Some have criticized Mr Verwaayen’s track record at Lucent and KPN, neither of which is doing terribly well. However, a closer look reveals that the Dutchman has performed well at both companies, demonstrating many of the skills that BT needs. Whether this will be enough to create significant growth prospects, however, is another question.
BT will hire Lucent executive Ben Verwaayen as its new CEO.
UK telco BT Group has said Ben Verwaayen will replace Sir Peter Bonfield as CEO next year. Mr Verwaayen, formerly president of Dutch telco KPN, is currently vice-chairman of Lucent Technologies. While his basic salary is lower then Sir Peter’s, his overall pay will be heavily dependent on how well BT performs.
At first sight, an executive from KPN and Lucent may seem an odd choice for BT to hire. Neither company has performed particularly well over the last few years, to say the least. KPN is still suffering from serious debt problems after expanding heavily into European 3G, while Lucent has been hit hard by the downturn in the network equipment market. In the last quarter, the US company made an operating loss of $909 million on top of one-off charges of $8 billion.
However, this analysis would be unfair. While Lucent has suffered since Mr Verwaayen joined in 1997, the company’s international business (his area of responsibility) has doubled. He has also played a major role in the company’s restructuring program. At KPN, he had a reputation for getting rid of bureaucracy, turning the company from a slow-moving public sector organization into a truly private company.
A more important question is whether any CEO will really be able to improve BT’s growth prospects significantly. After spinning off mobile operator mmO2, a major proportion of the company’s business is in the slow growth fixed line market.
The company’s internal restructuring, splitting into clearly defined business units, should help it chase new business outside UK voice calls. But its Internet and business services units are operating in highly competitive markets. Delivering significant growth from these operations will not be easy.
Mr Verwaayen does not have an easy job ahead of him. But he should be better placed than most to achieve it.