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Wednesday, 12 December, 2001, 16:10 GMT
Can BT's new chief end his losing run?
Ben Verwaayen (left) with BT chairman Sir Christopher Bland
Ben Verwaayen (left) with BT chairman Sir Christopher Bland
By BBC News Online's Mike Verdin

Many swear by the adage "success breeds success".

The executives in charge of British Telecom appointments appear not to be among them.

Profile - Ben Verwaayen
1997-present: vice president, then vice chairman, Lucent
1988-97: president, PTT Telecom
1975-88: general manager, ITT Nederland
Educated: degree in law and international politics from the University of Utrecht
Mr Verwaayen is also a board member at Astro All Asia Networks and HealthCenter Internet Services, and sits on the advisory council of ING
In selecting Ben Verwaayen as chief executive, BT has chosen a candidate whose four years at Lucent Technologies are ending in, at best, in disappointment.

When Lucent appointed Mr Verwaayen vice-president four years ago, it was to help the firm "capitalise on [its] growing worldwide opportunities".

Today Lucent is losing money to the tune of $8.8bn a quarter.

The firm's shares, which closed at $15.43 on the day Mr Verwaayen's appointment was announced, ended on Tuesday at $7.81.

Meanwhile Mr Verwaayen's earlier employer, the holding company for telecoms operator KPN, has emerged as one of Europe's least impressive telecoms players, amassing debts of 22.3bn euros at one stage.

The Mr Verwaayen which Lucent credited as "one of the most respected international telecoms leaders in the world" is the same Mr Vermaayen who told The Times newspaper in February 2000 that the European technology market was "the place to invest right now".

Try telling that to Lucent, KPN or BT shareholders.

So when BT chairman Sir Christopher Bland on Wednesday described Mr Vermaayen as "outstandingly well qualified" to lead the firm it may sound as much a threat as a commendation.

"If you have a history of working for firms like Lucent - about which there has been a complete collapse in perception - and KPN - which is in worse shape than BT - you might not be seen as the ideal selection for running BT," said Eric Paulak, vice-president of telecoms research at Gartner.

Rival candidates

So why has BT chosen Mr Verwaayen over a string of other business bigwigs rumoured to have been approached?

Philip Hampton, finance director, BT
Philip Hampton: Resigned

One is that executives have queued up to rule themselves out of the running.

Favoured internal candidate Philip Hampton, finance director, is to quit after reportedly clashing with Sir Christopher Bland.

Former Xerox Europe head Pierre Danon, BSkyB's Tony Ball and ex-Energis supremo Mike Grabiner were among respected executives quick to quash rumours of interest.

"The fact of the matter is that BT does not hold as good growth prospects as the firms the rumoured candidates were already working for," Mr Paulak said.

Besides its its infamous debt, which reached 30bn at one point, BT faces the challenges of stiff competition, limp sales, and the unwinding of ventures such as Concert.

The challenge for Mr Verwaayen is to restore profitability rather than focus on growth, Mr Paulak said.

"Hence the way his package was structured," Mr Paulak said of an earnings deal that largely rewards against performance "targets" BT has yet to detail.

Broader factors

Not that investors should abandon hope of Mr Verwaayen achieving such targets.

Certainly, Lucent has disappointed, overall, during his reign.

"But you have to ask yourself how much is down to him and how much to factors outside his control," Mr Paulak said.

The 90% fall in Lucent's share price pales beside the collapse swallowed by investors in rival telecoms equipment firm Marconi.

Global retreat

And where Mr Verwaayen impresses is that his role at Lucent - finding new clients for existing products - has covered much of the same ground many deem vital to BT's revival.

Holland's rich list
1: Brenninkmeijer family (owns C&A)
2: Freddy Heineken (beer magnate)
42: Nina Brink (then head of World Online)
243: Ben Verwaayen
500: Marc Overmars (footballer)

Source: Elite Group

"BT in the [pre-Bland] era expanded through a series of acquisitions it now seems to be regretting," Mr Paulak said.

BT may aim to be "the most successful worldwide communications group", as the firm's website says, but it is in reality, Mr Paulak said, "most definitely a European player".

"It has withdrawn considerably in recent months, reducing interests in foreign firms.

"What BT now needs to do is to build off current business. If you look at what Lucent has done over the last few years, that is exactly the same strategy."

Regulation buster

Mr Verwaayen's experience with KPN, which he helped transform into a private sector operator, may also prove invaluable at a BT which many consider as yet part-privatised.

Although BT gained a stock market listing 15 years ago, it has retained much of its public sector ethos, critics say, leaving it a telecoms sheep in wolf's clothing.

There would seem scope indeed for a man who comes with a reputation as an energetic shredder of red tape.

It was a desire to get quick results which dissuaded him from pursuing political interests in the 1970s, and later, when he was reportedly offered a job by the Dutch government.

His decision has at least proved personally profitable, earning him the number 243 spot in a Netherlands rich list drawn up by research group Elite last year.

Key clues

For signs of Mr Verwaayen's further prosperity, we should look first to success in shaking-up BT's senior management, associated with so many of the firm's recent disasters, Mr Paulak said.

Sven Goran Eriksson receives the UK Coach of the Year Award
Sven Goran Eriksson: Imported success

"If there are changes, this means he has been given a free run within the company.

"If he doesn't, it is more likely he will only be a caretaker chief executive, there for a couple of years."

Britain's businesses, like its football clubs, have shown an ever-greater willingness to appoint foreign stars.

Mr Verwaayen should know by the first kick of next year's World Cup if he will, like Sven Goran Eriksson, the Swedish coach of England's soccer team, be ranked as a big hitting import.

Or if he has, like former Dome chief Pierre Yves Gerbeau, accepted the unreasonable task of trying to transform a white elephant into a thoroughbred which runs only in the black.

See also:

12 Dec 01 | Business
BT lures Lucent boss with 7m package
04 Dec 01 | Business
BT plans to 'break losing streak'
15 Nov 01 | Business
Time up for BT phone boxes
08 Nov 01 | Business
BT unveils massive loss
31 Oct 01 | Business
Few takers for BT hot seat
31 Oct 01 | Business
BT chief quits early
31 Oct 01 | Business
Boom time for bosses
26 Apr 01 | Business
Vallance resigns from BT
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