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Has BT been duped by the UK regulator?

While headlines earlier today suggested that British Telecom had done very well out of recent negotiations with the sector regulator Ofcom, the small print of the announcement appears to suggest that all is not well between BT and Ofcom. Despite the fact that Ofcom has allowed British Telecom to significantly increase the cost of allowing competitors to use the network, the company had attempted to price in an increase which would assist it in reducing its significant pension fund deficit.

However, Ofcom has ignored the pleas of British Telecom to be allowed to include its pension fund deficit in the calculations and this may impact on future investment in the medium to longer term. The company has already committed to a significant multibillion pound investment into the new fibre-optic network of the UK although future developments may be put at risk.

British Telecom is one of a number of leading FTSE 100 companies who have seen their pension fund deficits balloon over the last 18 months. Various attempts to reduce the damage done to pension fund investments have proved relatively unfruitful but the battle goes on. As we have mentioned on a number of occasions, the damage done to the UK economy and the UK business arena over the last 18 months we take many many years to filter through the system.

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