Watchdog sets BT final deadline on curbs

The telecommunications watchdog Oftel last night told BT that unless it agreed to a package of new price controls and curbs on anti-competitive behaviour within the next fortnight, it will be referred to the Monopolies and Mergers Commission.

Don Cruickshank, the director general of Oftel, delivered his final proposals to the company with a blunt statement that they were "indivisibly linked" and that BT could not accept one without the other.

If BT has not responded to Oftel by 2 August, it will be taken t have rejected the proposals and will be sent to the MMC, said Mr Cruickshank.

The proposals are the same as those set out by Oftel in June and would limit increases in charges to most of BT's residential customers to inflation less 4.5 percentage points for four years from next July. They would also allow Mr Cruickshank to introduce a fair trading condition into BT's licence to prohibit anti-competitive behaviour.

The regulator's uncompromising stance came after pleas from an army of private shareholders at BT's annual meeting yesterday urging the company to stand firm against Oftel.

BT will consider the proposals at a crunch board meeting next Tuesday although it will have 10 days after that to decide whether or not to accept.

At the company's 12th annual general meeting in Newcastle, one of the "Sids" summed up the general mood. Margaret Hubbard from south London wanted reassurance that BT would not give up its campaign to gain a right of appeal.

"If we fail we might as well just roll over and play dead," she said.

But BT's chairman, Sir Iain Vallance kept shareholders guessing as to what the board would decide at Tuesday's crucial meeting, one of the most important since the company was privatised in 1984.

"Oftel, BT and the rest of the industry agree that a legislative solution which could resolve these difficulties, would be preferable. And we hope that this can be achieved," Sir Iain said.

Sir Iain may have moderated his language in recent months since describing Mr Cruickshank's plans at "highly dangerous" late last year but the two sides remain as far apart as ever on the fundamental question of a formal right of appeal.

Many shareholders blamed Oftel for the uncertainty which has plagued the share price.

Dorothy and Roy Hodgson from York - retired BT employees with 77 years' combined service and shareholders since privatisation - said: "It's gone on long enough. It's time Oftel backed off a bit. Don Cruickshank is too tough."

Munching a cheese sandwich before the start of the meeting, Mr Hodgson said: "It's a British firm and we should be supporting it. It's not as if there isn't plenty of competition around."

BT's shares stood at 359.5p last night, not far above the 335p price of the second BT share offer in December 1991 and way below the 410p price of BT two and a half years ago. Interest in the annual general meeting has dwindled with the share price itself. Only 657 small investors attended, most of them retired, yesterday at the Newcastle Arena - a fraction of the 2,000 who used to attend previous gatherings.

But the board did face tough questioning yesterday over the pounds 686,600 "pay-off" to the former managing director, Michael Hepher. Mr Hepher left the company at the end of last year but under the terms of his contract continues to receive a salary until August 1997. He also received benefits including a chauffeur and private health care worth pounds 57,700.

Asked about the "pay-off", Sir Iain was more tight-lipped. "It made sense" for Mr Hepher to leave early, he said, the salary was "entirely consistent with the recommendations of the Greenbury Committee.

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