BT rings the changes as Patterson is ushered out
Telecoms giant begins search for a new chief to deliver on fresh strategy unveiled just weeks ago
GAVIN PATTERSON’S tumultuous five-year reign leading BT has come to an abrupt end just a month after the chief executive set out a new strategy for the struggling telecoms operator.
Days after BT was forced to defend the 50-year-old from a new round of public criticism by major shareholders, chairman Jan du Plessis called time on an era that has witnessed its biggest takeover, a controversial multibillionpound push into sports broadcasting, damaging battles with regulators and a major accounting scandal.
After early success when the £12.5bn acquisition of mobile operator EE led to speculation that BT was itself a target for Deutsche Telekom, the shares have suffered a steep decline. BT is down 60pc from its peak under Mr Patterson in late 2015, and 40pc lower over his entire tenure.
The hunt has already begun for a replacement. BT is initially looking for an outsider from the telecoms and technology industry willing to deliver on the strategy agreed by the board last month, which includes 13,000 job cuts, moving out of its old-fashioned City headquarters and increased spending on broadband upgrades.
Speculation inside BT is focused on Olaf Swantee, the former EE chief executive known for his energetic approach to restructuring and emphasis on network development. Currently CEO of Sunrise, a listed Swiss telecoms operator, he retains roots in the UK.
At EE he worked closely with Marc Allera, now head of BT’S consumer business, who prior to Mr Patterson’s sudden exit was seen as a potential successor, although not for a year or two. Lord Stephen Carter, the chief executive of the FTSE 100 exhibitions operator Informa, is also viewed as a potential candidate.
He would bring heavyweight regulatory experience as the founding chief executive of the telecoms watchdog Ofcom and front-line industry experience from stints in the senior ranks of the equipment maker Alcatel-lucent and the cable operator NTL.
Liv Garfield, the Severn Trent chief executive who previously ran Openreach, BT’S network subsidiary, could be a contender. She oversaw a serious failure at Openreach, however, as it sought to avoid compensation payments for delays to new high-speed lines. The mess was uncovered years after she left and triggered a £300m compensation bill, as well as a record fine from Ofcom, adding to BT’S financial problems under Mr Patterson.
Mr Du Plessis said: “Obviously we would like to move as fast as possible. At the same time it is a very big decision and we would be crazy to rush it.”
Mr Patterson is due to remain in the job until later this year, meaning he will attend what is likely to be a stormy AGM in Edinburgh next month.
Mr Du Plessis said he felt forced to act after last month’s strategy overhaul failed to lift the shares. There was nothing wrong with the plans, he added, but the muted reaction indicated a lack of faith in Mr Patterson to deliver it.
The chairman said: “I don’t think I have picked up a single comment from a shareholder or sell-side analyst questioning the wisdom of the strategy. The revised strategy that Gavin announced is endorsed by everybody.
“But the truth is many people questioned if we had the right guy to deliver. That is the harsh reality. I got the sense it was time for a change.”
Shareholder disquiet has simmered for at least a year. Last summer, a top investor in BT told The Daily Telegraph Mr Patterson was “not the right man
for the job”. Those comments have been echoed in recent days, although it is understood only one top 20 shareholder had indicated to Mr Du Plessis in the last month that it would withdraw support for the chief executive.
Mr Patterson, who joined BT 14 years ago and worked his way up through its consumer business, was sanguine after a bruising two years managing the competing demands of shareholders, staff, politicians, regulators and pensioners.
He said: “This is a tough job. Five years is a typical innings of a CEO of BT. We’ve announced the strategy for the next five years and I couldn’t do another five, I’ll be honest with you.”
He cited the acquisition of EE and re-entry into the mobile market as a highlight and defended his sports investments but admitted regrets over BT’S handling of talks with Ofcom over the independence of Openreach.
He said he had not yet considered his next move but added: “I’m only 50. I hopefully have got a job or maybe two left in me.”