Ben Verwaayen emerged from the swimming pool of his home in Provence today to take up the challenge of transforming Alcatel-Lucent, the troubled Franco-American telecommunications giant, into a streamlined service provider.

Five months after surprising the city when he quit BT, the 56-year-old Dutchman was named as chief executive of the loss-making group formed in 2006 from the merger of France's Alcatel and Lucent of the US.

Analysts said Mr Verwaayen would be in the driving seat despite the appointment of Philippe Camus, formerly chief executive of EADS, the European aerospace and defence group, as non-executive chairman.

The architect of BT's revival faces a tough ride at a company in the throes of cutting 16,000 jobs amid evidence that Lucent's portfolio was oversold and that its customers will continue to hold down investment..

He told Le Monde, the French daily, that after three months swimming at his house in the Luberon, he was ready for the challenge of heading a company that is handicapped by mutual distrust between French and US employees.

Mr Verwaayen said he aimed to turn Alcatel-Lucent from a "product orientated business into a service orientated business".

His focus is likely to be on the management of fixed and mobile networks in an attempt to generate a stable revenue to offset falling product sales.

The appointment follows the departure in July of Pat Russo as chief executive and Serge Tchuruk as chairman amid investor fury over a tie-up which suffered from aggressive price-cutting by competitors in a shrinking market.

Alcatel-Lucent's share value has slumped by 60 per cent since the merger amid six successive quarterly losses, the latest of Euros 1.1 billion.

Analysts said a further fall in the share price in early trading yesterday had more to do with the company's removal from the Dow Jones Eurostoxx 50 index than from disappointment over Mr Verwaayen's arrival.

Alexander Peterc, an analyst at Exane BNP Paribas in Paris, said the new chief executive could succeed despite a market which shows no signs of an upturn.

"There is no magic recipe but the conditions are easier than they were in the beginning. The restructuring plan has been drawn up and the worst is probably behind the company.

"Ben Verwaayen is likely to make some changes to strategy but I don't expect him to throw it out of the window and start again. I don't think there will be a clean break."

Benoit Flamant, managing director of IT Asset Management, welcomed the appointments.

"The arrival of new blood and a clear change of management were necessary for the relaunch of Alcatel-Lucent. A turnaround is not impossible because a lot of its assets haven't been exploited yet."

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive