This week I am looking at BT, following the announcement last week that Chief Executive Gavin Patterson will step down later this year. BT confirmed that his departure was driven by poor reaction to its latest results and loss of investor confidence.
Mr Patterson’s position has been in question for some time. The company has faced a number of challenges in recent years, which have resulted in the shares trading at a near six year low. Recent issues have included an Italian accounting scandal, a slowdown in public sector spending, and a record fine from Ofcom. Despite ongoing concerns from shareholders, the timing of the board’s decision came as a surprise – only a month ago, Patterson was publicly backed by the chairman Jan du Plessis after unveiling an ambitious new restructuring plan.
The restructuring strategy came after the company failed to hit profit and revenue targets in the last year. Mr Patterson revealed that management intend to cut 13,000 jobs as well as close its iconic 150 year old headquarters in London, in an attempt to reduce costs. The company promises that the cost savings will give them the opportunity to invest heavily into 5G, aiming for BT and its mobile division EE to become the first business in the UK and Europe to have a live 5G network in 2019 – an exciting opportunity for the company, despite fierce competition from rival networks.
Patterson will remain in the role until a replacement Chief Executive is found, and has reassured investors that he will remain committed to the business and his updated strategy until his departure. Patterson believes that BT is well positioned to thrive in the future, and with the strong restructuring strategy underway, it will be interesting to see what his successor’s first move will be.