BT, the telecoms giant, confirmed today that Ian Livingston, the head of its retail division, will succeed Ben Verwaayen as group chief executive when he leaves at the end of May.

The widely predicted succession will see Gavin Patterson, managing director of BT's consumer division, step into Mr Livingston's shoes at BT Retail and join the main board.

The path was cleared for Mr Livingston to win the top job last October after his main internal rival quit the company. Andy Green, BT's head of strategy and operations, left to become chief executive of LogicaCMG, the computer services company.

Mr Livingston, 43, a former Dixons finance director, joined BT as group finance director in 2002. He is credited with boosting the fortunes of its retail division since taking over in 2004, through a combination of cost-cutting and marketing.

Analysts had tipped Francois Barrault, chief executive of BT Global Services, as a possible contender, although Sir Mike Rake, the BT chairman, said that Mr Livingston had been "the board's unanimous choice to succeed Ben".

Mr Verwaayen, together with former BT chairman Sir Christopher Bland, is credited with turning around the fortunes of BT, which in 2001 was struggling under the weight of a £30 billion debt mountain. The duo resolved the issue by launching a rights issue and spinning off BT's mobile phone operations.

Sir Mike paid tribute to Mr Verwaayen's six-year tenure since he joined from Lucent Technologies, where he was vice-chairman.

"Ben has been an exceptional CEO whose courage and leadership has transformed BT from being a deeply troubled organisation into a thriving business with global capability and a clear strategy for the future," he said.

"He has done more than anyone else to make Britain the most competitive broadband market in the world. He has been instrumental in restoring pride in BT."

Although Mr Verwaayen is known to have been considering his departure for several months, analysts had begun to think that he might stay on until next year in order to address BT's recent disappointing performance.

BT's share price has fallen sharply since its half-year results were published in November. Those figures, together with the third-quarter figures released last month, highlighted how revenue has fallen at BT's wholesale division.

Sales are declining because competitors such as Carphone Warehouse and BSkyB, which is 39.1 per cent owned by News Corporation, parent company of The Times, are buying fewer products from BT's wholesale division after establishing their own telecoms networks.

Following its exit from mobile phones, BT has pursued growth through BT Global Services, the division that services the telecoms and information technology needs of multinational companies. However, BT Global has struggled to raise its profitability, although it reported some margin improvement in the third quarter.

The market is also concerned at the possibility that BT may have to invest more than £10 billion to satisfy the Government's increasing enthusiasm for super-fast broadband. This would probably involve replacing much of BT's copper land lines with optical fibre, although it has so far made no commitment to such an investment..

Shares of BT fell 2.25p to 227.5p in early trading, little changed from January 2002 when Mr Verwaayen joined the company.

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