BT’s CEO Philip Jansen throws in the towel

BT Group CEO Philip Jansen presents the company's 2023 financial year results at the telco's London headquarters.

BT Group CEO Philip Jansen presents the company's 2023 financial year results at the telco's London headquarters.

  • BT’s CEO Philip Jansen is to step down within the next 12 months
  • The telco’s board has begun a formal succession process
  • Someone else will preside over the company’s major restructuring announced in May
  • He will still need to manage ongoing takeover speculation

Following multiple media reports over the weekend that BT has begun the search for a new boss, the UK national telco announced early Monday morning that current CEO Philip Jansen will step down within the next 12 months and that it has started a formal succession process

Jansen, who took over from Gavin Patterson in February 2019, has had a rocky time at the helm of the British incumbent and, according to various reports, he has been frustrated at BT’s languishing share price and keen to end his tenure for some time: The UK telco’s share price has dipped by about 45% to its current 122 pence since he took over as CEO, giving the company a current valuation of about £12.1bn.

That depressed share price has attracted opportunistic investors and led to a number of takeover bid rumours. Franco-Israeli billionaire telecoms and media investor Patrick Drahi, who owns European operator Altice and is known for his penchant for aggressive M&A moves, has built a 24.5% stake in the telco but has repeatedly denied he has plans to launch a full takeover offer. 

And just in the past few days, The Daily Telegraph has reported that BT is preparing to fend off an expected takeover bid “spearheaded” by Deutsche Telekom, which holds a 12% stake in the UK operator: The German operator’s CEO, Tim Höttges, told the Financial Times earlier this year that the UK telco still has “a lot of potential to increase its value”. 

It is also common knowledge that relations between Jensen and BT’s board have been fractious at times and that he and the operator’s former chairman, Jan du Plessis, did not see eye to eye. It was du Plessis who tempted Jansen away from Worldpay, one of the biggest payment processors in the US, but their relationship soured and comparative calm was restored only when du Plessis was replaced as chairman in late 2021 by Adam Crozier, the erstwhile CEO of UK free-to-air public broadcast network ITV. Scuttlebutt has it that Jansen may return to the US and possibly even to Worldpay. 

The low valuation and challenging telco economics also prompted Jansen to oversee a major restructuring plan that has already resulted in the merger of two of the telco’s largest and most sprawling arms, its Global and Enterprise divisions, to form BT Business – see BT merges units to form BT Business and save £100m.

The restructuring plan also includes an aggressive operating cost-reduction plan – BT aims to achieve annual cost savings of £3bn by 2025 – and a major long-term decrease in headcount. In May, Jansen announced that BT will reduce the size of its workforce by up to 55,000 jobs, or 42% of its total, by the end of the decade – see BT to cut up to 55,000 jobs in AI-enabled efficiency drive.

In addition, as TelecomTV reported last week, the operator is also revamping its renowned R&D unit at Adastral Park and reducing the number of staff at that facility by 1,100 – see Adastral Park restructuring is not part of major job cuts plan, claims BT.

All of these efforts are aimed at improving BT’s financial fortunes. For the 12 months to the end of March this year, BT hit its financial targets and reported an increase in like-for-like revenues and earnings, with pro forma sales up by 1% year on year to £20.43bn and pro forma earnings before interest, taxes, depreciation and amortisation (EBITDA) up 3% to £8bn. But in reporting these numbers, Jansen noted that this was the first time in six years that sales and earnings had increased. 

At the same time, though, BT’s debt pile has also been increasing, up by £850m to £18.86bn at the end of the most recent full financial year, while the operator’s capital expenditures (capex) came in higher than expected at £5.06bn, with capex levels set to stay at around that mark for the next few years. That’s because BT still has a lot of fibre access network build to complete and is still in the process of rolling out its 5G network. Jansen argued that these investments – in particular, Openreach’s fibre rollout coupled with ongoing investments in cloud-enabled, increasingly automated service delivery and network management platforms – will be vital for the telco’s future profitability and must be invested in now to gain those future benefits.

And it’s hard to argue against that, as BT at last has real broadband access competition in the form of Virgin Media O2, Cityfibre and some of the fibre-to-the-premises altnets that are gaining scale and continuing to attract investment, and if BT/Openreach doesn’t invest in its fibre infrastructure now, it will lose what is arguably its main competitive advantage: Currently, Openreach is on course to reach 25 million UK premises with its FTTP infrastructure by the end of 2026 and continues to avoid censure from UK regulator Ofcom as it introduces controversial discount pricing schemes.  

The FTTP rollout strategy has arguably been the main positive of Jansen’s tenure, with industry analyst Kester Mann, director of consumer and connectivity at CCS Insight, pointing to “the operator’s impressive response to the pandemic” and “major acceleration in the deployment of full fibre” as a couple of the highlights of his “rollercoaster ride at BT”, though the analyst also noted that Jansen has been on “increasingly shaky ground” in recent times. 

PP Foresight analyst Paolo Pescatore, who said Jansen’s departure has “been on the cards for some time”, also called out the fibre rollout strategy, as well as the “move away from costly sports rights,” as a plus point. “Openreach is now in a better place,” he noted, adding that “there’s not much more left for him to do. He has helped navigate the group through a difficult period… it’s time to think about the next chapter for both him and BT.” 

The view from BT’s board, though, is overwhelmingly positive, of course. “Philip has done an excellent job in his time at BT and the board is fully supportive of our long-term strategy, which he and his team are pursuing,” stated Crozier in BT’s official announcement about the CEO’s planned departure. “Whilst we are still in the early years of that transformation, we are on track to deliver. The succession process to replace Philip is something that the board was well prepared for. All appropriate candidates are being considered and we expect to be able to update the market on progress over the course of the summer.” 

So Jansen’s successor could be named over the next few months, it seems. But who are those candidates? CCS Insight’s Mann noted that while “many names will inevitably be linked to the role,” there is “no obvious initial candidate to take it on.”

PP Foresight’s Pescatore, though, believes there is a “prime candidate already at the business” in the form of Marc Allera, the current CEO of BT’s Consumer division. 

Another name being linked with the role is Allison Kirkby, president and CEO of Sweden’s Telia. She is a non-executive member of BT’s board and is a member of the operator’s Audit & Risk, Compliance and Nominations Committees. 

Whoever becomes BT’s next CEO, the telco’s aggrieved investors will be agitating for swift action to boost the company’s languishing share price, which has not been affected much by today’s announcement. 

- Ray Le Maistre, Editorial Director, and Martyn Warwick, Editor in Chief, TelecomTV