Ex-minister Hewitt and Lloyds chief Daniels join BT's board

By Sarah Arnott
Friday 14 March 2008 01:00

BT is appointing Patricia Hewitt, the former cabinet minister, and Eric Daniels, group chief executive of LloydsTSB, as non-executive directors.

Both will be paid a basic salary of £60,000 and will take up their positions within the next month.

Sir Mike Rake, BT's chairman, said: "Eric brings very strong global business experience to the board, particularly on financial and consumer matters; Patricia brings deep experience of government affairs, politics and public policy."

The additions are further evidence of the firm's shift towards its Global Services division as the BT Wholesale business suffers from increasingly stiff competition in the broadband market. Global Services sales were up 6 per cent year on year to just short of £2bn in the third-quarter results published last month, which was a bright spot in otherwise disappointing numbers that saw group revenue rising just 1 per cent and pre-tax profits down 30 per cent.

Richard Mahony, an analyst at Ovum, said: "Both appointments improve BT's position with international enterprises and the Government, and with Global Services contributing the majority of revenue for the group both appointments will serve the business well."

Ms Hewitt is the latest in a series of former Labour ministers to take up a boardroom post. As a former secretary of state for health, her appointment also fits with the division's plan to use its experience on the Government's £12bn programme for NHS IT to build its worldwide health-sector business.

In November, the firm met senior members of the Qatar business commun-ity to discuss opportunities in Qatar and neighbouring Gulf states. "Patricia's background with the NHS underlines BT's commitment to build its exposure to the health sector where BT Global Services intends to extend internationally," Mr Mahony said.

The board changes come amid uncertainty about the future plans of BT's chief executive. Ben Verwaayen was originally expected to step down later this year, but is now expected to stay until at least next year.

BT Wholesale's performance is widely cited as a reason for the deferment. The group's share price has fallen 30 per cent since its half-year results in November, and the speculation is that Mr Verwaayen, who helped turn the group around in the early 2000s, may defer his departure until the picture is rosier.

"The only person who knows about Ben Verwaayen's leaving date is Ben Verwaayen, but the general consensus at the moment is that it will be some time in 2009," Mr Mahony said.

Global Services' growth will be central to ensuring Mr Verwaayen's legacy is not tainted. But even with its forecast-beating performance in the third quarter, the division is by no means guaranteed to meet its 2011 target for a 15 per cent earnings margin before interest, tax, depreciation and amortisation.

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