Br0kenTeleph0n3

Following the broadband money

What’s BT up to in the north-east?

with 6 comments

Last week BT said it would lease up to £15,000 worth of technology and telecommunications to businesses in the North-East, Yorkshire and Humberside that had been trading for less than three years. A typical £3,000 lease would cost less than £20 a week, it said.

Source: ONS - Start-up survivors in Yorkshire and Humberside 2004-2008

That sounds like a good deal for start-ups, but one wonders whether BT shareholders would be so keen on the deal.

If one takes the £3000 on offer over three years and pays back £80 a month for 36 months, the start-up ends up paying a total of £2880, which is a -2.63% interest rate.

Moreover, BT will presumably have factored in the mortality rates of start-ups in the area. The latest ONS figures, for 2004-2008, show that one-third will die within three years, and more than half within five. Figures post the banking crash are likely to be much worse.

Since banks won’t give start-ups ice in winter, let alone a loan, and there is no way BT can make a profit from this, this seems an overly generous offer. So why is it doing it, and why is it not available to start-ups in the rest of the country?

Is this something for the Office of Fair Trading or perhaps the Compeition Commision to consider?

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Written by Br0kenTeleph0n3

2011/09/25 at 10:40

6 Responses

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  1. Ian, Could it have anything to do with the Thales/Al-Lu/Kcom Digital Region project i.e. the loan is subject to taking BT Broadband rather than broadband from the Digital Region project???

    John Nolan

    2011/09/25 at 18:21

    • Hmm. Interesting point, John. But doesn’t BT supply Digital Region with infrastructure? Could it be it’s heads BT wins; tails Digital Region loses?

      Ian Grant

      2011/09/25 at 18:49


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