BT, Virgin Media Warn Rates Hike to Hurt Investment -- Update

(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 [e-mail] 
 

(END) Dow Jones Newswires

September 30, 2016 05:21 ET (09:21 GMT)

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