BT Group's boardroom bust-up is reaching the boil, with a chairman having resigned, and CEO Philip Jansen confronting restive non-execs as he tries to swiftly overhaul the operator.
Jansen told directors they would need to choose between either Jan du Plessis – BT's City grandee chairman – or him, according to a report by the Financial Times (paywall applies).
And Jansen would not stay unless BT found itself a new chairman who would accelerate the pace of change, the CEO added.
Du Plessis was the one to go – although he'll remain in place until a replacement is found.
Jansen is a veteran of private equity-owned Worldpay, CEO during the heady lead-up to its 2015 IPO.
Coming shortly ahead of a high-stakes review by communications regulator Ofcom, the board bust-up was "a masterclass in how not to let a row blow over," tweeted Evening Standard City editor Jim Armitage.
In particular, Jansen would quite like to rev up BT's £12 billion full-fiber broadband rollout, a linchpin of a new strategy for the operator, though the widely expected Ofcom review is making him backpedal slightly.
Selling off a minority stake in the Openreach network business is something that has caught Jansen's eye, as have the Australian bank Macquarie and a sovereign wealth fund, both of which are potential buyers.
A £20 billion (US$27.9 billion) valuation last summer for Openreach dwarfs BT's own, now down at £13.7 billion ($19.1 billion).
(Curiously, this isn't that much more than the £12.5 billion BT paid to buy mobile operator EE in 2016).
The extra cash from a stake sale could come in handy for Jansen's £12 billion ($16.7 billion) dream of connecting 20 million homes to full-fiber lines by the end of the decade, and also for rooting out Huawei equipment from its networks.
The UK's largest provider of broadband, fixed-line and mobile services has now weathered choppy financial waters and two quarters of suspended dividends, with whispers of buyout firms rampant until BT brought in Goldman Sachs to fend them away.
And a £31 billion ($43.3 billion) mega-merger is underway between Virgin Media and O2, announced in May and now facing an intense once-over from the regulators.
This means BT would face a new telecoms giant to take on both it and Sky.
While like any former monopoly, BT is weighed down by a sluggish culture and costs such as pension liabilities – in its case, exceeding £50 billion ($69 billion).
When BT said in May 2020 it was suspending its dividends, it was brave new terrain.
Its dividends, in other years the highest of any FTSE 100 stock, had always made it a darling of pension funds and a large army of non-professional retail investors alike.
When in 2001, it cancelled a final dividend alone amid a £30 billion ($42 million) debt crisis, CEO Sir Peter Bonfield was out before the year's end.
BT was quick to say in October that dividends would resume again, but not until the year between March 2021 and March 2022.
Its share price was nonetheless halved during 2020, and down a precipitous 80% since October 2015.
Still, Jansen may "live to regret his boardroom coup", tweeted the Telegraph's City commentator Ben Marlow.
Du Plessis' priority was improving relations between BT and Ofcom, ahead of the regulator's big, long-awaited decision on fiber wholesale pricing, due later this month.
BT has urged Ofcom not to cap wholesale broadband prices for at least two decades. A decision on the point may come as early as March 18.
The chairman regarded the issue of the stake sale as settled in the negative, and discouraged further discussion.
Boards often are known to be awkward: this is, in part, is what they are for.
Jansen, though, felt BT's board under du Plessis agonized over decisions while he yearned to make swift job cuts, reaching to the thousands, and office shifts.
A private equity stake sale, of the sort for which Jansen pines, would though be controversial just as the government presses ahead with its nationwide broadband rollout plans.
Jansen getting his way now appears likely after du Plessis' departure, and infrastructure tax breaks announced in the Budget Speech of the UK's Chancellor, Rishi Sunak.
But in the long term, it's unlikely to win the CEO many friends in a remaining boardroom with which, like it or not, Jansen will come to find himself still stuck.
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