TACKLING BT’s two biggest problems have left Hanif Lalani leading a double life for the last two weeks. By day, he is the mild-mannered finance director of BT with a £35 billion pension fund to modernise. By night, or at least as late as 3am and into weekends, he becomes chief executive of the Global Services (GS) division which runs communications networks for multi-national companies such as Pepsi and Reuters.

All that changed last Friday when he finally gave up on the beancounting to concentrate on GS, the group’s biggest revenue generator. It needs the attention. Once regarded as BT’s growth engine, the wheels came off on Hallowe'en with a profits warning that sent the group’s shares plummeting below their privatisation price in 1984.

If BT is suffering a hangover from the era of former chief executive Ben Verwaayen, Lalani, together with chief executive Ian Livingston, are the ones administering the Alka Seltzer. Not surprisingly, Lalani, a BT lifer, doesn’t feel let down by those that have gone before.

“When there was a need for a vision, a vision was created,” he said. “Now we need a different type of leader.” Couldn’t he have spotted that GS, whose operating margin has fallen from 9.9% to 5.5% in the last quarter as underlying earnings fell 36% to £119m, was in trouble when he was group finance director? Worryingly, the answer is no.

“At this level, you give autonomy and accountability to the (divisional) chief executives. When they start missing numbers that is when you get involved and say: ‘What’s happening?’”

The party line is that it all went wrong in the second quarter, when Lalani’s departed predecessor Francois Barrault lost control of costs. However, Lalani is having to tackle years of accumulated excess in a 90-day streamlining programme. Gone is £20m of annual costs already, from clamping down on unnecessary conferences that GS ran, to the sponsorship of the Montreux Jazz Festival. Up to £7m could be saved by Christmas by purging “quite a few” management consultants from the organisation, he believes. Thousands of suppliers will be reduced to hundreds and GS will contribute its share to a 10,000 group-wide reduction in headcount.

Investors worry that GS’s problems are more deep-seated than budget overruns. In the last four years it has been on an expansion spree, pouring £1.5 billion on 29 acquisitions and putting network in 173 countries to chase outsourcing work with a target of reaching 15% profit margin forever on the horizon.

“The growth rate has not led to the problem,” said Lalani. “What hasn’t happened is the focus on delivery.”

By tailoring services to each client, BT also left itself little chance of making a profit. Lalani acknowledges that “repeatable solutions” are what he is after.

“You can hit the margin but the point is if you want better margins you don’t want to do the same thing again and again.”

In time, GS will focus on serving certain industries, such as financial services, rather than attempting to spread itself too thin. Networks in some remote parts of the world could be handed to third parties. Acquisitions, for so long GS’s lifeblood, are off the agenda.

“Given the fact I need to streamline, acquisitions in GS are on hold. We don’t need them. Are there things we could sell? There is plenty we could. The key thing for me is to move to fewer propositions and deeper relationships with our customers.”

Before that, Lalani must also face up to a doubting City who don’t get what GS actually does. He promises much more disclosure, but first he has lots to discover himself.

Contracts may need to be written down in value when he examines them all. There are a handful of loss-makers. Some will be weeded out. There are others where BT wants more payment earlier in the contract to match its outlay.

“I don’t see that as anything I have been lumbered with,” he said of the onerous task ahead. “Actually, I see it as a great opportunity to shine and demonstrate what GS can really achieve. I want it to be the engine of growth once again.”

Lalani is also busy with pension matters. Trade unions are backing changes to the £35 billion pension fund that will push up the normal retirement age to 65 and change the final salary scheme to a career average payout for 65,000 members.

Ahead of a three-yearly review in December, Lalani is encouraged that the scheme’s £34.4 billion asset value has held up reasonably well, falling from a £39 billion peak. But he won’t concede that the company’s contribution will have to rise from its current £280m a year.

“I can’t tell you what answer will be. We don’t know yet where asset values will be at end of December.”

Although Lalani will have passed on the baton, it sounds like the end game could involve BT parcelling off its pension fund or a portion of liabilities to a consolidator – a giant, complicated transaction.

“How can we manage the risk associated with the liability?” he said. “It will be trustees who have to make that decision.”

Lalani, a Leeds United fan, joined BT’s graduate scheme in 1983. His family were expelled from Uganda during the regime of Idi Amin and settled in Wetherby, West Yorkshire.

“I had a choice of working for BT in London or IBM in Portsmouth,” he said. “London just had all these bright lights.” Burning the midnight oil, he is still drawn to them.

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