BT has been hit with a record fine from telecoms regulator Ofcom and has set aside £300m to repay providers for delays in installing high-speed lines.
Ofcom has issued the firm with a £42m fine, which it said was the largest it has ever handed down.
It found BT’s Openreach division had cut compensation payments to telecoms providers for delays in installing the lines between early 2013 and late 2014.
Openreach said it “apologised wholeheartedly” for the mistakes.
The investigation found BT had broken rules about its “significant market power” by cutting the payments.
Gaucho Rasmussen, Ofcom’s investigations director, said: “These high-speed lines are a vital part of this country’s digital backbone.
“We found BT broke our rules by failing to pay other telecoms companies proper compensation when these services were not provided on time.
“The size of our fine reflects how important these rules are to protect competition and, ultimately, consumers and businesses.”
Openreach provides the wires and cables that powers the UK’s broadband and landline phone network.
In this case, it failed to pay full compensation to providers when it was late installing ethernet lines – high-speed cables used by large businesses, and mobile and broadband providers, to transmit data.
Earlier this month, BT agreed to Ofcom’s demands for it to legally separate Openreach from its main business.
Under the changes, Openreach will become a distinct company with its own staff, management and strategy “to serve all of its customers equally”.
BT chief executive Gavin Patterson said the investigation “revealed we fell short of the high standards” for serving telecoms providers.
“We take this issue very seriously and we have put in place measures, controls and people to prevent it happening again,” he said.