BT goes Dutch to cut costs

THE pace of change at BT since Sir Christopher Bland's arrival in May has been blistering. Bland set himself the task of reshaping the corporate structure and the balance sheet - and has largely achieved his objectives.

BT's debt burden has been halved, mmO2 demerged, Concert dismantled and Japan mobile evacuated. As Bland bulldozed his way through this agenda, top managers, including chief executive Sir Peter Bonfield and finance director Philip Hampton have headed for the exit.

Despite all this, BT shares have failed to respond and are trailing European telecoms indices.

The financial and senior management decks having been cleared, the new man, Ben Verwaayen, 49, has the task of turning around the underlying business. He must do this in an awkward economic climate and at a time when mobile rivals are raising their game.

To Verwaayen, who spent the last four years at Lucent, the task is clear. He must conserve as much as possible of BT's 20m customer base, under threat from mobile, cable and others. He must cut through the complex management layers that have hampered delivery at BT since privatisation and attack the cost base. Only then will he produce the share price response that he needs to achieve his £5m pay potential.

That Lucent has been an even bigger stock market loser than BT over two years does not inspire confidence.

For too long, BT, despite some technological brilliance, has been an also-ran in the delivery stakes. While it struggles to launch ADSL - its answer to broadband - cable companies such as Telewest are ploughing ahead. BT has struggled with telephony, while Sky and others are rolling out digital channels. The group has plenty of internet capability, but foreign interlopers such as AOL have made the running.

As an old-style ' mothercom', BT still believes it cancharge customers what it likes when competitors using the excess international capacity can offer overseas calls at one-tenth of the price. Installation costs for routine items remain sky-high.

Delivery means overcoming the cultural barriers to change and bringing down costs. At Lucent, Verwaayen claims responsibility for an explosive six months, in which the workforce was slashed from 130,000 to 60,000 as the telecoms industry went into reverse.

As he tackles 'complexity' at BT, the headcount can be expected to reduce rapidly. Bland is certainly not going to stand in the way now that he has a willing stalking horse.

Mortgage watchdog

WITH interest rates at their lowest in 40 years, there has never been a better time to take on a mortgage. But the old days when house buyers just wandered down their local High Street to the building society are long gone.

The scale and pace of competition in the mortgage market has never been greater. In theory, this ought to be terrific for the consumer since the price of loans is being driven relentlessly downwards, with all kinds of new-fangled deals available, from attractive fixed rates to discounts and cashbacks. But what used to be a relatively straightforward process has become incredibly complex.

It has also become a bonanza for a new breed of insurance brokers. The more mortgages they can refinance, the better the commission. Hang the redemption penalties and extra fees lumped on clients.

Despite these potential problems, FSA chief Sir Howard Davies has studiously resisted formal regulation - not surprising given the breadth and burden of work that falls on his shoulders.

Gordon Brown, the consumer's friend and a believer in transparency, has other ideas. Estate agents, mortgage and insurance brokers will soon join the myriad of others licensed and inspected by the all-powerful FSA.

It should be good news for the consumer - and it could end some of that churning of mortgage deals that has crept into the system.