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BT pension fund setback

BT, the UK telecoms giant, was today informed by the telecoms regulator that there is no obvious reason why the company should be allowed to increase wholesale charges in order to help plug the gap in the company's pension scheme. The company had hoped that the regulator would look favourably upon the request to increase wholesale charges which would have helped to pay down the £9 billion pension fund deficit.

While the decision by the telecoms regulator will be welcomed by the likes of BSkyB and Cable Wireless there is no doubt that British Telecom will need to find additional funding from elsewhere. The company is currently at odds with unions in relation to various cost-cutting initiatives as it battles to retain control of its cost base. The company has already agreed to pay additional top-up fees of £525 million a year for the foreseeable future which will obviously be a significant drain on company resources.

BT has the largest pension fund deficit in the UK and unless the figure is reduced significantly in the short to medium term it will continue to have a major impact upon the company's financial position. There had been hopes that the company's pension scheme would have been covered by a government guarantee, from the days when the company was owned by the state, but this would appear to be a forlorn hope.

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