Subscribe and receive the latest news from the industry.
Join 62,000+ members. Yes it's completely free.
June 11, 2018
For nearly 600 days in 2010 and 2011, Belgium had no elected government, amid a constitutional crisis in the small European country, and nobody really noticed. If anything, Belgium seemed to run better with its leaders out of the picture.
While a similar experience might be welcome in some parts of the telecom industry, BT Group plc (NYSE: BT; London: BTA) has decided an inept CEO is better than no CEO for the time being. Gavin Patterson, reportedly "sacked" by Chairman Jan du Plessis last week, will keep his role until BT's board has found a suitable replacement later this year. Where is that automated CEO when you need it? (See BT Waves Goodbye to Gorgeous Gavin.)
Figure 1: Not Looking Good Gavin Patterson, BT's current CEO, will leave the UK operator as soon as a replacement is found.
In all seriousness, shareholders whose unhappiness sealed Patterson's fate would not have expected to see him turfed immediately out of BT's headquarters with a cardboard box of hair-care products, Liverpool FC merchandise and other personal effects.
But they are reserving judgement on the UK operator's management overhaul until they have seen Patterson's replacement in action. BT's share price rose just 1% on June 11, when it announced Patterson would leave, and has lost 28% of its value in the last year alone. Some kind of improvement is a certainty when Patterson's successor is eventually named. A meaningful boost will happen only with the most astute management.
So who are the frontrunners for the role?
Marc Allera (Light Reading's odds: 5:1)
Light Reading's personal favorite already works at BT, and his reputation has not been tarnished by the operator's missteps and wrong-turns in the past two years. The former CEO of EE, the mobile giant that BT bought for £12.5 billion ($16.7 billion) in early 2016, Marc Allera took charge of BT's entire consumer business during an episode of restructuring in July 2017. (See BT Revamps Consumer Offers, Adds Amazon to TV and BT Rejigs Consumer Biz as Profits Hit by £225M Italy Payout.)
He has some of Patterson's showmanship but has been a safe pair of hands at EE, a relative high flyer in the group, and is spearheading the move into "convergence" that BT deems critical. While it is the consumer division that has been such a profligate spender, hurling money at TV soccer rights with the wayward riskiness of a throw by Liverpool goalkeeper Loris Karius, BT's questionable sports strategy pre-dates Allera. What to do about that strategy will be one of the most important decisions for BT's next boss. (See BT's Patterson May Be Running Out of Time.)
EE executives have done well since BT acquired them, and now occupy some of the most senior management positions at the UK telco. Allera's move into the top job would make EE's management takeover complete. (See BT Merges Business & Wholesale Arms, Hints at Future Layoffs.)
Simon Lowth (odds: 7:1)
Currently BT's chief financial officer, Simon Lowth is said to be popular among investors and provided some sharp responses to difficult questions about BT's figures on the recent earnings call about full-year results. He is relatively new to the telecom sector, having joined BT about two years ago from energy giant BG. Prior to that, he worked for drugs company AstraZeneca and utility business ScottishPower.
Lowth's appointment would hardly be an inspired choice, however. If Patterson brought energy, flair and an element of surprise, then Lowth's background and role seem likely to make him a far more conventional boss in the usual corporate mould. Perhaps that is what BT needs as it tries to sort out the problems that arose during the Patterson era. But plenty of critics will argue that Patterson failed partly because he ultimately left BT as a rather stuffy, bureaucratic, overstaffed and utility-like business, ill-equipped to meet new digital challenges. Handing the reins to 55-year-old CFO with a utility background may not convince skeptics that BT means to change.
Next page: Garfield, Carter and Swantee
Liv Garfield (odds: 9:1)
Currently CEO of water company Severn Trent, Liv Garfield is another executive with utility experience who is rumored to be in the running. At 42 years of age, she is much younger than Lowth, and her appointment would help to address the deficit of women in the telco boardroom. That alone could help BT shake off some of its reputation for stuffiness.
Also counting in Garfield's favor is her former telecom experience. Indeed, between 2011 and 2013, she was in charge of BT's Openreach division (now a legally distinct entity, although still part of BT Group), and before that she was the operator's regulatory chief. If any of the candidates for BT's top job are used to juggling shareholder and political interests, it is surely Garfield. That ability may be the essential requirement as concern grows about the UK's "gigabit" lag and the role the former state-owned monopoly should play in addressing it. (See Euronews: Openreach CEO Jumps Ship.)
On the downside, Garfield's stewardship of Openreach happened to coincide with BT wrongdoing over "deemed consent," a system mandated by regulatory authorities that requires BT to compensate wholesale customers when it misses service targets. Between January 2013 and December 2014, BT was found to have fiddled its compensation payments. It was accordingly fined £42 million ($56 million) in March last year. (See Eurobites: BT 'Fesses Up to Compensation-Fiddling on Ethernet Services.)
Olaf Swantee (odds: 9:1)
Currently the CEO of Swiss telco Sunrise, Olaf Swantee ran EE in the years after its creation -- from the merger of Orange UK and T-Mobile UK -- and before the BT acquisition. He is widely credited with pioneering the speedy rollout of 4G services in the UK market, stitching together the Orange and T-Mobile businesses and helping to make EE a more "digital" company than most other European service providers. (See Eurobites: Swantee Resurfaces at Sunrise.)
Swantee has long been removed from the UK telecom sector, but his name has been linked with the position Patterson is vacating. While individuals such as Lowth and Garfield would bring financial and regulatory expertise, Swantee might give BT some of that digital magic it has lacked in the past few years. And with BT apparently desperate to launch 5G services next year, the operator's board might regard Swantee as the perfect boss to take charge of a next-generation technology rollout. (See EE Switches On LTE-Advanced in UK.)
The UK's Financial Times also points out that Swantee maintains a close relationship with former EE shareholder Deutsche Telekom, which continues to hold a stake in BT. With Deutsche Telekom AG (NYSE: DT) less than happy about BT's recent performance, Swantee could be a helpful intermediary between the operator and one of its biggest shareholders. (See DT's Biggest BT Bother: Break-Up, Not Brexit.)
Stephen Carter (odds: 15:1)
Mainstream newspapers have not mentioned him in connection with the BT job, but could Stephen Carter throw his name into the hat? The CEO of the Informa information and events business has experience of running a FTSE 100 company and is well versed in telecom (full disclosure: Light Reading is a part of Informa Group). He previously worked at cable operator NTL (now subsumed into Virgin Media), led regulatory authority Ofcom between 2003 and 2007 and worked in various management positions at telecom equipment vendor Alcatel-Lucent (now a part of Nokia Corp. (NYSE: NOK)) between 2010 and 2013.
Carter is currently working on the acquisition of UBM, another UK events company, but might relish a new challenge, and a return to the UK telecom sector, once that deal is done. Besides experience and authority, he would bring an understanding of sectors outside but adjacent to the telecom industry, including publishing and broadcasting. He is also a UK peer (with the full title of Lord Carter of Barnes) and has excellent political connections.
Next page: Kirkby, Selley and Jeffrey
Allison Kirkby (odds: 11:1)
An all-too-rare example of a female CEO in the telecom industry, Allison Kirkby, who currently leads Sweden's Tele2, is also thought to be a candidate for BT's top job.
Like Simon Lowth, Kirkby has a finance background, but she has held the CEO role at Tele2 AB (Nasdaq: TLTO) for nearly three years, overseeing M&A activity and numerous operational changes at the company, which maintains subsidiaries in various European markets. While Kirkby does not appear to have worked in the UK telecom sector (at least not for many years), she has a good reputation in the European industry and has been exposed to most issues that BT is likely to encounter. (See Sweden's Tele2 to Swallow Com Hem in $3.3B Deal.)
All of that means BT's board would probably regard her as a competent replacement for Patterson, and someone able to work across multiple lines of business. That Tele2's share price has gained 18.6% in Stockholm over the last year will not hurt her chances, either.
Clive Selley (odds: 20:1)
Another BT insider who might get a shout is Clive Selley, the CEO of BT's Openreach business. This is a long shot for several reasons. As CEO of Openreach, Selley is somewhat removed from BT affairs (or supposed to be), and appointing him Patterson's successor might reinforce impressions Openreach is not as "legally separate" as BT makes out. (See BT Agrees to Openreach Split and BT Names Clive Selley as New Openreach CEO.)
He is also from the technology side of the business, and chief technology officers rarely find themselves dining at the top table (they are usually snacking on the side lines of tradeshows with reporters and analysts). The trend these days is to promote CFOs or those with a commercial background.
That said, Hans Vestberg has just landed the top job at Verizon Communications Inc. (NYSE: VZ), having previously been its CTO, and BT might feel a technology expert is highly appropriate given the network and IT challenges that lie ahead. If BT's board decides the number-one priority is the development of 5G and fiber networks supported by highly automated operations, Selley could be the man. (See Verizon Names Vestberg as New CEO.)
Nick Jeffrey (odds: 25:1)
Nowhere has Light Reading seen Nick Jeffrey named as a potential successor to Patterson, but the current boss of Vodafone UK would make an interesting choice for the job. His efforts at Vodafone will not have gone unnoticed by the BT board. Besides sprucing up the UK mobile operator's networks, and revamping its tariffs, Jeffrey has put the boot into BT through a partnership with fiber investor CityFibre, which competes against BT in various wholesale markets. A customer services overhaul that has seen Vodafone UK pioneer the use of "chatbots" will have caught the attention of any operator focused on digital transformation. (See Vodafone UK Turns Mobile Network Guns on BT/EE and Chatbot Takes Charge: Vodafone's Customer Services Overhaul.)
Like Allera, Jeffrey has some of Patterson's polish and panache, and he is not one for biting his tongue. His former criticisms of BT could make for some awkwardness, though. Last September, at a press event attended by Light Reading, he slammed "BT's stranglehold" and urged the regulator to get tough on the incumbent. Would he stand by those comments as BT CEO? (See Vodafone UK Boss Slams Openreach 'Stranglehold'.)
Next page: Dunne and Allardyce
Ronan Dunne (odds: 50:1)
Like Jeffrey, Ronan Dunne has long experience of working for one of BT's UK mobile adversaries. Although currently bossing Verizon Wireless in the US, he was Telefónica UK's CEO between 2008 and 2016, leaving after its failure to merge with Three UK, the smallest of the country's mobile network operators. (See Verizon Wireless Leadership a Dunne Deal.) Figure 10:
Reportedly pursued by Verizon at the same time Telefónica was trying to find him another role, the charismatic Dunne is evidently held in some regard. And he would be able to approach the BT CEO job in much the same way as Jeffrey, with a keen understanding of the UK telecom landscape from the perspective of other communications players. Such empathy has not always been the most obvious characteristic among BT CEOs.
A move to BT seems unlikely, though, if only because Dunne has only recently crossed the Atlantic to work at Verizon. His long tenure at Telefónica UK Ltd. suggests he is not the kind of man who quickly tires of a job, and the fast-moving US mobile market must seem like an exciting place to be.
Sam Allardyce (odds: 666:1)
Like managers of top-flight soccer teams, former telecom chiefs rarely find themselves out of work for long, as their own-goals and managerial shortcomings are either forgiven or forgotten. Take Hans Vestberg, for example. Two years ago, the erstwhile CEO of Ericsson AB (Nasdaq: ERIC) was persona non grata after running the Swedish vendor aground. Last year he made a stunning comeback as Verizon's networks chief, and last week it emerged he would succeed the retiring Lowell McAdam as CEO in August. (See Former Ericsson CEO Vestberg to Be Verizon's King of Networks and Ericsson Ejects CEO Vestberg.)
This got Light Reading thinking: If track record matters so little, and BT wants a boss from outside the industry, then why not throw caution to the wind and pick someone used to the musical chairs of soccer management to run BT? The UK incumbent loves soccer, after all, and most managers in the English Premier League would undoubtedly bring a fresh perspective to the running of a telecom business.
We can think of no better candidate than "Big Sam" Allardyce. He has never allowed abject failure to get in the way of his career ambitions, and nor have the clubs that have hired him. Allardyce has already managed the UK's national soccer team, albeit for only one match before he was sacked for misconduct. With this kind of experience in the bag, a move to the UK's main national telco would seem like a natural progression. Wouldn't it?
— Iain Morris, International Editor, Light Reading
Read more about:Europe
International Editor, Light Reading
Iain Morris joined Light Reading as News Editor at the start of 2015 -- and we mean, right at the start. His friends and family were still singing Auld Lang Syne as Iain started sourcing New Year's Eve UK mobile network congestion statistics. Prior to boosting Light Reading's UK-based editorial team numbers (he is based in London, south of the river), Iain was a successful freelance writer and editor who had been covering the telecoms sector for the past 15 years. His work has appeared in publications including The Economist (classy!) and The Observer, besides a variety of trade and business journals. He was previously the lead telecoms analyst for the Economist Intelligence Unit, and before that worked as a features editor at Telecommunications magazine. Iain started out in telecoms as an editor at consulting and market-research company Analysys (now Analysys Mason).
You May Also Like
Rethinking AIOPs — It's All About the DataMar 12, 2024
SCTE® LiveLearning for Professionals Webinar™ Series: Fiddling with Fixed WirelessMar 21, 2024
SCTE® LiveLearning for Professionals Webinar™ Series: Cable and 5G: The Odd Couple?Apr 18, 2024
SCTE® LiveLearning for Professionals Webinar™ Series: Delivering the DAA DifferenceMay 16, 2024