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BT Group CEO Gavin Patterson is to Step Down Later in 2018

Friday, June 8th, 2018 (7:35 am) - Score 1,647
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After a difficult couple of years the BT Group has today announced that their Chief Executive Officer (CEO), Gavin Patterson, will be stepping down later this year and the board has already commenced a search to identify his successor. A new boss is expected to be appointed during the second half of 2018.

It’s perhaps fair to say that BT has been under somewhat of a microscope for the past few years and they’ve not exactly had the best run of things, which has resulted in a continuing downward trend for their share value and that’s not made investors happy. At its peak in November 2015 you could still grab BT shares for around 500 and today it’s closer to 200. The reasons for all this are many and varied.

During Patterson’s tenure the company has suffered as Ofcom’s Strategic Review further weakened their position in the market, not least through the greater separation and independence of their network access division (Openreach). This has also given rivals more access to their national UK telecoms network and in the near future Ofcom are expected to have another bash at forcing them to offer Dark Fibre.

On top of that they’ve had to deal with the fallout from an Italian accounting scandal, job cuts, a huge fine and repayment for delayed Ethernet installs, pressure from the government and rival UK ISPs to deliver more FTTP broadband, uncertainty over Brexit, a failure to get their voluntary 10Mbps USO proposal passed, more pension troubles and the costs involved with EE’s merger etc.

Admittedly many of these challenges would have happened regardless of who was in charge at the time but there are only so many punches a company can take before something has to give.

Jan du Plessis, Chairman of BT said:

“Gavin has been with BT for just over 14 years and I want to thank him for his contribution to our business during that time, in particular during the almost five years that he has served as Chief Executive.

The Board is fully supportive of the strategy recently set out by Gavin and his team. The broader reaction to our recent results announcement has though demonstrated to Gavin and me that there is a need for a change of leadership to deliver this strategy.

To that end a number of concrete initiatives have already been launched and Gavin’s commitment to continue to lead the business during this transition phase will provide invaluable continuity. While BT is a very demanding business, with multiple stakeholders, we do have significant opportunities ahead of us. I am confident that, for the remainder of his term, Gavin and his senior management team will continue to display the energy required to deal with every dimension of the task at hand.”

Gavin Patterson, Outgoing CEO of BT Group, said:

“It’s been an honour to lead BT since 2013, and serve as a member of the Board for the last 10 years. Throughout that time I’ve been immensely proud of what we’ve achieved, in particular the transformation of the business in recent years with the launch of BT Sport, the purchase and integration of EE, and the agreement to create greater independence for Openreach. That, combined with the critical expansion of our superfast broadband network to 27m customers, and our stated ambition to reach 10m homes with ultrafast broadband by the mid-2020s have fundamentally repositioned the company. BT is a great business and with the new management team I’ve recently put in place, is I believe very well positioned to thrive in the future.”

At this point BT will no doubt be looking toward the Government’s Future Telecoms Infrastructure Review to see how that will impact their business, which is expected to surface sometime this summer. The review is considering how to make the UK a more attractive place for investment to support the rollout of “full fibre” broadband (FTTP/H) and future 5G Mobile networks, but depending upon the approach it could either bring good or bad news for the beleaguered telecoms giant.

Suffice to say that keeping Gavin in position until the outcome of that review is known would be a wise move as anybody who follows will have a better starting position to mould the company’s future direction, while leaving behind its past baggage.

In separate news we note that BT’s broadband package page has oddly reintroduce their old 40Mbps FTTC based profile and phone line rental package, which offers “average” download speeds of 36Mbps on an 18 month contract from £29.99 a month (plus £59.99 upfront). The operator had previously replaced this service with their 50Mbps package, which is a little bit more expensive.

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Mark Jackson
By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, , Facebook and Linkedin.
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31 Responses
  1. Avatar Marty

    Is this a joke? I almost choked on my tea 😉

    • Avatar Marty

      Jokes aside Some of the situations he’s been placed in was outside of his control. Not sure if it’s a good or bad thing.

      While BT find a successor I hope they find somebody who can speak as an unified voice with Clive selley (of openreach) to hammer home to OFCOM and the government that regulatory baggage is doing nobody any favours for FTTP deployment.

    • Avatar mrpops2ko

      Completely agree with Marty. Light touch government regulation is nothing but a joke. Nationalise BT and bring it back under public ownership. Infrastructure development or lack thereof should not be at the benevolence of private entities.

    • Avatar JustAnotherFileServer

      @mrpops2ko It’s when infrastructure is under government control that we see non development and something out of the Victorian age.

    • Avatar tonyp

      In My Honest Opinion, the last thing needed for national infrastructure investment is H.M. Treasury deciding where funds shall be spent. With department ministers with their begging bowls stretched out (e.g. NHS, Local Government, DEFRA and so on), network infrastructure would have to put up with penny packets of funding without the option of borrowing from the money market (even though that would add to the overall national debt which, in the end, we all have to pay for).

      Perhaps BT should have borrowed money to pay for infrastructure, which is a long term asset, rather than billions for footie rights which are essentially short term and do not have a permanent return on investment?

    • Avatar Ade Thompson

      Yes, renationalise it. The company is financially kapputt.

      BT never will invest for the future. It can’t. It’s completely cripped – hamstrung – by its £14 billion pension black hole.

      BT has the second worse pension deficit IN THE WORLD. With current earnings the deficit could never be plugged.

      Probably the only reason it hasn’t been re-nationalised is because the Government really does not want those pension liabilities sullying its own balance sheet.

      In the mean time, the nation’s “information superhighway” crawls along indefinitely in limp-mode!

  2. Avatar DL

    Pedantic typo alert: “At it’s peak in…”

    Possessive form of “its” doesn’t have an apostrophe (unhelpfully unlike other possessives.)

  3. Avatar A_Builder

    Well the destruction in shareholder value was pretty spectacular.

    I wouldn’t be too surprised if the GFast rollout was curtailed to move resources to fibre deployment. It definitely hasn’t been going swimmingly.

    As I’ve posted many times if Fibre First has been started 5 years ago BT wouldn’t be in the mess it is in now.

    Let’s hope the next incumbent has a technical as well as a long term asset focussed accountancy grip.

    • Avatar Fastman

      unbelievable statement

      I wouldn’t be too surprised if the GFast rollout was curtailed to move resources to fibre deployment. It definitely hasn’t been going swimmingly. —

      that’s not going to change

      As I’ve posted many times if Fibre First has been started 5 years ago BT wouldn’t be in the mess it is in now. —

      100% correct it would be in far greater one based on what the costs of deploying FTTP were how FTTP was delivered and the resources required to deliver miniscule number of premises at that time !!!!

    • Avatar A Builder

      @ Fastman

      unbelievable statement

      “”I wouldn’t be too surprised if the GFast rollout was curtailed to move resources to fibre deployment. It definitely hasn’t been going swimmingly. —”

      that’s not going to change”

      Really the penny seems to be dropping that Gfast only gives a significant speed improvement to a tiny number of properties? I’m only 140m wire length from the PCP and get 285Mb/s. Another person I know who is on about 200m is down to 150ish so people equidistant between the two PCP’s at either end of our street in London will be getting no benefit from this at all. We all had perfectly good VDSL2+ connections. It would have been better for BT to have offered bonded VDSL options or supported a 35 profile and reused the existing infrastructure fully.

      The 35 profile argument was lost when putting Gfast on phone poles was being bandied around and power came up as the blocking issue. This is pure lack of understanding of tech by those at the top of the leadership tree.

      “”As I’ve posted many times if Fibre First has been started 5 years ago BT wouldn’t be in the mess it is in now. —”

      100% correct it would be in far greater one based on what the costs of deploying FTTP were how FTTP was delivered and the resources required to deliver miniscule number of premises at that time !!!!”

      Shareholders have been quietly and not so quietly recently asking BT to dividend less and spend more on fibre for a good few years now. So nobody other than BT itself had any real issue with investment. When BT’s share price was 500 it would have been easy to raise funding on very good terms to do a good few million premises.

      Fibre First is, if OR is to be believed is a change in mindset to mass roll out of fibre and a focus on primarily deploying pure fibre rather than hybrid solutions. It is also a using pole mounted/overhead fibre so cheaper to deploy. Again if the public announcements are to be believed.

      My point being that in any roll out there is a ramp up. OR/BT are starting a ramp up in a hurry from a very low roll rate and this is causing resource stress. If the ramp up had been started 5 years ago they would be at full pelt by now and have a robust prediction or roll rate.

      As a shareholder I like to see investment in good quality long term assets with a sure return. Quite like dividend too but not at the expense of the long term asset base and share value.

      So would I like to have seen BT go to the market and borrow £10B 5 years ago to fibre up a swathe of the County then the answer is an emphatic yes. BT market cap now is £25B Market Cap back then was £70B. Most of the drop in market cap is a reflection of poor management as evidenced by lack of investment in fibre and finding £400M and Xk employers lost down the back of the corporate sofa.

      What is totally lost in all of this is that the drop in BT market cap is spectacular and probably far more than the cost of full fibre for the country as a whole.

    • Avatar MikeW

      The 5-year thing sounds a bit disingenuous, TBH.

      5 years ago, the commercial rollout was both in full swing and winding down… reaching the end of the commercial rollout was about 9 months away, so will have been largely planned, if not set in stone.

      Instead, it was the BDUK rollout that was ramping-up. And BDUK was all about the value-for-money target – pass the most premises as cheaply as possible.

      A fibre-first policy at that point in time, it seems to me, would have been incompatible with the work BT/Openreach actually had in the pipeline.

      To have a significant impact, I reckon a fibre-first policy would need to have been introduced 8 years ago. The commercial rollout would have looked very different (part of which is that it would have been slower), and I’m not sure BDUK would look anything like it did.

    • Avatar A Builder

      @MikeW

      Nice to see a balanced informed post on this.

      I agree with you factually regarding the timings. However, the areas where fibre was the only option should have been identified and work, at least on those areas, pressed ahead with. This is areas such as the City of London and other areas with high levels of EOL’s where VDSL has not been deployed much or to great effect.

      I am not saying that VDSL was a terrible idea: it was just about fine for the time but it was forced on BT by the launch of 4G. The terrible idea was trying to go further with Gfast rather than to upgrade the existing VDSL estate which would have been even cheaper and delivered much the same thing to most people probably faster.

      I am guessing that the issue of headline speed competition won the argument and that idea of being able to put up 350 against VM 350 was probably the clincher. Obviously that evaporates when VM do full DOCIS3.1.

      The fibre roll rate was there five years ago and should have been ramped up so that there was a basis to raise roll rate from today and a trained and optimised tech base to do it from.

  4. Avatar A_Builder

    Great comment on BBC site

    “Great quote from an FT article when Gavin Patterson was appointed chief executive back in 2013.

    “The suave former Procter & Gamble marketing chief could not be more different from his predecessor Ian Livingston, a combative Glaswegian. ‘Ian used to say that one button undone was fine, two was a bit racy, and three was Gavin’,” one former BT staffer told the paper.”

    • Avatar NGA for all

      How Ian Livingston, became Lord Livingston and a Junior Minister Of Trade (Investment) while delivering £1.3bn of the £2.5bn capital promised and no report on the £1bn promised for rural is a story yet to be told.

    • Avatar TheFacts

      @NGA – links to numbers and statements please.

      Company plans change, is that a problem?

    • Avatar Fastman

      VFM it said 2.5bn (only you think that 2.5bn is capex) and because you can only se 1.3 capex you continue this miscompection deliberate misunderstanding as some form of fraud / lies / underhand

      investment for a business will always be a mix of capex and opex

    • Avatar NGA for all

      Facts -£1.3bn is from the WLA – Ofcom/Cartesian cost models aligned to BT commercials cabs of 49,000. If plan change – not doing FTTP, the numbers in representations to public bodies should reflect change.
      Fastman – opex Audit Scotland looked at this, £10 per customer passed for 10 future years. This a bit of a joke.
      Mike McTeague opening statements on his arrival on the lack of investment is not reflected in your comments.

  5. Avatar un4h731x0rp3r0m

    “At its peak in November 2015 you could still grab BT shares for around 500 and today it’s closer to 200. The reasons for all this are many and varied.”

    That’s some pretty expensive old toilet paper some still own

  6. Avatar Meadmodj

    The main criticism of Gavin is that he chose to listen to the wrong people within the business. Somewhere the main core business got ignored and whilst BT Content/Sport was a good idea we all knew that BT would not be quick enough before the US arrived. The only thing that he has got right is the purchase of EE as the future is in a combined mobile and fixed offering. The Government and of course Ofcom have played their part in distorting many of the executive decisions within BT over the last 20 years. Major changes in 2019 are rumoured and assume they are looking for a CEO to make them happen.

    • Avatar FibreFred

      “Major changes in 2019 are rumoured”

      They are already happening aren’t they? They’ve announced the future plans inc the loss of 13,000 people

    • Avatar Meadmodj

      That’s current, to drastically trim BT as some departments have become out of proportion (EE as the benchmark). BT needs a cash injection to turn around years of neglect in the core UK business. Deutsche Telekom (still owns around 12%) or others will have a big influence what happens next. The choice of CEO may indicate the way it is going to go.

    • Avatar A Builder

      @Meadmodj

      To be fair, and I doubt know if I have an exceptional experience, but EE has been positively transformed since BT bought it. Dealing with them by email is so easy now to order new SIM’s etc. And pricing seems much better. Maybe I’m lucky and we are spending enough to be kept happy.

      Yes, they need to catch up on network investment. But they also need to improve efficiency an awful lot.

      I was looking out of the window of the stack of cabins on one a my sites a few months ago and there was a team from HyperOptic putting in fibre and a team from BT doing the same in in different locations a few 100m apart. The Hyper guys turned up in their little vans and moved around with energy and came did their stuff and left in a few hours and didn’t really stop moving. The BT guys were leaning on the cabs (they were not doing anything in the cabs as they were fibre ducting guys), chatting on the phone, no sense of urgency at all work progressing at a snails pace with no clear urgency. It was quite a contrast and said a lot about workforce motivation as well as costs.

    • Avatar Fastman

      abuilder

      so do you know what they were doing, waiting for, (perhaps they were supporting the Hyperoptic guys — you clearly have not idea or perhaps they were held up by, no you don’t and so you make wild assumption of things that you have no real view of only your perception (actually I assume you were referring to Openreach when you said fibre ducting guys (worrying that you don’t realise that Openreach

      The main criticism of Gavin is that he chose to listen to the wrong people within the business. Somewhere the main core business got ignored and whilst BT Content/Sport was a good id

      interesting the deployment of sport and quad play drove other providers into the FTTC market with a vengeance — you only look at who was selling FTTC before sport and who is selling it now

      you have completely missed the point of sport / TV

    • Avatar FibreFred

      @Meadmodj

      Got ya. It will be interesting to see if he gets the job. If so big changes ahead.

  7. Avatar Neverbuyanewbuild

    @A builder.

    What a load of bollocks. I know many people that have literally given their lives to supply people in this country broadband and they don’t work for bloody Hyperoptic. I usually agree with your comments on this site but that last statement is utter garbage.

    Good day sir.

  8. Avatar A Builder

    @Fastman

    I know exactly what both teams were doing. Both buildings being connected are under our warranty so I called the building managers and asked them what was being done.

    Your point about my confusing OR and BT is valid.

    The OR team was putting the 25mm tube in place for another team to blow the fibre through later.

    @Neverbuyanewbuild

    I appreciate the sentiment and strength of feeling but what I saw was a total sketch. And actually very funny to watch

    I don’t have anything against the OR workforce. I know from experience that is more the way that things are done, communicated and organised that prints through to this kind of behaviour on the ground. Ultimately this comment string is more about what is going on at the top of the tree and we have wandered very off topic.

    My uncle used to work for Telecom as a linesman back in the day and he was a real top grafter.

    • Avatar Fastman

      my point is the same the comments is not helpful, not aware of all of the facts and based on a conversation with a customer (who I assumes customer is Hyperoptic of which Openreach were working on behalf of !!!!! Whats someome uncle did as a linesman back in State owned days are really not relevant in the very complex equivalent environment Openreach works in

    • Avatar A Builder

      @Fastman

      My comment about my well respected relative was purely in response to @Neverbuyanewbuild who, had probably rightly, taken umbrage at my earlier comment. All I was saying was that I do have some degree of insight into the intense manual work that pole and duct work is.

      I would totally accept that the overall network is totally different to what it was in the 80/90’s (even if some of the legacy copper layout would look suspiciously similar).

      The two teams were doing totally different things. Hyperoptic were linking from their own PoP over the road to the new building. OR was running a leased line into an office. As I said both of the building are under our warranty so all works have to be reported to us so I do have very detailed information including the wayleaves visible to me on our database.

      It could well be that the OR guys were struggling to get a coherent answer out of their controllers as to what to do. It isn’t entirely unknown for OR information flow to be less than optimal.

  9. Avatar Simon

    Shame – he was the only one who ever did good when I needed him.

  10. Avatar A_Builder

    @Simon

    Ha!

    Got to get some humour going on this site.

    It is a sunny afternoon after all.

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