BT is surfing the new wave

THE new BT is now unrecognisable from the one inherited by Sir Christopher Bland when his predecessor Sir Iain Vallance was unceremoniously dumped three years ago.

Its debt mountain has been greatly reduced and gone are the group's loss-making imperial ambitions and its dreams of a merger with AT&T of the US.

BT's future looked to be one of managed decline as the company watched its fixed-line market share decline in the face of competition from mobile, no-frills and cable operators.

The trick pulled off by Bland and his chief executive, the evertalkative Ben Verwaayen, has been to soften the blow by building new streams of revenues.

At the same time, management has been hacking away at layers of fat built up over generations of public ownership, delivering (like BA) a rolling stream of cost reductions.

If there was a big strategic mistake that could have been avoided, it was the flotation of mmO2, which left it without a mobile service as fixed-line traffic faded. But who is to say mmO2 had any hope of prospering under BT management?

Now BT is having to link with rival Vodafone to launch a service that does away with the need to have a home phone and a mobile at a time when competition in cellular markets is fierce.

The plus side of all this is broadband. In the final quarter of last year, sales of internet-related products climbed a muscular 38%. Over the full year all wired activity was up 30%. More than 2.5m people have access to broadband through BT and the goal is to raise this to 5m.

Traditional business is in serious decline, falling 7% in the last year.

No one knows where this will end, but there is a view that by the end of the decade, 90% of telephone traffic in Britain will be mobile. So BT needs all the new-wave business it can muster and fast.

If it could demonstrate to the market that it has the capacity to be a real growth company - not one that just sets targets - the shares (which I hold) might eventually pick up, too.

Scrooge missive

JUSTIN King's efforts to care and share with staff at J Sainsbury are backfiring. The new boss has dared to interfere with that most treasured of perks, the Christmas gift payment.

This is part of a wholesale attack on the rewards culture inside the company. As profits sank in the last financial year 'no bonus linked to profits performance will be payable'. In fact, 'almost all' management outside retail will receive no payment, according to a letter sent to his colleagues.

There is one notable exception. Chairman Sir Peter Davis will be collecting 864,000 shares worth £2.4m, plus a bonus for his efforts in recruiting King.

It is not surprising that the new chief executive found it necessary to inform staff 'we can expect to see some negative publicity in the press in the coming days'.

Sainsbury was once a company that prided itself in a paternalistic attitude towards staff. The bosses drawn from the Sainsbury family were known by the staff as Mr John, Mr David and so on. Respect was earned through store visits.

Part of the culture of building staff loyalty was the Christmas bonus. Now staff tell us they are demoralised.

King says the first job is to start doing things 'the right way, every day'. It is a great mantra, but poorly executed.

Colonels' coup

THE crowing over the efficiency of the colonels' coup at Rentokil, where four-star general Sir Clive Thompson was removed from office, bears a second look. The records of the independent directors behind the shake-up are far from perfect.

New chairman Brian McGowan is best known for taking the Fayed's shilling for floating House of Fraser, dismissing several of his colleagues and then flouncing off.

Hammerson chairman Richard Spinney, who hosted the secret meeting of directors on Monday evening, is a veteran of Greycoat plc, a property firm caught up in the crash of the early 1990s.

Then there is Ian Harley. His efforts to turn Abbey National into a bank that could compete with the best of them horribly backfired.

Under his stewardship Abbey ploughed into wholesale banking and became a magnet for corporate failure including Enron.

He built an insurance arm now being propped up by loans from the main company. He also eschewed several value-creating mergers.

Sure, having delivered for so many years, Rentokil's profit warning is stunning. But maybe it was the colonels who should have stepped back, not the commander who delivered so effectively, for so long.