Network Rail has abandoned plans to privatise the vast telecoms network that runs alongside UK railway lines.
The decision not to sell the fibre optic and telecoms network that delivers voice, data, video and broadband services for maintenance teams and communication between trains, comes despite a deluge of interest from telecoms operators worldwide.
The
UK’s state-owned railway operator, said there were now “no immediate
plans to progress” the privatisation but that it would press ahead with
other asset sales.
Telecoms for UK railways were brought back in-house in 2002 and Network Rail has since spent £2bn on modernisation.
Its power assets include about 120 substations, as well as thousands of cables and pylons, which could be sold to energy companies or private investors, although officials close to that sale said the process had slowed after the Brexit vote.
After Brexit vote, some industry insiders say groups risk seeing growth fall short of forecasts
Network Rail says the sales will streamline the organisation and allow it to focus on its main job of maintaining 20,000 miles of track, 40,000 bridges and tunnels, and 6,300 level crossings.
About 60 per cent of its £6bn annual turnover comes from the taxpayer, with 27.8 per cent from track access charges paid by 22 train operating companies. Property and shops account for 10.6 per cent.
The decision not to sell the fibre optic and telecoms network that delivers voice, data, video and broadband services for maintenance teams and communication between trains, comes despite a deluge of interest from telecoms operators worldwide.
It held talks with BT,
Virgin Media and a number of other companies looking to tap into a
network that could improve services on trains and in rural areas. BT was
seen as the frontrunner to strike a deal to buy the network, form a
joint venture with Network Rail
or lease capacity. However, talks became deadlocked and the plan has
been shelved in favour of selling off property assets. BT declined to
comment.
One industry figure said the telecoms network was likely come up for
sale again because of government pressure to reduce its debt, although
any deal would be complicated by Network Rail’s reliance on the fibre
lines for its signalling.
Telecoms for UK railways were brought back in-house in 2002 and Network Rail has since spent £2bn on modernisation.
Experts have raised concerns that the sale would
lead to further fragmentation of the system. Roger Ford, founding editor
of Rail Business Intelligence, called the sell-off of telecoms and
electrical power assets as “sheer madness that ignores past experience”.
“This is the nervous system of the railway and it’s the one thing you must control,” he said at the time the sale was announced.
Network Rail has been under pressure to sell assets since its debt —
now at £42bn — was transferred to the Treasury’s balance sheet two years
ago. It is also wrestling with cost overruns on a £38.5bn five-year
modernisation project.Its power assets include about 120 substations, as well as thousands of cables and pylons, which could be sold to energy companies or private investors, although officials close to that sale said the process had slowed after the Brexit vote.
Fears for Britain’s railways
Network Rail is also looking at options to raise money
from 18 major stations, including London Waterloo, Reading, Leeds and
Edinburgh Waverley. This could include outright sales, or investments
that companies could buy shares in. Citigroup has been appointed to
advise on the future of the stations.
The operator is also in the process of raising up to £1.8bn over the
next three years from commercial property sales, including units that
are home to small businesses from car mechanics to hairdressers in 5,000
railway arches, 115 train depots and 570 light maintenance depots.Network Rail says the sales will streamline the organisation and allow it to focus on its main job of maintaining 20,000 miles of track, 40,000 bridges and tunnels, and 6,300 level crossings.
About 60 per cent of its £6bn annual turnover comes from the taxpayer, with 27.8 per cent from track access charges paid by 22 train operating companies. Property and shops account for 10.6 per cent.
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