(Rewrites with more analyst comments, background, shares)
LONDON, April 8 (Reuters) - Ben Verwaayen, the man who helped to transform BT Group into an IT and broadband-focused communications powerhouse, is leaving the former state phone monopoly to be succeeded by high-flying insider Ian Livingston.
Analysts said Livingston, the 43-year-old head of BT's retail business, was a strong successor, but that Verwaayen's departure came a little earlier than expected and could spark a few jitters ahead of BT's annual results on May 15.
Some also thought the promotion of the cost-cutting Livingston could herald fresh job losses at Britain's biggest fixed-line telecoms provider.
"We think that Livingston...can get BT focused much more on costs," Merrill Lynch analysts wrote in a research note, estimating that BT's core UK fixed-line business could run with closer to 50,000 employees compared to the current 80,000.
BT said on Tuesday that Livingston was the board's unanimous choice to succeed Verwaayen and there would be no big change in strategy.
"He was in the kitchen for the last six years," Verwaayen told CNBC television. "It's safe to assume that the strategy we're in is the strategy we'll be on with him."
Livingston joined BT as finance director in 2002 and became head of its retail business in 2005. He previously worked for retailer Dixons and was the youngest director on the FTSE-100 when appointed finance director there at the age of just 32.
He will replace Verwaayen in June and be succeeded as head of BT's retail division by Gavin Patterson, currently managing director of its consumer business.
In 1984, BT became one of the world's first state telecom companies to be privatised. It was one of a string of national firms to be floated under Conservative Prime Minister Margaret Thatcher.
For years it struggled as regulators imposed heavy restrictions in a bid to encourage competition at the same time as its traditional fixed-line business started to decline.
Verwaayen, 56, joined BT in 2002 from Lucent Technologies and helped to avoid a break-up of the group at the hand of regulators by opening up its network to rivals. He also spearheaded a drive into network IT services and broadband which helped to double the group's share price between 2004 and 2007.
Over the past six months, however, the shares have fallen around a third as revenue growth fell short of some analysts' expectations. The stock is now trading close to the level when Verwaayen took the helm in January 2002.
BT is Britain's biggest provider of broadband Internet connections, with 4.3 million users. But it faces stiff competition from the likes of BSkyB BSY.L and Carphone Warehouse CPW.L which rolled out their own networks, meaning BT Wholesale made less money from renting out its lines.
"Ian (Livingston) inherits the business at a fairly delicate time," Deutsche Bank analysts said in a research note, pointing out that BT is in the midst of a complex and costly network upgrade and that it also has huge pension obligations of about 40 billion pounds which could drag on future earnings.
Verwaayen's departure also comes just 7 months after BT changed its chairman and JP Morgan analysts were concerned it could signal that trade is getting tougher.
But Dresdner's Lawrence Sugarman said Livingston was the right man for the job.
"He's likely to be more focused on the detailed delivery (of BT's strategy). Ben was probably a bigger picture thinker ... In this environment, people probably want someone who's more focused on the detail," he said.
At 1225 GMT, BT shares were up 1 percent at 232 pence, valuing the business at about 18 billion pounds ($35.8 billion).
A BT spokesman said Livingston would have a base salary of 850,000 pounds a year and would be entitled to a bonus of the same amount if the firm meets its targets.
Verwaayen, who was paid a base salary of 742,000 pounds in the group's 2006-7 financial year, will receive a cash payment of 700,000 pounds on his departure. (Editing by Sue Thomas/Andrew Hurst)