You forgot to point out that BT is a former state owned monopoly ;)
BT to splash £550m integrating EE. Firm shrugs: Cheap!
BT's £12.5bn gobble of EE will cost the business £550m in integration costs - according to the company's full-year financial results which were given a significant boost thanks to the acquisition. For its full-year results for 2016, revenue increased six per cent to £18.9bn, with profits up 15 per cent to £3bn. Revenue for the …
COMMENTS
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Thursday 5th May 2016 09:12 GMT Tony S
I've never been a BT employee, but am a shareholder. The bit that might worry me is
"The business also revealed net pension deficit of £5.2bn net of tax"
That's a tonne of money that they are going to have to find at some stage in the future; unless they decide to default on pension plans already in place.
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Thursday 5th May 2016 09:47 GMT lsces
Sod the pensioners
This seems to be the underlying plan everywhere. How many teachers have lost out where they have been moved to 'academies' which have then folded to re-appear without the pension liability. Since working place pensions are now automatically being created should there not be a more concerted effort to make sure the pots ARE independent and fully funded NOW.
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Thursday 5th May 2016 10:18 GMT Steven Jones
Re: Sod the pensioners
That's utter nonsense. Teachers are part of the teachers pension scheme, which is a public sector scheme backed by the government. Academy status makes no difference.
Of course, like many schemes, it's less generous than it used to be, but it's still a defined benefit system much better than in the private sector (where defined contribution schemes now rule).
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Thursday 5th May 2016 10:48 GMT Tom 7
Re: Sod the pensioners
But even if the teachers are in the TPS their employers have a legal obligation to pay some money into the TPS fund on their behalf - shit even our cleaner is on to this one.
If that money hasn't been paid by the school/local authority on conversion to an academy is the academy responsible? I'd bet not.
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Thursday 5th May 2016 10:14 GMT Steven Jones
Pension scheme
"Unless they decide to default on pension plans already in place"
That's not an option, at least for a PLC (see the BHS point later). The pension fund trustees have to approve any plans to cover the deficit and, beyond that, there is the pension regulator who has a lot of power in this area. These obligations are set in law and nothing, short of insolvency, can absolve the company of its financial responsibility in this area. The BT pension fund is simply enormous - there are around 300,000 pensioners, and it's capital assets are around £47bn and higher that BT's market capitalisation (at least it was prior to the EE merger). The net value after liabilities is, of course a different matter; that's negative. For a long time the burgeoning pension deficit weighed heavily on the share price. Ultimately the government is on the hook for this (doubly so, as there's the Crown Guarantee at the time of privatisation as well as the pension protection scheme). The split of responsibility for the pension deficit would not doubt have caused some very considerable complications were BT forced to split off OR (as, arguably, most BT pensioners would have worked in areas which functionally fit with OR).
Of course there is a lot of controversy about BHS being stripped of liquidity and leaving the pension fund deficit without cover, but that was privately owned and there may yet be legal action from the pension regulator. It's clearly possible for a privately owned company to be manipulated in a way that is not feasible with a publicly quoted one. It is yet possible that there will be legal action on the BHS pension scheme deficit if somebody believes that Philip Green's payment of large dividends (to his wife in tax exile) was knowingly imperilling the company and pension scheme. As it is, he's going to get grilled by a select committee in Parliament. Whether there is a legal issue is another matter (but he has offered to make a contribution to the deficit).
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Thursday 5th May 2016 12:40 GMT Doctor Syntax
Re: Pension scheme
"The split of responsibility for the pension deficit would no doubt have caused some very considerable complications were BT forced to split off OR (as, arguably, most BT pensioners would have worked in areas which functionally fit with OR)."
If OR were to be floated off as O2 was with the same arrangements it would still be the BT pension scheme on the hook for those pensions in payment. I'm not sure about deferred pensions.
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Thursday 5th May 2016 12:44 GMT Doctor Syntax
Re: @Tony S
"you may find that the pension fund is lacking money that was given to the shareholders while BT had a pensions holiday."
The pensions holiday was forced on it by HM Treasury. Can't have companies evading tax by paying too much into pension schemes.
Ultimately, of course, it's HM Treasury on the hook because of the pensions guarantee. Other pension schemes that are in deficit because of enforced contributions holidays aren't so fortunate.
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Thursday 5th May 2016 20:00 GMT Steven Jones
Re: @Tony S
There was a reason that companies took pension holidays and that was because a Conservative chancellor had the law changed so that excessive pension fund surpluses (many were in apparent surplus at the time) would be taxed. Unfortunately the actuarial rules at the time for calculating fund assets and liabilities were rather optimistic as they had grossly underestimated the increase in life expectancy, not to mention that returns on investments are now considerably lower.
In any event, the upshot is that virtually all companies have had to pay far more in to top up the pension schemes than they ever saved from a few years' tax holiday. In any event, the company is legally obliged to make up any shortfall. Those legacy (and very generous) inflation-protected defined benefit systems are now a major factor in the market value of many companies carrying that responsibility. In some, it's a major factor in their viability (witness the steel industry - or the Royal Mail where the government had to step in to pick up the £8bn deficit; or maybe you think the Royal Mail had been taking a pension contribution holiday whilst in public ownership?). Indeed, whilst some (not all) public sector pensions use a funded model, almost all have deficits for the same reason. Nothing to do with pension holidays, and everything to do with incorrect calculation of liabilities.
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Thursday 5th May 2016 10:51 GMT Tom 38
Most pension funds are in deficit at the moment because interest rates are so historically low and so larger funds are required to cover the same liability. Its maybe fine for a while for larger firms for a while, but yeah, either interest rates need to rise soon or these holes need to be plugged.
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Thursday 5th May 2016 11:15 GMT Dave Pickles
"Most pension funds are in deficit at the moment because interest rates are so historically low and so larger funds are required to cover the same liability."
Also the stock market is down about 15% on its peak of last year. It won't take much of a rise in share prices to eliminate the 'deficit'.
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Thursday 5th May 2016 11:42 GMT Commswonk
Also the stock market is down about 15% on its peak of last year. It won't take much of a rise in share prices to eliminate the 'deficit'.
That's fine if the stock market does rise, but not so fine if it slides down further. Investments can go down as well as up... past performance is no guide to future performance and all the rest of it.
I'm not sure that adopting the "Micawber" approach (something will turn up) is anything other than complacency.
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Thursday 5th May 2016 12:26 GMT Roland6
I receive bumf regularly that states that plans are fully in place to fix the pension deficit. As far as I can tell, it seems safe, but then again, who knows?
The only figure I actually trust on my pension statements is the one that states what I would get if the company went bust - currently on my main scheme that stands at 38% of my entitlement. So I've got fingers crossed that circumstances don't arise that cause the relevant employer to default on their plans...
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Thursday 5th May 2016 12:33 GMT Doctor Syntax
"The business also revealed net pension deficit of £5.2bn net of tax"
That's not exactly a revelation. It's had a deficit for years now. Like other pension deficits it's a consequence of government policy coupled with the law of unintended but-entirely-foreseeable-if-only-we-weren't-so-dumb consequences.
Once upon a time BT's pension scheme was in surplus. HM Treasury tend to treat pension contributions as a species of tax evasion* and force companies which are in surplus beyond limits to take a "contribution holiday". This means that the surplus is less than it could have been and more easily turned into a deficit. That's one side of it. The other was Brown's stealth taxation, specifically his removal of allowances on pension schemes' investment income. That was quite obviously a tax on the future. That future arrived years ago and, because pension schemes had less reserves because of the contribution holidays, they found themselves in deficit.
*Being Civil Servants they have the CS pension arrangements which are a species of Ponzi scheme. There's no pension fund. Pensions are paid out of current contributions being backed by HMG's current account where necessary. BTW, whatever the popular view of Civil Service pensions they're not that great in comparison to BT's.
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Thursday 5th May 2016 12:21 GMT Roland6
Bad News - BT prices will increase
I like how BT also announced their (not small) price increases, something many may have missed.
http://www.telegraph.co.uk/bills-and-utilities/phone/bt-increases-cost-of-landline-broadband-calls-and-tv-for-million/
Not sure yet how or when these increases will apply to existing EE customers, but I'm sure they will...
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Thursday 5th May 2016 13:42 GMT Oor Nonny-Muss
These premises passed by fibre - does that include me where I am 250m from the cabinet (straight line along a straight road, with houses on it and ducting under it) yet my line is 1375m long (as measured by BTOpenreach's reflectometer) to the exchange... 1300m to the cabinet.... It would be almost excusable if the circuitous route it took to the cabinet was the direct circuitous route - but it takes a circuitous diversion even from that.
The joy of "Superfast" "fibre" broadband at 22-24M (yes, that's the line speed range) - with 75m of fibre in 1.375km of actual line length - chances of actual fibre before hell freezes over, near enough nil as to make no difference... chances of G.Fast making a blind bit of difference, similar. Wish I'd had a tenner on Leicester...
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Thursday 5th May 2016 17:37 GMT Anonymous Coward
"The joy of "Superfast" "fibre" broadband at 22-24M (yes, that's the line speed range) - with 75m of fibre in 1.375km of actual line length - chances of actual fibre before hell freezes over, near enough nil as to make no difference... chances of G.Fast making a blind bit of difference, similar. Wish I'd had a tenner on Leicester..."
G.FAST gets the fibre closer so the copper line length is shorter and the line speed is higher.
The cabinet might be 1300m away, the next stage of concentration won't be.
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Friday 6th May 2016 06:32 GMT Ray Merrall
Why do people use other companies rather than BT?
Almost certainly because of an experience, personal or what happened to a friend or relative - and not a pleasant one at that.
Eg: It took government action to force cold callers to show their phone numbers, even though BT had the ability already, and was more than willing to sell another product to stop the calls. So not only were BT making money off the scammers calls, it was also making extra money of their own customers.
I wonder how many people are going to move from EE to avoid going back to BT?
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Monday 9th May 2016 08:33 GMT Anonymous Coward
BT has a strong culture of telling the next layer of management what they want to hear. Hence the senior board members at BT were the last people in the country to realise just how bad their Indian Call centres really were.
Likewise here, I suspect people on the ground are "sexing up" the EE merger. Each layer of management will then do the same - by the team the information reaches the board they'll think buying EE was best deal since Manhatten Island was bought for a some beads and a bottle of whiskey