BT Group Picks Philip Jansen to Replace Gavin Patterson as CEO

After a lengthy hunt the UK telecoms giant, BT, has finally found a replacement for their outgoing Chief Executive Officer (CEO), Gavin Patterson, in the form of ex-Worldpay co-chief, Philip Jansen (age 51). Patterson will continue to serve as CEO until 31st January 2019.

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 hasn’t made investors happy (some are now even calling for Openreach to be completely split). On the other hand the operator’s share price has now started to slowly climb back up but there are still plenty of challenges ahead.

During Patterson’s tenure the company has suffered as Ofcom’s Strategic Review further weakened their position, 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.

On top of that Patterson also had to contend with an Italian accounting scandal, job cuts (partly negated by a recent increase in engineering positions), a huge fine and repayment for delayed Ethernet installs, pressure from the government and rival ISPs to deliver more FTTP broadband, uncertainty over Brexit, a failure to get their voluntary 10Mbps USO proposal passed, pension troubles and the costs involved with EE’s merger etc.

By comparison Philip Jansen will step into the role during a period of relative stability, albeit one with plenty of challenges. Jansen will be paid a salary of £1,100,000 per annum (fixed at this level for 5 years) and an annual bonus of up to 240% of salary, which is subject to performance.

He’ll also benefit from an Incentive Share Plan and a buy-out to compensate him for the loss in shares that will be forfeited on leaving Worldpay (i.e. an award of 370,798 shares in BT, which have a face value of £895,848). Philip has similarly committed to invest £2m in BT shares within 30 days of this announcement.

Philip Jansen said:

“I’m honoured to be appointed as the next Chief Executive of BT Group. BT is a special company with a wonderful history and a very exciting future. It has built a leading position across fixed and mobile networks, creating an opportunity to deliver increasing benefits for our customers, the UK economy and our shareholders.

In a competitive market we will need to be absolutely focused on our customers’ needs and pursue the right technology investments to help grow the business. I’m excited to get to know all the people at BT and work together to take the business forward.”

Jan du Plessis, Chairman of BT Group, said:

“The Board is delighted to have appointed Philip as our new Chief Executive. He is a proven leader with outstanding experience in managing large complex businesses. Philip’s strong leadership has inspired his teams, successfully transformed businesses across multiple industries and created significant value for shareholders.

His most recent success at Worldpay, a technology-led business, means he is well suited to build on the solid foundations that are in place at BT. I look forward to working with him to position BT at the heart of the UK’s digital economy.”

It’s worth noting that Jansen’s employment history does have some telecoms related connections, not least back in 1999 when he was the Group Marketing Director for UK cable operator Telewest Communications and later promoted to be the MD of its Consumer Division (Telewest and NTL merged over a decade ago to become Virgin Media). Today’s market is of course very different.

In terms of those aforementioned challenges, Jansen will have to contend with a much more aggressively competitive market for Fibre-to-the-Premises (FTTP) services, one where they do not dominate. We suspect that it won’t now be long before Openreach is able to confirm a solid commitment to extend their “full fibre” broadband to 10 million UK premises by around 2025 (as opposed to it just being an ambition).

On top of that the operator will, like everybody else, need to adapt to all of the changes that were recently proposed as part of the Government’s Future Telecoms Infrastructure Review (FTIR) and other measures from Ofcom, such as their anticipated second stab at a regulated Dark Fibre solution. Not to mention that question mark over how BT’s Pay TV service adapts (last we saw it was still bleeding customers).