BT has been given a STG42 million ($A69 million) fine by Britain's telecoms watchdog and is expected to pay out STG300 million in compensation to rivals over delayed high-speed cable installations.
Ofcom said BT Openreach committed a "serious breach" of its rules for reducing payments to other providers between January 2013 and December 2014.
The UK telecom giant was supposed to pay out compensation after failing to deliver Ethernet high-speed services to other, smaller providers in adequate time.
Under Ofcom rules, the company is obliged to give telecom companies access to their vast network to ensure competitiveness.
Openreach CEO Clive Selley said: "We apologise wholeheartedly for the mistakes Openreach made in the past when processing orders for a number of high-speed business connections.
"This shouldn't have happened and we fully accept Ofcom's findings."
The watchdog said rules had been put in place to curb BT's "significant market power" and that it would "not tolerate" the breach.
Compensation will now have to be paid to affected providers - including Vodafone - within 12 months, Ofcom said.
BT had faced an even greater fine, but this was slashed by 30 per cent after it admitted full liability.
It was fined a further STG400,000 for "failing to provide information" to Ofcom.
Gaucho Rasmussen, Ofcom's investigations director, said: "These high-speed lines are a vital part of this country's digital backbone. Millions of people rely on BT's network for the phone and broadband services they use every day.
"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."
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