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Verwaayen Set to Leave BT

Michelle Donegan
News Analysis
Michelle Donegan

BT Group plc (NYSE: BT; London: BTA)'s straight-talking, media-friendly chief executive Ben Verwaayen says he will leave BT at the end of May after leading the British carrier for more than six years. (See BT's Verwaayen Steps Down.)

Verywaayen will step down as CEO at the end of May and will leave the board of directors at the end of June. He'll be replaced by BT Retail's chief executive Ian Livingston. (See BT Snares Lucent Exec, BT CEO Is Knighted , and Knight Time for BT.)

"He feels he's had a good run... and now it's time to let someone else have a go," says a BT spokesman. "It's nothing more dramatic than that."

The spokesman says Verwaayen made his decision recently and that he is not leaving BT for another position elsewhere. The spokesman said Verwaayen's decision was not forced by BT's board. Verwaayen has a 12-month rolling contract, which he has been on since he joined BT in January 2002, but apparently a contract renewal was not the issue; the BT chief has just decided to go.

Verwaayen's successor Livingston certainly has a tough act to follow. To say that Verwaayen transformed BT is putting it mildly. He has taken a staid, old British incumbent and made it a player in next-generation networking.

"Verwaayen sorted out the mess that was BT in 2002... It was a big job to pull BT back from the abyss," says Mike Cansfield, telecoms strategy practice leader at Ovum Ltd. "Also, the rapprochement and constructive dialogue with the regulator was a huge achievement."

Verwaayen navigated BT through a tense government investigation into whether the incumbent should be broken up. In the end, BT worked with regulator Ofcom and split out its access network business on its own terms with the creation of Openreach . (See BT Let Off the Hook, Government Report Cheers BT, BT Opens Up Access.)

His legacy in technology terms will be the massive and groundbreaking 21CN project -- a converged, all-IP network that BT is expected to migrate to some time in 2011. (See BT Moves Ahead With Mega Project and BT Inches Toward Telco 2.0.)

The 21CN has encountered some setbacks recently, and the timeline for the 21CN completion has slipped. Light Reading has reported that the operator is dealing with delays in the delivery of multiservice access equipment and problems with the new network's voice service related-elements in the 21CN Intelligence Node. (See BT: 21CN Slips, IPTV Nears, BT Aims to Finish 21CN in Late 2011, Upheaval at BT's 21CN?, and Green Leaves BT.)

"BT has been very quiet about 21CN -- strangely so," says Cansfield. "BT needs to be clear about what it's doing with 21CN."

Heavy Reading's chief analyst Graham Finnie says that Verwaayen has done an excellent job of marketing BT to the world through the high-profile 21CN project and the separation of Openreach. But the operator hasn't really done any better than other incumbent carriers that face the same challenge of being "reliant on revenues from saturated or maturing commodity products."

And in some cases BT lags other incumbents in technology innovation.

"BT has been slower than other telcos in some respects, specifically in launching content/entertainment services and in committing to deep fiber or FTTH strategies," says Finnie. "They have built a large global services business but it is barely profitable. The most profitable business is the wholesale business, which is in decline."

So running BT, prestigious as it is, won't be an easy job for Livingston. "Livingston will face at least as many challenges as Verwaayen as BT commits fully to NGN and tries to open up its platforms to third parties," says Finnie. "BT has a lower market share in broadband than most incumbents, and it is seeing revenue decline in its wholesale business. Revenues are flat overall. There will be plenty to do."

At BT Retail, Livingston has a good track record since he became CEO in 2005. "It's growing as a business and it's more profitable than it has been in years," says Ovum's Cansfield.

Those skills will be most welcome at BT Group, which faces the challenge of how to grow its top-line revenues.

Dresdner Kleinwort analyst Lawrence Sugarman welcomed the management change.

"Ian should bring a more direct and focused style in comparison to Ben's more visionary one," writes Sugarman in a research note. "In the current environment this change in style should be positive."

Livingston will be replaced by Gavin Patterson, who is currently group managing director of BT's consumer division. Meanwhile, Verwaayen will deliver BT's full-year results on May 15 and focus on the handover to Livingston.

— Michelle Donegan, European Editor, Light Reading

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User Rank: Light Beer
12/5/2012 | 3:43:29 PM
re: Verwaayen Set to Leave BT
It is about time this guy moved on. Prediction CTO is going to go soon.

21st will be a disaster and a new RFP will be on the streeet in 9 months for 21.5 - lol

BT is still not a player.
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