The high-profile collapse of Carillion may have an impact on the delivery and maintenance of Openreach current copper and fibre networks and upcoming G.fast deployments. However, contingency plans at the Carillion telent JV which is supporting BT work should reportedly minimise any negative effects.

  • Carillion’s minority JV partner telent to take full control of the Openreach supplier.
  • Openreach confident forensic due diligence work on existing contracts shows its projects are secure.

After nearly a year of speculation and concern regarding the financial position of major construction and support services company Carillion, the publicly-listed business entered compulsory liquidation proceedings in January 2018. While the focus on the impact of the collapse has been on the disruption and potential state costs associated with massive public sector contracts, it also has consequences for Openreach’s maintenance and development of its network infrastructure.

Carillion was the larger partner in a joint venture (JV) with network support services business telent. The Carillion telent (Ct) JV was created in 2009 to manage contracts intended to rationalise Openreach network support outsourcing, and its contract with Openreach was subsequently expanded to back up the BT business’s work on BDUK projects (BTwatch, 2009.07, #250). In mid-2017, the Openreach relationship with Ct was expanded through a contract that could make it worth £1.5bn over five years (BTwatch, #284).

In the immediate aftermath of the insolvency announcement at Carillion, telent was quick to publicly state that the appointment of receivers at Carillion triggered a contractual clause linked to Ct, which means that full ownership and control of the JV switches to telent.

As the status of Carillion was confirmed, telent immediately implemented the contingency plan that will see all employees of the JV transferred to its employ. It also said that there would be no change to the contractual arrangements around its sub-contractors, and that it would be business as usual for all ongoing work, including the major contracts with Openreach and a £200m deal with altnet Gigaclear.

Ironically for a business that emerged in 2006 in the wake of the collapse of Marconi (which was prompted by its failure to win significant BT 21CN contracts), the Carillion insolvency sees telent become a more significant supplier to BT Group.

“ telent has had management oversight of the Ct JV since its inception and various members of telent’s management team have devoted a considerable amount of time to Ct historically. That engagement will continue as Ct becomes 100% telent operated. ”

“ We initiated implementation of our contingency plans for the Ct JV on Monday morning to ensure a smooth transition and are maintaining open communications with customers, workers and subcontractors. ” — Mark Plato, Chief Executive Officer, telent.

“Don’t panic!” message relayed by all parties

Openreach issued a statement downplaying the risk associated with the change in management at a JV in the midst of providing a £1.5bn contract for network supply chain support. It also expressed confidence in its internal contract review processes in ensuring the business is largely immune to potential nasty shocks.

“ The Ct joint venture is one of seven major partners providing similar services to Openreach across Britain and we have robust processes in place to monitor and manage all of our supplier risk. ”

“ We have conducted a thorough legal and financial assessment of the JV, and we’re confident in its ongoing viability without Openreach incurring any extra cost or liability. ” — Openreach statement.

While Openreach appeared bullish and played down the potential for any disruption, Gigaclear was a little less upbeat, acknowledging there could be “a minor impact” on its delivery schedule for network rollout in the south-west of England, while also noting that it had alternative suppliers in place should future problems arise.

  • As Carillion began to acknowledge financial problems through a series of 2017 profits warnings, Openreach had instigated a “forensic” review of its contracts with Ct. This prior work, which quickly followed the latest contract extension, may now be alleviating concerns that the insolvency action could derail Openreach projects significantly.
  • telent was also keen to stress that going from being the smaller player in a 60:40 JV to sole owner of the enterprise would not have a negative impact on any other areas of its business.

Image: Graham Richardson / Flickr CC BY 2.0.

Table of Contents

EXECUTIVE BRIEF

BT GROUP

Digital Britain

BT meets 95% fibre coverage deadline in Scotland… 100% superfast next [p6]

  • Hancock takes the DCMS tiller

Pension

Changes afoot at BT Pension Scheme [p7]

  • Asset sale may also be on the cards

BT plans for pension inflation cap dealt a blow [p8]

  • Table 1: People movement highlights

CONSUMER/EE

5G

Positive news for BT as 5G takes “huge” step forward [p12]

  • Progress on standards opens way to 2019 deployments…
  • …while UK government outlines next steps on 5G
  • Key points of the UK 5G strategy update
  • Stay of execution for Airwave workers highlights ESN delays
  • Table 2: Premier League live broadcast rights packages, 2019-22

BT Sport

Amazon lurks as Premier League auction kicks off [p16]

  • Mobile switching by text due in 2019
  • Premier League woos new entrants, creating BT partnering opportunity

Products and services

G.fast out of the blocks (at a price) [p18]

  • Pricey products, but may appeal to core customers
  • Table 3: BT ultrafast products, and Virgin Media comparators
  • Ofcom considers future fixed-wireless needs
  • G.fast SmartHub foreshadows Future Voice launch

Spectrum

Ofcom pushes on with auction despite Three appeal [p21]

  • H3G knocked back again; returns for another round

Suppliers

BT Sport switches digital ad contract from Google to Channel 4 [p22]

  • Media empires strike back
  • DoubleClick minimised
  • Channel 4 already has history with BT
  • BT’s digital advertising ambitions get a boost

BUSINESS AND PUBLIC SECTOR

Products and services

BT taps Resilient to bring call recording to Inbound Contact [p25]

GLOBAL SERVICES

Cloud services

IBM latest recruit to BT cloud bandwagon [p29]

  • Patterson among execs pushing BT in USA

OPENREACH

Network

Openreach rows back on G.fast pilot scale [p32]

  • Mixed signals as fibre talks continue
  • Retailers waiting in the wings

Operations

Separation progress reaches Openreach IT [p33]

  • New approach to planning at Openreach
  • Open reach-out

Regulatory

Peer pressure prompts Ofcom to cap FTTC pricing freedom [p35]

  • Higher prices: the cost of preventing Openreach discrimination?
  • CityFibre fears challenges to creating demand for FTTP
  • Openreach takes the high road

Ofcom calls on Openreach to play fair on narrowband [p37]

  • Fixed voice still popular, but significance wanes

Suppliers

Openreach sheltered from Carillion fallout [p38]

  • “Don’t panic!” message relayed by all parties

FURTHER READING

INDEX

Index

Symbols

21st Century Fox 7
Sky
Sky Sports 16

A

Accenture 7
AD2ONE 23
Alphabet
Google
DoubleClick 22, 23
– – YouTube 17, 22
Amazon 16, 17, 26, 30
Amazon Prime 17
– Amazon Web Services 26, 30

B

BlackBerry
Good Technology 26
Broadband Delivery UK (BDUK) 6
BT Group 5, 7, 9, 12, 21, 23, 30, 33, 34, 35, 37, 38
BT Business & Public Sector 25
BT smartnumbers 25
BT Consumer 18, 19, 23, 32, 33
BT Cloud 29
– – bt.com 23
– – BT Infinity 18
– – BT Mobile 23
– – BT Openzone 9
– – BT Scotland 6
– – BT Sport Europe 23
– – BT TV 17
– – BT Wi-Fi 9, 23
BT Global Services 9, 28, 29, 30
BT Americas 30
– – BT Health 9
– – BT Security 30
BT Pension Fund 7
Hermes Pension Management 8
BT Pension Scheme 7
– BT Technology, Service and Operations 33, 34
21CN 38
– – Adastral Park 13
BT Wholesale & Ventures 9
Tikit 9, 26
EE 11, 12, 13, 15, 21, 26
Emergency Services Network 15
Executives
Ainley, Katherine 9
– – Artley, Jennifer 30
– – Dick, Brendan 6
– – Hill, Simon 9
– – Hughes, Mark 30
– – Joshi, Jayesh 9
– – Khanna, Sandy 9
– – Lowth, Simon 7
– – McRae, Neil 12
– – Patterson, Gavin 30
Perkins, Jason 9
– – Petter, Ed 30
– – Pilcher, Malcolm 25
– – Rolph, Scott 9
– – Rosenberg, Jeremy 22
Openreach 9, 18, 19, 26, 31, 32, 33, 34, 35, 36, 37, 38, 39
– Products and services
Family SIM 23

C

Carillion 38, 39
Carillion telent 38
Centrica 9
Channel 4 22, 23
Cisco Systems, Inc. 13, 14, 26, 30
CityFibre 35, 36
CK Hutchison 21
3 Group 21
– Three Group
Three UK 21
Communications Workers Union 15
Cricket Australia 15

D

Department for Digital, Culture, Media and Sport (DCMS, UK)
Broadband Delivery UK (BDUK) 6, 38
– Hancock, Matt 7, 13
Digital Britain 6, 7
Digital Economy Act (UK) 14

E

Electronic Communications Code 14
Emirates Airline 22

F

Facebook 17, 22
Financial Services Authority 26
Football Association 22
Premier League 16, 17, 22

G

G-Cloud 26
Gigaclear 38, 39
Goldman Sachs 26
Google 17, 22, 23

H

Hewlett Packard Enterprise 30
High Court 21
Home Office (UK) 15
HP Inc 30
HSBC 26
Huawei Technologies 12, 13, 19

I

IBM 9, 29, 30

J

JPMorgan Chase 26

L

Liberty Global
Virgin Media 9, 18
LinkedIn 9
Lloyds Banking Group 26

M

Marconi 38
Mediaset 22
Microsoft 30
Ministry of Defence (MoD) 26
Morgan Stanley 26
Motorola 15
Motorola Solutions
Airwave 15

N

National Health Service (NHS, UK) 26
Network Rail 14
Nomura 26
North Supply 26

O

Ofcom 12, 14, 17, 19, 21, 35, 36, 37
Oracle 30
Orange 26

P

PricewaterhouseCoopers 8

Q

Qualcomm 13

R

Resilient plc 25, 26
smartnumbers 25, 26
Rubicon Project 23

S

Samsung 13
SWIFT 14

T

TalkTalk Telecom Group 18, 33
Technology
2.5G 13
– Blockchain 29
– Broadband 6, 7, 18, 19, 26, 32, 33, 35, 36, 37
– Fibre 6, 18, 32, 33, 34, 35, 36, 38
Fibre-to-the-cabinet (FTTC) 18, 35
Fibre-to-the-premises (FTTP) 18, 32, 33, 34, 36
– G.fast 18, 19, 32, 33, 35, 36, 38
– Internet of Things 29
– IP 19, 37
– ISDN 26, 37
– LTE 12, 13
– OTT 22, 23
– PSTN 19, 37
– R&D 13
– SaaS 25, 26
– SIP 26
– TDM 15
– VoIP 19
– Wi-Fi 14
Telent 38, 39
Carillion telent 38
Thruvision 9
TM Forum 14

U

UEFA 17, 22, 23
Champions League 22, 23

V

VMware 26
Vodafone 9, 13, 15, 26, 35
UK 35

W

Walt Disney Company, The
ESPN 23
WPP
Maxus 23

About

About BTwatch

Report: #292
Published: January 2018
Next report: February 2018
For more information visit: BTwatch