Carillion goes into liquidation – BT Openreach contract hangs in the balance

Natalie Bannerman
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As Carillion enters into liquidation its fibre broadband contracts with Openreach and Gigaclear are put at risk

UK construction firm Carillion has begun the process of “compulsory liquidation” after succumbing to insurmountable debts.

Carillion along with its partner Telent, the telecoms systems installation and services’ company, also holds engineering and fibre broadband contracts with two major UK telcos.

Less than a year ago Carillion Telent signed a £1.5 billion agreement with Openreach to extend its national fibre broadband network, taking its contract into 2021. In addition, to a new £200 million contract with Gigaclear to rollout 1GBps broadband to the South West England.

In an official statement on behalf of the company, Philip Green, chairman of Carillion, said:

“This is a very sad day for Carillion, for our colleagues, suppliers and customers that we have been proud to serve over many years.

Over recent months huge efforts have been made to restructure Carillion to deliver its sustainable future and the board is very grateful for the huge efforts made by Keith Cochrane, our executive team and many others who have worked tirelessly over this period.

In recent days however we have been unable to secure the funding to support our business plan and it is therefore with the deepest regret that we have arrived at this decision.

We understand that HM Government will be providing the necessary funding required by the Official Receiver to maintain the public services carried on by Carillion staff, subcontractors and suppliers.

Further to the announcement made on 12 January 2018, Carillion continued to engage with its key financial and other stakeholders, including Her Majesty’s Government, over the course of the weekend regarding options to reduce debt and strengthen the group’s balance sheet.

As part of this engagement, Carillion also asked those stakeholders for limited short term financial support, to enable it to continue to trade whilst longer term engagement continued.

Despite considerable efforts, those discussions have not been successful, and the board of Carillion has therefore concluded that it had no choice but to take steps to enter into compulsory liquidation with immediate effect.”

But Gigaclear have made it clear that this announcement will not affect its plans for fibre deployment and that the businesses are in fact separate entities.

Speaking to Capacity Matthew Hare, chief executive of Gigaclear, said:

“It is very sad news that Carillion has gone into compulsory liquidation. Whilst this may have a minor impact on delivery schedules, Carillion telent is a separate business holding its own funds and bank accounts. Therefore, the contract with Gigaclear to deliver the build for full fibre broadband to the South West region still stands.

“We are committed to delivering ultrafast broadband to Devon and Somerset, and already work with alternative partners in the area should the need to relook at capacity and resource arise. We will ensure any disruption to both our potential customers and suppliers is minimised. Our priority remains to connect this area to future proofed, full fibre broadband.”

In an official statement to Capacity Openreach was quoted as saying:

“We note the reports about our work with Carillion telent (Ct). The Ct joint venture is one of seven major partners providing similar services to Openreach across Britain and we have robust processes in place to monitor and manage all of our supplier risk.

It goes on to reassure its customers, adding: "We have conducted a thorough legal and financial assessment of the JV, and we’re confident in its ongoing viability without Openreach incurring any extra cost or liability. We’ll continue to work closely with telent to avoid disruption, but we have every confidence that there will be no impact on our national network services and plans.”