Michael Rake

On The Move: Michael Rake

BT's incoming chairman will find a company much improved by his predecessor, but he will follow his own path.

by World Business
Last Updated: 23 Jul 2013

Sir Michael Rake's appointment in February as the next chairman of BT takes the chairman of accountancy firm KPMG to his first experience of a public company at board level. Rake, who will take up his new position in September, will inherit a very different BT to the one that his predecessor Sir Christopher Bland took charge of in 2001. The company was then suffering the worst crisis since it was privatised in 1984. Soon after Bland arrived, it began the process of reducing its debt, including demerging its mobile phone division, BT Wireless.

The slimmed-down version of BT has fared well during his reign, with the share price rising 82% since 2003. This contrasts sharply with the fortunes of some of Europe's other telecoms monopolies, such as Deutsche Telekom and France Telecom, both of which have issued profits warnings in the past year. BT's relatively strong performance is seen by some as a vindication of the UK government's decision to completely cut state support when it was privatised.

Free from the distraction of a mobile phone division, BT has focused on expanding its high-speed internet provision throughout the UK. However, it has faced stiff competition since regulators forced it to open its network to rivals in 2005. Another important source of growth for the company has been its Global Services unit, which supplies communications and IT services to businesses across the world. The unit is expected to provide more than 50% of BT's revenue in 2006-07.

Rake has already indicated he intends to steer the company further along its current trajectory, possibly in a strategically bolder manner. According to Neil Rickard, an analyst at Gartner, this is likely to include "significant" acquisition activity. "It is likely to be buying into IT services in a big way," he says.

Rake, nicknamed 'Labour's favourite beancounter', is renowned for his straightforward approach and was known to most as plain 'Mike' before his recent elevation to knighthood. He may have little telecoms experience, but after 33 years at KPMG he knows how to schmooze governments and tiptoe through complicated regulation. He will also have the task of finding a suitable successor to CEO Ben Verwaayen.

CV AT A GLANCE...
Education
Wellington College, Berkshire

CAREER
1972 Joined Peat Marwick Mitchell, Belgium and Luxembourg
1986 Senior partner, Middle East, Peat Marwick Mitchell
1989 Transferred to London, KPMG Peat Marwick McLintock
1991 Joins UK board, KPMG Peat Marwick
1998 UK senior partner, KPMG
2002 International chairman, KPMG
2007 Chairman, BT Group

In comparison... RenE Obermann, CEO, Deutsche Telekom Rene Obermann may have been appointed Deutsche Telekom's chief executive and chairman only in November, but his short spell at the top has been highly eventful so far. In January, the former state-owned monopoly (the German government still has a significant stake, however) issued its second profits warning in six months, citing sharp competition and unfavourable exchange rate movements for an expected fall in earnings of EUR898 million.

Obermann has outlined controversial cost-cutting plans worth about EUR3.5 billion by 2010, including reducing staff by 32,000 by 2008 and the outsourcing of a further 45,000 jobs to lower-paying subsidiaries. But these proposals are fiercely opposed by the trade unions, which, in line with German corporate law, are represented on Deutsche Telekom's board. In February, the board voted by a narrow margin to approve the plans, but strong opposition from the board's employee representatives signalled that Obermann may find it difficult to implement them.

Kai-Uwe Ricke, Obermann's predecessor and mentor, was forced to step down last November after criticism of his handling of the jobs issue and the first profits warning in August of that year.

CV AT A GLANCE...
Career
1984: Traineeship, BMW
1986: Director, ABC Telekom, Munich
1991: Managing partner, Hutchison Mobilfunk, successor to ABC Telekom
1993: Chairman, Hutchison Mobilfunk
1998: Managing director, sales, T-Mobile Deutschland
2000: CEO, T-Mobile Deutschland
2002: CEO, T-Mobile International
2006: CEO, Deutsche Telekom

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