Ofcom unleashed the telecoms giant from a strict price structure –introduced when

Ofcom unleashed the telecoms giant from a strict price structure –introduced when the company was first privatised – which was aimed at preventing BT from abusing its monopoly.
The regulator believes the market is sufficiently advanced to allow open competition in fixed-line phone rental and calls.In theory, BT could ratchet up prices, but competition from Sky, Carphone Warehouse and others makes this unlikely.BT promises so-called “vulnerable” customers will be protected from cost increases, while vowing that it will fight to hang on to market share.BT has about 58 per cent of the market for home phones, but it is losing about 5 per cent a year as customers switch to cable or internet rivals.Some home phone packages will go up in price, but the trend will mostly be down, BT claimed.As the price of phoning from home falls, the mobile phone industry will come under increased pressure to lower its rates. Marks & Spencer sold its M&S Money financial services arm to HSBC last year, though it continues to earn fees from sales of personal loans, pet insurance and the &More credit card.Asda’s parent company, Wal-Mart, does not publish separate figures for sales at its subsidiary, but the supermarket group has begun selling its insurance range, which is backed by Norwich Union, more aggressively.. Jobs have gone to try to cut costs, and the bank has pulled out of mortgage lending.Mr Pile’s departure fuelled speculation – later denied – that Sainsbury may look to sell its 55 per cent share of the business, with HBOS seen as the obvious buyer.Tesco remains the supermarkets’ most successful financial services operation. It notched up pre-tax profits of £202m in 2005, and has more than 5 millioncustomers. It continues to win customers, but margins – the difference between the rates at which it lends and borrows, and a key measure of profitability – have been squeezed. As he does not sit on its board, the supermarket is not required to make his pay public.Sainsbury shareholders will expect the new boss to revitalise the bank so that it may realise its early promise.

Its shares edged 1.5p higher to 329.5p.Sainsbury’s Bank notched up its first profits two years after an explosive launch in 1997, but started to run out of steam in 2002. Benny Higgins, who oversaw the success of Tesco Personal Finance while at RBS, will soon take charge of retail banking at HBOS.Sainsbury remained tight-lipped about whether Mr Pile will receive a pay-off. Tesco, on the other hand, aimed for scale and let profitability follow.”Jim Kinloch, Sainsbury Bank’s finance director, will head the business until a permanent replacement is found for Mr Pile, the chief executive since 2002. But City experts question whether he got his strategy right.Simon Maughan, at Dresdner Kleinwort Wasserstein, said: “Sainsbury’s shot for profits from the word the go That backfired because they didn’t capture enough customers. Similar difficulties have hit profits at Sainsbury Bank’s most successful rival, Tesco Personal Finance, a joint venture with Royal Bank of Scotland.Sainsbury has enjoyed something of a renaissance under the chief executive Justin King, who has kept his faith in the company’s brand to drive the bank’s sales. Sainsbury’s Bank lost £5m in the first half of its year after its bad debt charge soared 68 per cent to £49m.The bank, which is turning away three in every four loan applicants, is expected to lose £10m over the full year, putting it £57m behind the original profits plan. Rising costs and bad debts have resulted in steep losses at the bank, a joint venture between the supermarket and HBOS.
Only one year into its three-year turnaround plan, Sainsbury was forced last year to abandon its target to boost banking profits by £90m.

Tim Pile stepped down as chief executive of Sainsbury’s Bank yesterday amid mounting frustration about its faltering performance. Sky said its strategy was to serve an “increasingly cash-rich, time-poor society” with a variety of entertainment services.The company’s head of business development, Stephen Nuttall, said Sky would continue to provide most of its television services through its satellite network, which was a more efficient and cost-effective delivery system.. We believe Easynet is a great deal and we are confident it will be rolled out in a value-enhancing way.”The Sky move into broadband will put it in direct competition with BT’s core market, just as the incumbent telecoms giant is to move into television with its launch of a television service this year. For instance, the company put through a £2bn investment in digital television, starting in 1998. But some critics suggested that Sky’s need for making new investments is a perennial “jam tomorrow” story.Mr Guest said: “Sky is taking some of yesterday’s jam to create tomorrow’s jam but it is not like going back to 1998, when the company had to suspend the dividend.

The costs of rolling out the Easynet network will be an additional substantial sum.Philip Guest, of Exane BNP Paribas, said the scale of the investment paled in comparison with previous “big decisions” which he said had been successfully pulled off by Sky. Sky provided no information about how aggressively it aimed to grow market share or how much it would need to spend to connect each new customer.It is estimated that providing broadband will cost about £200 per customer, meaning that signing up 500,000 users this year, for instance, would wipe £100m off the £800m pre-tax profits forecast. Sky briefed City analysts yesterday on the £211m acquisition, completed late last year, of Easynet, an internet service provider. Sky is to mount a major assault on the broadband market, which will include offering broadband with voice calls and television over the internet.
Analysts who attended the Sky presentation said investors remained unclear about the costs involved in the company’s broadband plans. Excluding a £215.4m exceptional charge, pre-tax profits fell 33 per cent to £447.2m on turnover up 5 per cent at £8bn..

BSkyB, the dominant pay-television provider, is to launch its broadband service this year to broaden its offering from television-focused to more of a “whole home” entertainment company. But Mr Murphy said he spent “virtually no time” considering the possibility of a takeover offer.Kingfisher’s overseas operations, the Castorama and Brico Depot chains, grew retail profit by 9 per cent to £230m. B&Q also wants to make its stores more appealing to women, who initiate 80 per cent of all home improvement projects, it said.Analysts at CSFB, the company’s broker, said: “We believe the UK business has not yet bottomed out and talk of a recovery is very premature.”Shares in the group gained 5p to 248p on speculation Kingfisher was an attractive target for private-equity groups. The chain is testing the UK appetite for “do-it-for-me” services including decorating and flooring. It already offers a kitchen fitting service.Ian Cheshire, who runs B&Q, said the initiative “clearly had scope”.