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UPDATE 2-BT demands tax, regime change to deliver high fibre growth

* Q3 adjusted revenue and core earnings fall 5%

* Reiterates outlook for year, raises free cashflow guide

* Network investment hinges on regulator review (Adds CEO comments)

LONDON, Feb 4 (Reuters) - BT called for British government support on business rates and a new deal from the regulator to allow billions of pounds of investment in fibre to drive a post-COVID recovery.

The country’s biggest broadband and mobile operator has been making its case to Ofcom, which will publish the regulatory regime for the next five years and beyond in March.

“BT is absolutely ready, willing and able to build like fury and fibre up the UK, but we need Ofcom to come good on creating a climate that encourages investment and the government to show some urgency in removing barriers,” Chief Executive Philip Jansen said after BT’s third-quarter results on Thursday.

Jansen called on the government to remove taxes - called Cumulo rates - on fibre networks, saying they placed a heavier burden on fibre than on out-of-date copper infrastructure.

“Exemption from these rates would be worth around 1 billion pounds to BT alone, which is equivalent to about 3 million premises,” he said.

BT was currently building fibre at the rate of just over four premises a minute, putting it on track to reach 4.5 million by March, he said, and with the right conditions it could reach 20 million by the mid to late 2020s.

The company earlier reported a 5% drop in both adjusted revenue and core earnings that it put down to COVID-19, which has closed retail stores and reduced mobile roaming revenue.

It kept its outlook for core earnings for the year to end-March at 7.3-7.5 billion pounds, but raised the lower limit of its free cash flow range by 100 million pounds to 1.3-1.5 billion pounds.

BT’s shares, which were trading at 11-year lows last summer, gave up early gains to trade broadly flat. ($1 = 0.7359 pounds) (Reporting by Paul Sandle; Editing by Estelle Shirbon and Alexander Smith)

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