New BT chief axes division

6,000 workers at Affinitis told there will be no compulsory redundancies
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The Independent Online

Ben Verwaayen, British Telecom's new chief executive, is to bring the axe down on a 6,000-strong business unit within the company that was created by his predecessor.

The Dutchman, who has been in the job just one month, told senior managers last week that Affinitis – set up less than two years ago to operate a number services business within BT – would be dissolved.

Mr Verwaayen is working on a strategic plan for BT. Analysts said the swift decision on Affinitis could point to the further integration of BT's other businesses, set up by former chief executive Sir Peter Bonfield. Philip Hampton, BT's outgoing finance director, has been charged with breaking up Affinitis. He has told staff there will be no compulsory redundancies.

When Affinitis was created in October 2000, BT claimed its purpose was "to create value for BT and its customers by providing business infrastructure solutions". At the time, there was even talk within BT of floating Affinitis on the Stock Exchange. But the unit failed to win significant business outside the BT group and last month Geoff Almedia, the division's chief executive, suddenly resigned. A BT spokesman said: "The changes are designed to make the business more efficient."

Analysts say Affinitis's main problem was that it lacked focus. The business was essentially a mishmash of IT and computing services units, but also managed the company's property portfolio and owned its fleet of 58,000 vehicles. Having sold the property to Land Securities for £2.4bn, BT is planning to spin off its vans business. The remaining Affinitis units will be absorbed into the BT group or closed. The BT spokesman denied the decision to dissolve Affinitis meant it had failed. "We decided instead to find partners for some of the businesses, such as property and fleet." Mr Verwaayen is planning to create a new unit in BT – named Commercial Partnerships Directorate – to manage the Affinitis contracts with companies such as Land Securities.

The pace of change at BT has worried the unions, which are unhappy with the number of staff being transferred to new companies. Simon Sapper, assistant secretary of the Communication Workers Union, said: "Tupe [transfer of employment regulations] has almost universally created uncertainty for our members. But we welcome the apparent recognition that certain Affinitis businesses need to remain within the group and we note with interest the apparent trend of re-integration at BT."

Mr Verwaayen is also planning to speed up decision-making at BT, which in the past has been slow to react to changes in technology and the markets. He is to set up an "operating committee" of division heads to tackle issues such as customer service and financial performance.

In a memo to senior BT managers last week, seen by The Independent on Sunday, Mr Verwaayen says: "This team will approve capital and investment proposals, review the performance of each line of business and prepare for the board ... This new approach should increase the speed with which decisions are taken and implemented. It is designed to deliver results – effectively and fast."