BT's Vallance to 'stay'

Sir Iain has come under fire from shareholders

BT has denied weekend reports that its chairman Sir Iain Vallance is to leave the company before his contract ends.

The reports suggested that Sir Iain - who has just signed a two-year contract - was to leave by the middle of next year.

Stiff competition and the huge costs of securing next generation mobile phone licences have contributed to a slump in BT's profits this year.

The rumours that Sir Iain was to leave are thought to highlight the extent of unrest within BT at his leadership of the company.

Sir Iain was appointed chief executive of the group more than 14 years ago and became chairman in 1987.

Anthony Greener, the former chairman of drinks group Diageo, was tipped as a likely replacement for Sir Iain. Mr Greener was named last week as successor to deputy-chairman Lord Marshall after he retires next summer.

Shares drop

Shares in BT had fallen to a two-year low on Friday and many analysts and shareholders blame Sir Iain for the company's drop in profits.

A huge restructuring, including the spin-off of operations such as the internet based yellow pages service, Yell, was announced earlier this year but has so far failed to convince doubters.

BT has also blamed the cost of investing in the Japanese and Irish telecoms markets and the expense last year of taking complete control of BT Cellnet, buying a 40% stake off Securicor for the fall in profits.