Shareholders ‘losing faith’ in Patterson at top of BT, says news report
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Shareholders ‘losing faith’ in Patterson at top of BT, says news report

Pressure increased on BT’s CEO Gavin Patterson today following reports that leading shareholders are talking to the company’s new chair about replacing him.

The Financial Times said it had talked to five of BT’s 20 largest investors, and all five were expressing reservations about Patterson’s suitability.

According to the FT, one said: “I don’t have much faith in Gavin.” Another said he was on his “last chance”. A third said he is “not the right person” for BT. The FT did not name its sources.

A number told the paper that they were seeking meetings with Jan du Plessis, who became chair of BT in November 2017, to discuss the future of Patterson, who has been CEO since 2013. Among other things, said the paper, they are concerned about BT’s acquisition of sports rights for its BT Sport service.


Last month BT announced it would fire 13,000 people from the company after reporting poor figures from all divisions apart from the mobile operation EE, which BT bought from Orange and Deutsche Telekom for £12.5 billion in January 2016.

One of the 13,000 who are leaving told Capacity the atmosphere in BT is “toxic”, saying it is “very similar to 2009 but with a less capable CEO”. Ian Livingston became CEO of BT in 2008, replacing Ben Verwaayen, who went on to lead Alcatel-Lucent for five years until he was replaced by Michel Combes. Two years later Nokia bought Alcatel-Lucent.

In Verwaayen’s time, as now, BT Global Services is at the heart of BT’s woes. In 2009 the group wrote down £1.16 billion in the value of the business and dispensed with the services of François Barrault, then CEO of BT Global Services.

In 2017 BT had to write off £530 million after an accounting scandal at the Italian division of BT Global Services. The president of BT’s European operations and the CEO and CFO of BT Italy all left. Luis Alvarez, CEO of BT Global Services, left and was replaced by Bas Burger, president of BT in the Americas.

On top of this last year the UK regulator, Ofcom, fined BT £42 million for failures in its Openreach wholesale last-mile division, and BT agreed to pay a further £300 million in compensation to Openreach’s wholesale customers.

All this has been reflected in BT’s share price, which has fallen by more than half from £4.52 in May 2016, just after the EE acquisition. Today shares were trading at £2.08 each, just 46% of the value of two years ago.

This is uncomfortable for many of BT’s large corporate shareholders – but for one of them it is good news as well as bad. Deutsche Telekom is the biggest shareholder, with 14% of the company as the result of the EE deal. (Orange took most of its payment in cash and later arranged an early exit for the rest.)

Two years ago each BT share was worth €5.92 at the pound/euro exchange rate at the time. Today, because of the slide in the value of the pound, a BT share in euro terms is worth only €2.37, just 40% of the 2016 price.

Under the terms of the EE acquisition, Deutsche Telekom cannot buy or sell BT shares until the beginning of 2019. BT’s market cap this morning was £20.6 billion, of which Deutsche Telekom already owns £2.9 billion worth.

In February,Deutsche Telekom CEO Tim Höttges – who is a non-executive director on BT’s board – told Capacity at a Mobile World Congress event that BT is “a very attractive company” and said it has “a great content strategy”.

According to the Financial Times this morning, du Plessis supports Patterson and the BT management team. The shareholders will gather on 11 July for their annual meeting – this year in Edinburgh. The FT quoted one of them as saying: “Shareholders are worn out.”


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