Ben Verwaayen waves goodbye to BT from his starting point

Ben Verwaayen went out with a characteristic flourish yesterday, pulling some better than expected numbers out of the hat for his last set of results as BT's chief executive.

The shares jumped 5 per cent to 235p, leaving them almost exactly where they were when Mr Verwaayen joined six years ago.

Hardly a sparkling performance. But then Mr Verwaayen was given a pretty ropey hand to play.

Spinning off BT's mobile arm may have been necessary and it may have been in the shareholders' interests given the fat price subsequently paid for it by Telefonica. But it left BT with a low growth fixed-line business facing increasing competition.

When Mr Verwaayen took over, the company was in "strategic disarray", according to Richard Lambert, head of the CBI. There was also a bit of "who is this bloke? He's Dutch . . . we've never heard of him". But Mr Lambert yesterday paid generous tribute to the "transformation" of the company under his leadership.

After the balance sheet was sorted, Mr Verwaayen focused on building BT's international business and becoming a leader in broadband services. These new businesses, which represented less than 10 per cent of turnover when he took over, contributed more than 40 per cent to its revenue in the year to March, which edged up 2 per cent to £20.7 billion.

Revenue from supplying and managing large companies' networks increased revenues by 9 per cent. Tom Glocer, head of Thomson Reuters, which is the biggest customer of BT's Services unit, joined the valedictory chorus yesterday.

Many of BT's smaller customers may not feel quite so warm towards Mr Verwaayen. But that is inevitable for a company of BT's size.

And it certainly seems to be doing something right among small and medium-sized companies, where its business has been transformed in recent years.

By focusing on meeting all its customers' telecom needs rather than sitting back and hoping they would make more calls, it has been turned into a growth business.

Revenue from small companies was up 10 per cent last year, compared with a 5 per cent contraction three years ago.

Mr Verwaayen's successor, Ian Livingston, still faces some tough challenges. The traditional fixed-line business saw revenue fall by 2 per cent last year. This was not helped by a steep fall in premium rate traffic linked to television quiz shows and phone-ins following the recent scandals.

On the cost side, the delays in BT's £10 billion network modernisation project mean the promised savings have been pushed out.

Mr Livingston admits there is also much work to do on improving customer service. This will not merely mean happier customers, it will mean less expensive customers by cutting down on unnecessary care and attention.

Some customer service measures improved strongly last year. Mr Livingston said the related savings would start to show through this year and more strongly next. With 30 per cent of top executives' bonuses linked to improved customer services, the issue should get plenty of top-level attention.

Despite yesterday's share price jump, however, the stock market verdict on Mr Verwaayen's reign is distinctly lukewarm.

Dividends have risen eightfold during his tenure, while the shares have gone sideways. That leaves them trading on a prospective yield of 7 per cent, which is scarcely a standing ovation for Mr Verwaayen. Or, indeed, a big vote of confidence in Mr Livingston.

source: timesonline.co.uk 16-05-2008