What’s BT up to in the north-east?
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.
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?