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Next BT chairman hints at future plans

Sir Michael Rake has suggested that BT may have to borrow and spend to become a major IT services player
Written by Graeme Wearden, Contributor

Sir Michael Rake, BT's incoming chairman, has hinted at his future ambitions for the telco in the telecoms and IT sectors.

Rake is currently chairman of accountancy firm KPMG, and will take over from Sir Christopher Bland at BT in September. Speaking just days after his appointment was announced, Rake suggested that BT may need to borrow more money from the financial markets if it is to compete with global IT services giants such as IBM and EDS.

"I think when you have a very credible management who have a track record in an extremely dynamic area, it strikes me most shareholders will want to give them the tools and the opportunities to go and make something of this," Rake told the Financial Times.

Rake explained that he wants BT to be seen as one of the top three telecoms companies in the world by 2010. However, a BT spokesman later insisted that Rake would not be giving any firm details on his plans for BT until he joins the telco in the autumn.

In recent years, BT has attempted to transform itself from a traditional incumbent telco into a serious player in the IT services space. It has enjoyed some early success, with its Global Services arm securing IT contracts with the NHS, the Ministry of Defence, Bank of New York and Lehman Brothers.

BT's share price has slipped from 320p to 310p since Rake's appointment was announced and talk of acquisitions may not thrill the financial markets. When Sir Christopher Bland arrived at BT in 2001 he faced a deficit of £29bn, which forced him into tough measures. He quickly sold off BT's operations in Japan and Spain, and abandoned its loss-making joint-venture with America's AT&T. He also sold off its Cellnet mobile arm, which is now O2, and managed to reduce BT's debt to £8bn.

Rake's biggest challenge may be finding a replacement for Ben Verwaayen, BT's chief executive, within the next few years. Verwaayen has previously refused to give credibility to rumours that he is planning to go into politics in the Netherlands, his home country, but Rake admitted to the Financial Times that "he [Verwaayen] is not going to be there forever".

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