BT, Virgin Media Warn Rates Hike to Hurt Investment -- Update
September 30 2016 - 5:36AM
Dow Jones News
(Rewrites, adds detail.)
By Simon Zekaria
LONDON--BT Group PLC (BT) and Liberty Global PLC's Virgin Media
Friday warned the U.K. government's revaluation of their commercial
infrastructure would result in higher business tax rates and hurt
the industry's investment into Britain's high-speed Internet
network.
In a statement, BT said the government's Valuation Office
Agency--which sets non-domestic rates on commercial
premises--proposed increasing the firm's 'rateable values' to 715
million pounds ($926 million) in England and GBP28 million in Wales
from April 1 next year, from current values of GBP158 million and
GBP7 million, respectively.
BT said its rate liability would be phased-in over five years,
with the first year's increase being "tens of millions of pounds"
in fiscal 2017.
"BT considers the proposed rateable values to be excessive and
will challenge the VOA on its method and assumptions. BT will also
be responding to the transitional relief consultation," it
said.
A BT spokesman added: "We are extremely disappointed by the new
rateable values that have been published today and which are
clearly excessive." "Imposing a rateable value that is four times
the current level is both unwelcome and unacceptable."
"This measure, if enacted, could have a negative impact on
future investment in the network," the spokesman said, adding that
it could lead to higher prices for consumers and businesses.
Still, BT said its financial outlook for both fiscal 2016 and
2017 is unchanged.
Virgin Media, which competes with BT and others in the U.K.'s
competitive telecom, Internet and television market, didn't provide
figures on its liabilities, but said there would be a "steep
increase for broadband providers who are laying
infrastructure."
"The Chancellor Philip Hammond is choosing to side-step
responsibility for a huge increase in infrastructure taxes at the
very moment after the Brexit vote the U.K. needs to maximize
investment into its digital fiber network," said Virgin Media Chief
Executive Tom Mockridge.
VOA declined to comment about individual companies and wasn't
immediately available for any further comment.
At 0848 GMT, BT shares were down 2% at 384 pence.
--Write to Simon Zekaria at simon.zekaria@wsj.com
(END) Dow Jones Newswires
September 30, 2016 05:21 ET (09:21 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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