BT shares fall as regulator eyes ban on inflation-linked price hikes

Dec 12 (Reuters) - BT Group shares fell more than 4% on Tuesday after Britain's telecom regulator proposed a ban on inflation-linked price rises in the middle of customers’ mobile and broadband contracts.

Ofcom said the practice was unfair on consumers and hampers competition.

The stock is up by around 13% this year, helped by recent UK budget measures aimed at reviving the UK's sluggish economy.

BT noted Ofcom's consultation into inflation-linked pricing mechanisms and said it had always followed their guidance.

"Currently, we are in the process of reviewing this consultation, and assessing our options which we will submit as part of our response," a BT Group spokesperson said.

Shares in Vodafone fell as much as 1.7% and Telefonica, which owns British telecom services provider O2 UK, was down 5.5%, as its shares traded ex dividend in Madrid. (Reporting by Danilo Masoni; editing by Amanda Cooper and Jason Neely)