BT shares tumble on false Brown Net cuts story

More than £2 billion was wiped off the value of BT shares yesterday after it was reported Chancellor Gordon Brown was to announce plans that would cut the cost of Net access in Britain. In the event, he didn't. He merely voiced his desire to see costs come down and to speed up the unbundling of the local loop. But a combination of political spin and media hype led to near panic on the stock market, causing BT's share value to crash. In an attempt to turn the tide, BT chairman Sir Peter Bonfield issued a statement attacking the Chancellor. He said: "Opening up our local access network to our competitors is an entirely separate issue. BT shareholders own the network and BT not only needs to be consulted but to agree any timetable with Oftel. "We have already agreed with Oftel a deadline of July 1, 2001 and there will be no change to this date without our agreement. That would anyway be a matter for Oftel and BT -- not for the Treasury. So Brown has to live with the sorry fact that his political intervention has made him deeply unpopular among thousands of small investors who saw the value of their personal savings plummet. Understandably, relations between BT and the Treasury chilled considerably in the wake of Brown's blunder. Treasury spinsters attempted to salvage what they could from the fiasco but by then, the damage had been done. It remains to be seen whether his intervention will result in any long-term damage. ® Related Stories Brown Net cuts story is false Brown to slash Net charges