Press Release | 14 Oct 2015


Vodafone UK commissioned Frontier Economics to update its analysis of  BT’s overcharging.

As part of its submission to Ofcom’s Digital Communications Review, Vodafone UK recently commissioned Frontier Economics to update its analysis of data from BT’s regulatory financial statements (RFS) since the implementation of the 2005 Ofcom strategic review (of telecommunications) to assess the effectiveness of the regulatory framework in balancing the consumer benefits of lower prices with the need to provide incentives to invest in networks and operate these networks efficiently.

This analysis is based on comparing the level of profitability for BT’s regulated services, expressed as a return on capital, against Ofcom’s estimate of BT’s cost of capital. The Frontier analysis shows that over the period April 2006 to 31 March 2015:

  • reported returns on BT’s regulated services overall were consistently above the rate required to compensate investors, as determined by Ofcom. More specifically, in the past 10 years BT made around £18.9 billion profit from regulated services, of this £6.5 billion was over and above the determined cost of capital, of which £770 million was for the financial year to 31 March 2015;
  • there is no clear trend of a reduction in overall returns, despite a number of actions by Ofcom to constrain prices over the period; and
  • there have been some changes over time in the composition of the excess returns, with the excess returns concentrated on those services used by competitors to BT.

The conclusion to the report is that BT’s returns for regulated services overall have been consistently above a benchmark rate based on Ofcom’s determinations of the return required by investors. This implies that prices overall have been set at a higher level than that required to provide investors in BT with an appropriate rate of return: in other words, prices could have been lower and BT’s investors would have still been adequately compensated. We estimate that BT’s regulated prices would have been 11% lower on average, had BT’s regulated returns been in line it the cost of capital.

About Vodafone UK

Vodafone UK is a technology communications company that connects people, businesses and devices to help our customers benefit from digital innovation. Our services span mobile, fixed-line connections, home and office broadband, and the Internet of Things (IoT).

We have a strong track record as a tech pioneer, making the UK’s first mobile phone call, sending the first text message, and making the UK’s first live holographic call using 5G in 2018. We were the first to start carrying live 5G traffic from a site in Salford, Greater Manchester and now have 5G in locations across Germany, Ireland, Italy, Spain as well as the UK. Meanwhile, our 4G network coverage currently reaches over 99% of the UK population.

Today, Vodafone serves more than 18 million mobile and fixed-line customers in the UK. Vodafone is the largest provider of full fibre in the UK – our superfast broadband services are now available to nearly 12 million homes across the UK.

Sustainability is also at the heart of what we do: as of 1 July 2021, 100% of the grid electricity we use in the UK is certified to be from renewable sources.

For more information about Vodafone UK, please visit:

Vodafone UK Media Relations

Telephone: +44 (0) 1635 693 693


Twitter: @VodafoneUKNews


Vodafone Limited

Registered Office: Vodafone House, The Connection, Newbury, Berkshire RG14 2FN

Registered in England No: 1471587