British Telecommunications yesterday dealt investors another blow by announcing its highly regarded finance director Philip Hampton is to leave the group and unveiled a 7 per cent drop in underlying profits.
The company also put its plans to split its retail and wholesale businesses and float or demerge other assets on ice while warning its pension scheme would show a £4bn deficit this year.
The departure of Mr Hampton, who is paid £435,000 a year, comes one week after Sir Peter Bonfield, BT's chief executive, said he would leave at the end of January.
BT shares closed down 3.85 per cent at 325p, the biggest faller in the FTSE 100 index, as analysts fretted the company would be left with a leadership vacuum. The company, which has £16.5bn of debt, still has much to prove as a separate entity with shares in its mobile phone arm, mmO2, due to start trading on 19 November.
Mr Hampton, who decided not to extend his two year contract beyond 31 October next year, will stay on at BT until a new chief executive is found but he is likely to leave shortly after – a move that will see him forfeit his entitlement to about 60,189 shares.
Industry watchers speculated Mr Hampton's decision to quit was prompted by a clash with Sir Christopher Bland, who became BT's chairman in May. "He [Hampton] didn't look particularly happy this morning. There has obviously been some kind of personality clash. It's bad news because he's the only one on the board people actually liked," said one analyst.
Sir Christopher denied there had been any such rift and said he was "very sorry" to lose Mr Hampton but understood his reasons for leaving. "We haven't fallen out. There hasn't been a disagreement over policy," he said.
Mr Hampton, who said he initially thought he would work for BT for three to five years, described BT as a "changed company" and his position there as a "changed job".
Sir Christopher said an international hunt for a new chief executive was underway and defended the board's decision to grant Sir Peter a £3m payoff.
BT yesterday also promoted Pierre Danon, head of BT retail, Paul Reynolds, head of BT Wholesale, and Andy Green, head of BT Ignite to the board.
"What BT needs is a period of organisational stability. We need to put together a new team to take it forward. We need to focus on existing businesses and it doesn't need the kind of distractions that are created, if you're always looking at bits of the business that may not be a permanent part," Sir Christopher said.
The moves came as BT announced group second quarter to 30 September pre-exceptional Ebitda [earnings before interest, tax, depreciation and amortisation] fell to £1.463bn from £1.573bn in the same quarter last year. Sales for the three months were £5.3bn, up from £5bn last time.
After accounting for heavy exceptional items, principally costs associated with unwinding its Concert joint venture with AT&T, BT reported a second-quarter pre-tax loss of £1.349bn compared with a £471m profit last time.Reuse content