The development of digital radio in Britain was dealt a blow yesterday when GCap, the UK's largest commercial radio group, said that there was no future for Digital Audio Broadcasting (DAB) technology and announced plans to abandon many of its digital radio investments.

Fru Hazlitt, GCap's chief executive, said that the group's 63 per cent stake in Digital One, the national radio multiplex, would be sold to Arqiva and that the digital radio stations Planet Rock and theJazz would be closed. Both decisions marked a reversal of GCap's strategy under Ralph Bernard, the previous chief executive.

Ms Hazlitt told The Times that she would have ended digital broadcasting entirely, but GCap was tied into transmission contracts that ran until 2016. The take-up of digital radio had been too slow to justify further investment, she said. The new strategy would save £8.8 million a year through disposals and restructuring.

GCap's announcement on digital radio was part of what has become known as Ms Hazlitt's “defence document”. After an approach by Global Radio, chaired by Charles Allen, the former ITV chief executive, GCap's new head has come under pressure to prove that the company's management can generate greater value for shareholders.

The DAB platform has struggled to grow at the rate of digital television and the industry has failed to persuade carmakers to adopt DAB radios instead of conventional FM-AM units. Ms Hazlitt believes that real growth will come from radio on handheld devices. GCap said that it had new deals to build applications for Apple's iPod touch and Nokia handsets.

The BBC and other commercial broadcasters reiterated their commitment to digital radio yesterday, despite concerns elsewhere that the platform may not survive now that the commercial industry leader is exiting many of its digital radio investments.

GCap's decision puts particular pressure on Channel 4, which last year acquired the second national DAB multiplex, to reinforce its digital-only strategy. Channel 4 and the BBC issued a statement yesterday reiterating their commitment to encouraging more rapid consumer take-up of digi-tal radio and developing technology to secure a successful future for DAB.

Mark Story, managing director of radio programming at Bauer, formerly Emap, said: “This is unfortunate news for GCap. It is the wrong time for them to be leaving, as DAB is on its way to a strong future.”

One senior industry source added that it was “dangerous” for GCap to leave DAB, suggesting that concerns over the BBC's dominance in radio could be exacerbated: “The BBC will continue to invest in DAB and grow the platform and the commercial radio leader will, yet again, be struggling to keep up.”

GCap, which has about 15 million FM listeners, will increase the amount of advertising on its flagship Capital 95.8 station to nine minutes an hour, dropping a previous policy of no more than two consecutive adverts. It hopes that this will boost profits by £3.6 million as the group tries to fight off takeover interest from Global Radio.

GCap's shares closed down 5p at 184¼p yesterday.

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