SHAREHOLDERS in BT expressed concern last night that the sudden departure of Pierre Danon, the company’s head of retail, could hit the rate of recovery at the telecoms giant.

They fear that a sudden vacancy in the group’s key retail division could harm performance and derail the company’s recent progress in attracting revenue from “new wave” products, such as broadband.

Analysts also questioned why Sir Christopher Bland, the company’s chairman, had been unable to keep the peace and maintain stability by persuading M Danon to stay.

As head of BT’s retail division the 48-year-old Frenchman was in charge of the company’s key sectors — fixed-line sales and BT broadband.

In his four-year reign, fixed-line sales had continued to fall, but the rate of decrease had slowed. Meanwhile, M Danon, who joined BT from Xerox in October 2001, had helped BT to increase its share in key so-called “new wave” areas such as broadband — regarded as the future of the group.

The company’s recent interim results showed revenue from IT and broadband up 36 per cent to £1.03 billion.

With revenues from traditional calls being eroded by competitors and the increasing take-up of mobile, these areas are seen as vital.

One shareholder said of Danon’s departure: “It will, in the short-term at least, be destabilising.”

Julian Hewett, at Ovum, the telecoms consultancy, said: “Any change at this level will have some kind of impact.”

He added, however, that only time would tell whether M Danon’s strategy for the company would have been successful.

The timing of M Danon’s move is unfortunate. His departure — officially set for next March — comes just as BT is being forced to make major changes to its structure.

Ofcom, the telecoms regulator, demanded earlier this month that the company make a series of changes, including making access to its networks cheaper and easier for rivals, and ensuring that the retail and wholesale divisions are not intertwined.

The moves followed fears that BT Retail, because it is part of the BT Group, receives more favourable treatment from BT Wholesale, the division of the company that runs the networks and infrastructure, than its competitors.

Andrew Darley, an analyst at ING, said: “BT will be in a slightly thorny position because it will need BT Retail to contribute thoroughly to the group’s proposal to Ofcom.”

M Danon denied that he had left the group “high and dry” at a crucial period. He also continued to deny rumours of a spat in the boardroom, but analysts are certain that his departure was prompted by frustration at the board’s refusal to allow him to follow his strategy for increasing sales of broadband.

Yesterday M Danon admitted that there were frustrations at BT, but said there were frustrations at any company.

SWITCH PRICE

FROM: head of retail, BT
BT’s market cap: £16bn
Staff: 40,000
Pay: £450,000 plus £259,000 bonus plus 1.64 million share options plus £519,000 pension

TO: chief operating officer, Cap Gemini
Cap Gemini’s market cap: €3 billion (£2 billion)
Staff: 60,000
Pay: “A very fair offer”

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