BT has agreed to pay compensation to homes and businesses following an underground fire in March that wiped out more than 130,000 phone lines in Manchester as well as disrupting emergency services.

Confirmation that the UK's dominant fixed line telco is prepared to pay out to those left without a phone line for up to a week follows BT's own preliminary investigation into the blaze.

Despite its initial findings, BT has made it clear that "is not accepting any blame or responsibility for the fire". Instead, it is prepared to cough up compensation because, as a spokeswoman put it, "we feel it is the right thing to do... BT will honour its contractual commitments to its customers and is processing claims," it said.

In a statement the company said: "BT today said that the results of its preliminary investigations into the cause of the Manchester fire were now known. The fire severely affected communications services in and around the city last month.

"The initial findings indicate it started as a result of damage to electrical equipment. BT believes that during the course of work being undertaken in the tunnel before the fire, electrical fittings were damaged and this damage may have caused the fire. Investigations are ongoing." ®

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