October 25, 2018 / 8:25 AM / in 4 months

UK's embattled BT names payment firm chief as new CEO

(Reuters) - BT Group has poached the co-CEO of payment processing firm Worldpay to be its next chief executive, ending months of speculation over who would be charged with turning round Britain’s biggest telecoms company.

British Telecom (BT)'s headquarters is seen in central London, Britain May 10, 2018. REUTERS/Hannah McKay/File Photo

Philip Jansen, who led Worldpay through Britain’s largest fintech IPO, will have to decide whether the former state monopoly needs a more radical restructuring, such as separating its network business Openreach, and whether it should cut dividends to pay for investments and a huge pension deficit.

The 51-year-old will replace Gavin Patterson, who run BT for almost five years and announced some 13,000 job cuts earlier this year as the company struggled with intense competition and an underperforming IT services unit.

Chairman Jan du Plessis said in June that while the board was confident in Patterson’s strategy, it doubted his ability to deliver it. BT shares have fallen 24 percent under Patterson.

Jansen, who will join the board as an executive director on Jan. 1 and take over as CEO at the start of February, previously worked with Patterson at cable firm Telewest, and both men also worked for consumer giant Procter & Gamble.

“Although his CV replicates outgoing Gavin Patterson’s in many aspects, his role at Worldpay is a key differential,” Macquarie Capital analyst Guy Peddy wrote in a note.

Worldpay last year agreed to be bought by U.S. rival Vantiv, creating a global payments giant.

At 1030 GMT, BT shares were down 3.4 percent at 241.75 pence, lagging a 0.1 percent drop in Britain’s benchmark FTSE-100 index.

The company also said former Vodafone, O2 and Telefonica executive Matthew Key would join the BT board as a non-executive director immediately.

Peddy, who has an “outperform” rating on BT shares, said Jansen’s agenda for his first 100 days should include a dividend cut, a push for next-generation 5G mobile technology, IT investment and holding on to Openreach.

Patterson engaged in fractious talks with Britain’s telecoms regulator about the fate of Openreach, which runs the national broadband network and which rivals say should be separated from BT to prevent it from gaining a competitive advantage.

He managed to avoid a full break-up of the group by agreeing to legally separate Openreach.

Patterson won plaudits when he took BT into TV sports, going head-to-head with rival Sky in Premier League soccer rights, and back into mobile by buying market leader EE.

But a fraud left a 530-million-pound ($684 million) black hole in the company’s Italian business, forcing Patterson to cut profit targets in 2017. In May, BT forecast stagnant profits for the next couple of years and failed to hit its revenue target.

Its shares have approximately halved in value since they peaked at more than 500 pence in late 2015 and early 2016.

Jansen will be paid 1.1 million pounds a year along with a cash allowance in lieu of pension of 15 percent of salary and an annual bonus of up to 240 percent of salary subject to performance.

Patterson received a total of 2.3 million pounds in the year to the end of March, according to BT’s annual report - basic pay of 997,000 pounds plus a 1.29 million pound bonus. He missed out on a bonus the previous year after a number of setbacks.

($1 = 0.7758 pounds)

Reporting by Arathy S Nair in Bengaluru; Editing by Adrian Croft and Mark Potter

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