One month after announcing a bold set of job cuts in an attempt to turn around operations, BT Chief Executive Gavin Patterson has become a casualty himself.
London-based BT Group today said that Patterson would “be stepping down” later this year, with the board having begun a search for a successor. Patterson, who has been with the telecom provider for 14 years and chief executive for the past five years, will stay on until his replacement is found. That is expected to happen by year-end.
Reports indicated that the BT board was pressured to make the move due to investor concerns over recently announced initiatives. BT’s stock had sunk to a new 52-week low since those plans were announced last month but was trading up more than 1 percent early Friday.
BT last month said it would cut 13,000 jobs primarily in back-office and middle-management roles. It also announced plans to ditch its London headquarters in an effort to downsize and evolve with the market.
Patterson at that time said the move was a “pivotal moment for BT,” on a fiscal fourth quarter 2018 earnings call with investors, according to the Seeking Alpha transcript.
BT Chairman Jan du Plessis said that despite the leadership change, the company remained focused on the plans implemented by Patterson.
“The board is fully supportive of the strategy recently set out by Gavin and his team,” du Plessis explained in a statement tied to the Patterson announcement. “The broader reaction to our recent results announcement has though demonstrated to Gavin and me that there is a need for a change of leadership to deliver this strategy.”
That support perplexed at least one analyst.
“What’s the point in changing the man at the top if he is merely tasked with carrying on with a flawed strategy?” wrote Mike van Dulken, head of research at Accendo Markets, in a research note on CNN Money. “Patterson is also potentially in place for another six to seven months. Will he continue to lead his troops on the same bumpy trail?”
BT had reported that fourth quarter revenues dropped 3 percent year over year to $8 billion. The company placed some of the blame on the regulatory environment, saying it had a $675 million impact on BT over the past three years. BT also said that the expected impact over the coming three years could be greater than $1 billion.
In an attempt to offset that impact, BT was focused on reducing cash costs by $2 billion including a nearly $1.1 billion payback over two years. Nearly $1.2 billion of the reduced costs will come from the job cuts. That number may now increase slightly as Patterson was paid just over $3 million in compensation last year.