Philip Jansen’s belief that he was the right man to revive BT’s fortunes led the outgoing chief executive to spend more than £7m on shares in the telecoms giant during his tenure. Yet his successor will inherit a business that has seen more than £10bn wiped off its market value over the past four years.
On Monday, the 56-year-old confirmed that he intends to stand down as chief executive, a role he has held since February 2019, with the chair, Adam Crozier, due to give an update on the hunt for a successor later in the summer.
Jansen – who is nursing a paper loss of about £1.7m on his investment in BT shares according to analysts at Numis – will be remembered as a wartime general who navigated BT through the pandemic and instituted a sweeping £3bn plan to cut costs and staff while also ploughing £15bn into rolling out next-generation 5G mobile and full-fibre broadband across the UK.
“Clearly he set BT on the right path, he has been positive that’s for sure, but I think the job is far, far from finished,” says John Karidis, a telecoms analyst at Numis. “But equally, what is left now is the need to execute really well for another four to five years. And in the meantime the cracks are starting to appear.”
BT’s board and the headhunting firm Spencer Stuart are tasked with finding Jansen’s successor. So far the only publicly known contender keen to take over when Jansen stands down at some point over the next 12 months is the company veteran Marc Allera, who runs BT’s consumer division.
There are those within BT who would welcome the return of the former EE chief executive Olaf Swantee, who left in 2016 after BT’s £12.5bn takeover of the mobile operator. He was most recently linked with the top role at Vodafone.
Other names touted include Dominique Leroy, the former boss of BT’s Belgian counterpart Proximus who holds board positions at companies including BT’s second-biggest shareholder Deutsche Telekom and was named as a contender at the time of Jansen’s appointment.
Allison Kirkby, the chief executive of the Swedish telco Telia who is a non-executive director at BT, has also been linked, as has Stephen Carter, the former boss of NTL who was appointed to Vodafone’s board last year. However, he has previously indicated a desire to remain at the helm of London-listed exhibitions firm Informa.
Jansen has undertaken an impressive amount of the restructuring at BT – from resolving a dispute over pay and cuts that resulted in a first national strike in 35 years to offloading the costly pay-TV sport business in a £633m deal with US group Warner Bros Discovery. However, investors have effectively shrugged – the company’s market capitalisation has fallen by 47% from £22.8bn to £12.14bn during his tenure.
“Jansen had been looking on increasingly shaky ground at BT,” says Kester Mann, the director of consumer and connectivity at research firm CCS Insight.
However, he is not alone in attempting to revamp a major player in the embattled telecoms market. Vodafone recently announced a UK joint venture with mobile operator Three, alongside exits and sell-offs in other markets and the ousting of its group chief executive, in an effort to revitalise an ailing share price.
Three years ago the pay-TV and broadband operator Virgin Media struck a £31bn merger deal with O2 UK, Britain’s biggest mobile operator, to create a new “national champion” to compete with BT.
The BT management shake-up and poor share performance have reignited the prospect of a potential takeover by Deutsche Telekom, which became the company’s second-largest shareholder after gaining a 12% stake as part of the deal to take over EE.
“We think BT’s fundamental problems will prevail no matter who owns the company,” says Karidis. “We think Deutsche Telekom’s team is top tier and therefore not delusional to think it can do better than BT’s top team.”
BT’s largest shareholder, the French telecoms billionaire Patrick Drahi who controls an almost 25% stake, has maintained he is not interested in a takeover and supports the strategic direction the company’s management has taken to date.
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Jansen has made the fibre rollout a central mission. Industry watchers had expected the broadband subsidiary Openreach to benefit from a potential easing in competition from a number of smaller market players building their own networks, labelled “alt nets”, such as CityFibre, amid choppy economics conditions.
But one industry executive says: “Reports of the demise of the alt nets by BT is greatly exaggerated. They are not dying, some are getting stronger and adding more customers than they were and they will grow to continue to threaten Openreach.”
A new chief executive is likely to revisit the ultimate future of Openreach, which in recent years has been the subject of speculation of a part or full sale by BT. Under Jansen, the company has maintained that it is inextricably linked to its future operations and cannot be spun off.
One industry source describes Jansen as impatient, a good thing in their view as it has enabled significant progress in restructuring BT during his tenure.
However, with a £100m fortune built on the huge success at his previous employer WorldPay under his belt, Jansen has decided his ultimate goal of recreating the glory days of the former monopoly as a “national champion” is proving to be a much longer game than he anticipated.
“You can’t blame him for where BT is in terms of market value, he definitely believed his own Kool-Aid which he proved with the level of his personal investment in the business,” says one source.
“Whoever takes over needs to be mindful that the fact of BT’s life is that infrastructure-based competition is a very difficult place to create value, and you can’t sort out all the structural headwinds.”
