BT to invest 1.5 bln in super-fast broadband

By Kate Holton

LONDON (Reuters) - BT (BT.L) will suspend its share buyback to invest 1.5 billion pounds in rolling out super-fast broadband to 10 million homes by 2012, enabling services such as video conferencing and interactive gaming.

But its shares fell as some analysts questioned whether it was "investing in the unknown", while its rivals also slumped after investing heavily in BT's current copper-wire network.

The programme will be the largest ever investment in super-fast broadband, to deliver speeds of up to 100 Megabytes per second.

"Now is a good time to make a bold step," new Chief Executive Ian Livingston told journalists on a conference call.

"It is important to invest in the long term, and with the very strong take-up of broadband (we felt that) now was the time to enhance that infrastructure."

BT will make the fibre network available to other Internet service providers, such as Carphone Warehouse (CPW.L), BSkyB (BSY.L) and Tiscali (TIS.MI), through wholesale agreements to ensure the broadband market remains competitive.

Alternatively, those ISPs could decide to place their own fibre within the BT network to secure greater pricing control.

But their shares suffered on the stock market on Tuesday after previously investing in the current copper network.