Brace down, more to go
10/6/2000
Investors were justifiably jubilant when Robert Brace announced his departure as finance director of British Telecommunications last Friday. But they should not get carried away.
Brace was uninspiring; he may even have blocked initiatives. But, ultimately, he was only the finance director.
The malaise at BT goes much deeper. The two top men – Sir Iain Vallance, chairman, and Sir Peter Bonfield, chief executive – bear the lion’s share of the blame. And, of the two, it is Sir Iain who has the most to answer for. He was chief executive for a decade and has been chairman for the last 13 years. It seems pretty clear that he has crimped Sir Peter’s style and prevented him being the fresh broom that many expected him to be. Investors would be better served if he followed Brace’s lead and resigned.
There is now an ideal pretext for Sir Iain’s departure. BT has nearly completed its lengthy strategic review. Given the dire state of the share price, this is expected to lead to a more radical overhaul of the group’s structure than was previously expected – with BT maybe splitting itself into two or more parts. Sir Iain is the wrong man to lead BT through this metamorphosis. He should take this opportunity to write himself out of the script.
If he doesn’t, investors will have to keep beating at BT’s door. Lord Marshall, BT’s deputy chairman, has reportedly been taking soundings from some of them as to whether further top management changes are required. If this is indeed the case, it’s welcome news - not least because it offers investors the chance to demand more change. The fear, though, is that BT sees Brace as a sacrificial lamb and that change will stop with him. That would be a bad missed opportunity. Shareholders must not let it happen.
Author: Hugo Dixon
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