BT chief is ‘not the right man for the job’, says top investor
BT shareholders are urging more change at the top of the company, with one top 20 investor calling on the board to line up a replacement for Gavin Patterson, the chief executive.
The investor, who controls a stake in BT worth hundreds of millions of pounds, said that “with the benefit of hindsight, Gavin Patterson was not the right man for the job”.
He added: “Few of us said so at the time but it has shown to be the case. What BT actually needed was a guy who could take on the regulator, not a retailer and marketer.
“A lot of what has gone wrong has not been Gavin’s fault but we’d like to see progress on a process and new leadership in the next year.”
The call is the clearest public signal yet that BT’S recent stumbles have raised doubts over Mr Patterson in the City and this weekend prompted the company to defend Mr Patterson and back him to see it through a complex restructuring.
The shares have lost all the ground they gained following his appointment in 2013. The Brexit vote, regulatory battles, and the company’s Italian accounting scandal have outweighed progress by BT’S consumer business, including the successful £12.5bn takeover of EE.
The investor, who asked not to be named, said his fund wanted BT to be led by “an external candidate with a regulatory and, preferably, also an engineering background”.
BT is already making major leadership changes under Mr Patterson, who is being advised by consultants from Mckinsey. John Petter, his long-time
ally and head of BT’S consumer business, abruptly opted to leave last month despite talks over a promotion to a strategy and restructuring role.
Those responsibilities are being now taken on by chief financial officer Simon Lowth, who is seen by some in the City as a potential successor. Marc Allera, promoted to run a combined EE and BT consumer business, is also tipped as a key player in the company’s future.
There is not a clamour for immediate change, after nearly all BT shareholders approved Mr Patterson’s reappointment at its AGM last month.
Questions over BT’S future executive leadership are part of a busy agenda for Jan du Plessis, the incoming chairman, who is due to take the helm in November and must also complete crucial negotiations over the company’s massive pension deficit.
Mr du Plessis said he looked forward to “supporting Gavin and his management”.
Sir Mike Rake, the current chairman, said this weekend: “There is strong support for Gavin and the way he has handled the issues BT has had recently. It is very much in the interests of BT and its stakeholders that he stays to lead the company.”
The restructuring now under way is expected to take more than two years to complete.
Mr Patterson, who has been at BT for 13 years, has expressed anger and disappointment over the Italian accounting scandal.
He also received no bonus last year and repaid a portion of earlier payouts after an investigation uncovered complex fraud in Italy. BT’S cash flow took a £500m hit this year and it was forced to take a £530m impairment, sending its shares plummeting.
Further bills related to the scandal have followed, and investors were also shocked by a £300m bill for failures at its Openreach network division.
Analysts at Barclays last week said there was cause for optimism, however, in part because BT may have been “too conservative” in making its provision for compensation for the failures.
Virgin Media, one of the customers Openreach failed, said it had received £22m. The figure was less than expected and could indicate a final cost of only £150m.