BT Group Plc named Gavin Patterson chief executive officer, taking over from Ian Livingston who leaves the post in September to become minister of state for trade and investment.
Patterson, 45, is head of retail operations and has been at London-based BT since 2004, according to a statement today from the biggest U.K. fixed-line phone company.
BT is picking an insider to continue the modernization of the 165-year-old company. Livingston, who took the CEO role in 2008 after managing the retail and finance teams, began transforming the fixed-line carrier by building a fiber-optic network to offer high-speed Internet access and creating the BT Sport channels to compete for pay-television customers.
“It has been an incredibly hard decision to leave BT at such an exciting time,” Livingston, 48, said in the statement. “We have made huge progress over the last few years, but I know there is still so much that BT can and will do.”
BT fell as much as 4 percent after the statement. Shares were down 1.8 percent to 313.70 pence at 4:00 p.m. in London. The stock had gained 38 percent this year before today.
Livingston will join the government in December replacing former HSBC Holdings Plc Chairman Stephen Green.
“He will bring huge talent to a vital national effort,” U.K. Prime Minister David Cameron told lawmakers in the House of Commons.
Despite his efforts, Livingston couldn’t reverse sales declines as BT’s base of fixed-line customers opted for digital and mobile phone service and a Europe-wide recession crimped business spending.
BT Sport, set to go live in the U.K. this summer, will be free to customers of its broadband Web packages. The company is betting access to Premier League soccer games and ESPN programs across TVs, online and through applications for mobile phones will win subscribers who had resisted paying for TV before. Shares of British Sky Broadcasting Group Plc, the pay-TV provider part-owned by Rupert Murdoch’s News Corp., dropped the most in almost two years after BT Sport was unveiled on May 9.
BT’s arrival as a BSkyB rival has led to spats over the terms for access to each other’s channels. U.K. communications regulator Ofcom said today that it would investigate BT’s complaint that Sky isn’t giving it wholesale access to Sky Sports channels “on fair terms.”
BT’s claims are “entirely without merit,” BSkyB said.
The BT Sport initiative will be expensive. BT has said the rights will probably cost 1 billion pounds ($1.2 billion) in the next three years and the service will lose money in the near term.
Patterson joined as managing director of BT Retail’s consumer division. Four years later, he was promoted to head the group when Livingston became CEO. He’s worked as European marketing director for Procter & Gamble Co., and is president of the U.K. Advertising Association.
Before joining BT, Patterson lead the consumer division for Telewest Communications Plc, which was then the second-biggest cable-television company in the U.K. The company ran into difficulties meeting debt obligations after a series of acquisitions to help it compete with BSkyB and BT. Telewest was acquired by NTL Inc., its larger competitor, which became part of Virgin Media in 2006. Liberty Global Inc., owned by billionaire John Malone, closed its $16 billion purchase of Virgin Media this month.
BT Retail, which sells broadband and phone access to homes and small-to-medium sized businesses, is the company’s largest unit, accounting for almost a third of sales.