the U.K. at the end of September, up from 70,000 three months earlier. It opened up its fixed broadband offer to the whole market – not solely to Vodafone mobile customers – last month.
Vodafone posted revenues of £3.09 billion in the U.K. in the first half of the year, up by 2.7% year-on-year on a reported basis. Service revenue fell by 0.1% organically, Vodafone said, adding that it saw improving trends in fixed-line and enterprise offset by a slowdown in consumer mobile.
In Europe as a whole the operator reported a 1.3% decline in service revenue for the six months to £12.1 billion, while EBITDA was up 1.1% due to cost controls offsetting the revenue decline. The telco said it is starting to feel an easing of regulatory pressures and a steady improvement in the macroeconomic climate in Europe.
At group level, revenue grew by 2.8% organically to £20.3 billion and service revenue increased by 1% to £18.4 billion.
"We have reached an important turning point for the group with a return to organic growth in service revenue and EBITDA in the first half of the financial year," Colao said, in a statement.
The CEO talked up his company’s spending, including Project Spring, the multi-billion-pound investment programme it unveiled two years ago, which is now starting to have an impact on financial results.
"We also remain keenly focused on increasing efficiency and improving margins," Colao said. "We expect progress to continue in the second half of the year."
