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Pressures to privatise

Margaret Thatcher with Sir Iain Vallance

Freeing the network  : opening the doors

For years, Britain's telephone and data communications industry had developed in a cocoon, protected from overseas competition by the Post Office monopoly.

By the late 1970s that couldn't be sustained any longer - the rest of the world was moving ahead too fast, and Britain risked being left behind.

The Carter report of 1977 recognised the problems and was the first step to opening the doors to liberalisation and competition.

That process was completed by privatisation a few years later. 

Share offer launch, 1984

Taking BT to market (1984) : selling the idea - inside and outside

On April 12, 1984, the Telecommunications Bill paving the way for the privatisation of British Telecom received royal assent. Over the next few months the British government carried out something that no other country in the world had attempted - to take a telecommunications network out of state ownership into a private company with publicly held and traded shares.

It was a mammoth undertaking on three separate fronts.

The first was the flotation, which involved selling the prospectus and the shares for the new company to institutional and small investors.

The second was the corporate change that needed to happen within BT, transforming itself from a public service bureaucracy into a high-tech private enterprise.

The third was the restructuring of the entire telecommunications market from a complete monopoly, to an open system in which rival companies could compete.

The share sale took place in November 1984, with the first day of trading in the shares on December 3.

Stock market

British Telecom privatised (1984) : setting shareholder records

On December 3, 1984, British Telecom shares began trading on the London Stock Exchange. The offer - 3,012 million ordinary shares - was 3.2 times oversubscribed. Initially priced at 130p, the shares ended the day at 173p.

Ten years later BT had the biggest shareholder register in Britain, with 2,641,000 investors, including most of its employees - reduced in number to around 150,000, compared with 250,000 pre-privatisation.

By that stage, the sale of BT shares had netted more than £14 billion for the government directly, with around £30 billion more into government coffers through dividends and tax.

Broadband access

BT on the net (1994) : connecting Britain

As the 1960s gave way to the 1970s, shortcomings state-owned telecommunications became increasingly apparent. The 'one size fits all' approach became increasingly irrelevant to people's domestic and business needs. Something else was needed.

There was also a big change in the political climate, with the election of a government committed to returning state industries to the private sector. Telecommunications was the first to be dealt with, with Cable & Wireless and then British Telecom (now BT plc) being 'privatised'.

This meant taking the network out of government hands and making it a business - freed from Treasury spending limits - but exposed to free market forces.

fun and games

Can you beat our games? Explode equipment to see what's inside, hear the changing sounds of telecommunications, see how telecommunications designs have changed over time or send an e-postacard.

what's on

The UK's first permanent gallery dedicated to the history of information and communication technologies opens in the new Information Age gallery at London’s Science Museum.

audio history

Take a trip down memory lane with extracts of the interviews which have been recorded as part of the Connected Earth oral history programme.

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