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U.K. Labour Party Platform Shifts Left -- WSJ

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11/16/2019 | 02:48am EST

Opposition would take over digital network, offer free broadband if it wins December vote

By Max Colchester 

LONDON -- The U.K.'s main opposition Labour Party, maneuvering for advantage in national elections next month, is planning to run on its most leftwing platform in decades. Its latest plan: nationalize part of the country's telecoms network and give citizens free broadband.

The proposal to take over the digital network now owned by one of the country's largest telecoms companies comes on top of its plans to nationalize water companies, the postal service and rail operations.

The telecoms pledge, announced Friday by Labour leader Jeremy Corbyn, is part of a vision to remake the British economy and appeal to traditional Labour voters who may be tempted by Boris Johnson's plan to pull the U.K. out of the European Union by Jan. 31.

"What was once a luxury is now an essential utility," Mr. Corbyn said. "That's why full-fiber broadband must be a public service."

Mr. Johnson's Conservative Party condemned the plan as a "fantasy" that would cost "tens of billions" of pounds.

The market reaction to Mr. Corbyn's announcement was muted as it looks unlikely that the Labour Party will win an outright majority in the Dec. 12 election. The party is currently trailing the Conservatives by around 10 percentage points in opinion polls.

If Mr. Johnson fails to gain a majority, Labour could come into power with the support of smaller parties. However, under those circumstances, Labour would likely be forced to ditch some of its campaign pledges.

Labour's full election manifesto is due to be finalized this weekend, but elements of it already outlined -- including a four-day working week to be introduced over 10 years and extra government spending running into hundreds of billions of pounds -- suggest a further leftward shift beyond the pledges it made for the 2017 election campaign. In 2017, the party gained 30 seats with a 40% share of the popular vote, its highest since 2001.

Labour's shift has echoes on the other side of the Atlantic. Prominent U.S. Democratic Party presidential contenders like Elizabeth Warren and Bernie Sanders are laying out agendas that call for a significant redistribution of economic resources from the highest earners and break up big tech companies.

Labour's moves reflect the ascendancy of the party's left wing in the past decade, including the rise of self-avowed socialists such as Mr. Corbyn and John McDonnell, his Treasury spokesman.

Pushing this agenda has been Momentum, a group of mainly young Labour activists whose 40,000 members have pushed Europe's largest socialist party to re-invent itself as a hard left-wing movement, in the past four years.

The party is now seeking to bury the legacy of two former British prime ministers detested by the British left: Margaret Thatcher and Tony Blair.

Mrs. Thatcher's Conservative government privatized large swaths of the British economy in the 1980s and subdued the trade union movement. Mr. Blair is one of Labour's own. He was prime minister for a decade from 1997 and won three general elections, but earned many Labour activists' scorn by moving the party to the center and supporting the U.S.-led war in Iraq.

The promise of free broadband is a pitch to traditional Labour supporters. Once the state-owned telecoms monopoly, the then British Telecom, was privatized in 1984 by Mrs. Thatcher. The remaining government stakes in the company were sold in the early-1990s.

The Labour moves open up a clear division with the Conservatives even though both parties promise big increases in public spending.

Mr. Johnson's pledges to boost spending on policing, health and education are less ambitious than Labour's spending plans, but represent a significant relaxation from the tight fiscal stance advocated by his Conservative predecessors.

But Mr. Corbyn's vision of the state taking back control of several industries contrasts with Mr. Johnson's emphasis on a more market-oriented economy opening up to trade with economies like the U.S.

Mr. Corbyn's plan entails nationalizing the digital network and related businesses owned by BT PLC, which it says would cost GBP15.3 billion ($19.7 billion). BT's shares fell 3.7% on the news before recovering to be less than 1% lower in an overall market that edged up. The company's market capitalization is about GBP19 billion.

BT's OpenReach is a national network used by a number of competing telecoms operators in the U.K. including Vodafone PLC. The main competitor to BT OpenReach is Virgin Media, owned by Liberty Global plc. Mr. McDonnell, the finance spokesman, said Virgin could be nationalized as well.

Labour said the nationalized entity would be called "British Broadband" and that BT shareholders would receive compensation in the form of government bonds.

The project would be funded in part with a tax on online giants, including Amazon.com Inc., Facebook Inc. and Google. The nationalization is part of a Labour plan to roll fiber broadband out across the country by 2030.

Neil McRae, BT's chief network architect, tweeted "Labour plans broadband communism."

BT said in a statement that "whatever the result of the election" it would encourage the next government to work with all parts of the industry to accelerate the roll-out of full-fiber broadband and 5G across the U.K.

Write to Max Colchester at max.colchester@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
ALPHABET INC. -2.21% 1483.46 Delayed Quote.13.26%
BT GROUP PLC 0.10% 156.28 Delayed Quote.-18.79%
CF INDUSTRIES HOLDINGS, INC. -0.33% 39.35 Delayed Quote.-17.57%
FACEBOOK -2.05% 210.18 Delayed Quote.2.40%
LIBERTY GLOBAL PLC -0.68% 21.265 Delayed Quote.-6.49%
PUBLIC SERVICE ENTERPRISE GROUP 1.32% 59.96 Delayed Quote.1.54%
VODAFONE GROUP PLC -0.08% 154.88 Delayed Quote.5.53%
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Financials (GBP)
Sales 2020 22 876 M
EBIT 2020 3 620 M
Net income 2020 1 999 M
Debt 2020 17 851 M
Yield 2020 9,85%
P/E ratio 2020 7,72x
P/E ratio 2021 7,51x
EV / Sales2020 1,45x
EV / Sales2021 1,51x
Capitalization 15 333 M
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Average target price 222,37  GBp
Last Close Price 156,28  GBp
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