Own initiative investigation into British Telecommunications Plc (“BT”) concerning compliance with SMP Services Conditions 13A.8 and 8A.8

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Complainant: Ofcom own-initiative investigation
Investigation against: British Telecommunications plc (“BT”)
Case Opened: 6 November 2015
Case Closed: 13 January 2016
Issue: Whether BT has complied with its obligations under SMP Services Conditions 13A.8 and 8A.8 in relation to the publication of reconciliation reports and corresponding audit opinions.
Relevant Instrument: SMP Services Conditions 13A.8 (set out at Annex 29 of the Fixed Access Market Reviews Statement) and 8A.8 (set out at Annex 2 of the Wholesale Broadband Access Markets Review Statement)

On 30 November 2015 Ofcom issued a decision under section 96C of the Act (a “Confirmation Decision”) confirming that in order to comply with the requirements of SMP conditions 13A.8(vi) and 8A.8(vi) and to remedy the consequences of the contravention set out in the section 96A notification issued to BT on 6 November, BT had to publish reconciliation reports and corresponding audit opinions forthwith, and in any event no later than 4 December 2015.

BT published the reconciliation reports and outstanding audit opinions on 2 December 2015. Ofcom has therefore decided to close this investigation.

BT’s 2014/15 regulatory financial statements and reconciliation report are publicly available on BT’s website at the following link: http://www.btplc.com/Thegroup/RegulatoryandPublicaffairs/Financialstatements/2015/index.htm

See related items for the non- confidential version of the section 96C Confirmation Decision (with annexes).

Update note: 30 November 2015

On 6 November 2015, Ofcom issued a Notification under section 96A of the Act (“the Notification”) to BT, stating that Ofcom had reasonable grounds for believing that BT had contravened, and continued to contravene, SMP conditions 13A.8(vi) and 8A.8(vi) in that it had failed to publish reconciliation reports and corresponding audit opinions for the Financial Year 2014/15, in accordance with those conditions.

BT provided Ofcom with written representations on 20 November 2015. In its representations BT set out its reasons for the delay in preparing the reconciliation report and corresponding audit opinion; mitigating factors; and its intention to comply with the Notification.

Ofcom notes BT’s reasons for delay in preparing the reconciliation report and corresponding audit opinion, and its intention to publish both by 4 December 2015. We also note the various arguments BT put forward in mitigation. Having considered BT’s representations, however, we take the view that BT was required to publish those documents on 31 July 2015. On this basis, we are satisfied that BT has contravened, and is continuing to contravene, SMP conditions 13A.8(vi) and 8A.8(vi).

Ofcom has therefore issued a decision under section 96C of the Act (a “Confirmation Decision”) confirming the imposition of requirements in accordance with the Notification. This means that, in order to comply with the requirements of SMP conditions 13A.8(vi) and 8A.8(vi) and to remedy the consequences of the contravention, BT must publish the reconciliation reports and corresponding audit opinions forthwith, and in any event no later than 4 December 2015.

BT has until 5.00pm on 4 December 2015 to comply with the requirements imposed by the Confirmation Decision.

Ofcom will publish a non-confidential version of the Confirmation Decision in due course.

End of update note

Ofcom has today opened an investigation into BT’s apparent non-compliance with SMP conditions 13A.8 and 8A.8, which require BT to publish reconciliation reports and corresponding audit opinions in relation to its regulatory financial statements.

We have also issued BT with a notification under section 96A of the Communications Act 2003 (the “Notification”), stating that we have reasonable grounds for believing that BT has contravened, and continues to contravene, SMP conditions 13A.8 and 8A.8 as it has failed to publish the reconciliation reports and corresponding audit opinions for 2014/15 required by those conditions.
Under SMP conditions 13A.8 and 8A.8, BT is required to prepare and publish a reconciliation report which sets out changes to the Regulatory Accounting Methodology and the impact of such changes on the Regulatory Financial Statements, and Material Errors corrected in the Regulatory Financial Statements and the impact of such Material Errors on the Regulatory Financial Statements. BT is required to publish the reconciliation report and a corresponding audit opinion within four months of the financial year to which they relate.

The notification sets out the steps that BT should take in order to comply with the requirements of SMP conditions 13A.8 and 8A.8. BT has two weeks to make representations to Ofcom about the matters set out in the Notification.

Case Leader: Tor Ahjem (tor.ahjem@ofcom.org.uk)
Case Reference: CW/01171/11/15