BT chief signs off with turnaround set fair
LONDON (Reuters) - Outgoing BT (BT.L) boss Ian Livingston is set to leave on a high note after results that carried all the hallmarks of his five years at the telecom operator's helm, with costs down, profits up and investment in place for the future.
His successor, head of retail Gavin Patterson, will step into the chief executive role with the company's stock trading near a six-year high after a recovery from the two major profit warnings Livingston delivered at the start of his tenure.
On Thursday the 167-year-old former state monopoly posted a trading update for the three months to the end of June showing adjusted profits up 5 percent despite lower sales, helped by demand for fiber broadband and early bookings for the group's new sports TV service, Livingston's two major projects.
With revenue down just 1 percent compared with a 5 percent drop a year ago, the country's largest fixed-line operator is on track to return to growth in the next couple of years after four straight years of shrinking revenue.
"The nadir of the March 2009 share price (72p) is now a distant memory and the recovery in BT's fortunes continues apace," Richard Hunter, the head of equities at Hargreaves Lansdown Stockbrokers, said of the stock that now trades at 340 pence.
"As the company has reinvented itself, it has become a more modern, streamlined and focused entity whose prospects remain tantalizing."
Having removed millions of pounds of costs in the last three years, Livingston has been able to invest in a new superfast fiber network and a sports service that it hopes will draw in more customers and persuade them to pay more.
The move will pitch BT in direct competition with the country's largest pay-TV group BSkyB BSY.L which is 39-percent owned by Rupert Murdoch'S 21st Century Fox (FOXA.O).
It is also designed to reduce the amount of subscribers who defect to take their broadband and telephony from BSkyB.
BT said on Thursday that more than half a million customers had signed up to take the service, and that its consumer line loss was at its lowest level in five years.
It added 197,000 retail fiber broadband customers, taking its total to around 1.5 million, and it hopes this growth rate will stay strong as users opt to take the faster broadband service to watch the new TV service.
It also said it had seen signs of higher demand from small and medium-sized companies and a 50 percent jump in its total order intake for the Global Services division which handles the IT needs of multi-national organizations.
"These are another set of solid numbers," Livingston told reporters. "It is very early days but the (sports additions) are better than expectations.
"I am immensely proud to have led BT over the last five years. The foundations are in place for an exciting future and I'm confident that BT will make even more progress under Gavin's leadership and our talented team."
Livingston leaves in September, to work for the government. Shares in the group, which fell on the news of his departure in June, were down 1.8 percent on Thursday.
$1 = 0.6512 British pounds)
(Reporting by Kate Holton; Editing by Erica Billingham)
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