The CEO of BT, Gavin Patterson, is stepping down after a five-year tenure that has overseen major change across the business.
During his time in charge Patterson led the industry-shaking £12.5bn acquisition of EE, the UK’s largest mobile operator, and managed a wide-ranging restructuring that included separating Openreach into a standalone business and updating BT’s TV strategy as over-the-top (OTT) services such as Amazon Prime challenged traditional pay-TV models.
EE acquisition
The merger between BT and EE raised concerns among smaller competitors, who feared the combined group would use its scale to dominate the market and deliver highly competitive quad-play bundles of broadband, landline, TV and mobile services.
Before the deal EE already held the largest share of radio spectrum in the UK, and the merger increased the combined company’s spectrum position even further. That prompted industry pressure to limit spectrum concentration.
Three UK, owned by Hutchison, launched the #MakeTheAirFair campaign asking regulator Ofcom to impose a 30 percent cap on spectrum ownership to prevent excessive market concentration. The campaign gathered more than 200,000 signatures and sought tighter limits on auction allocation.
Ofcom ultimately set a 37 percent cap for its auction in the 2.3 GHz and 3.4 GHz bands earlier in the year. Auction results included significant purchases by all major operators:
- EE won 40 MHz of 3.4 GHz spectrum, paying £302,592,000.
- Hutchison 3G UK won 20 MHz of 3.4 GHz spectrum, paying £151,296,000.
- Telefónica UK acquired all 40 MHz of 2.3 GHz spectrum for £205,896,000 and 40 MHz of 3.4 GHz spectrum for £317,720,000.
- Vodafone secured 50 MHz of 3.4 GHz spectrum, paying £378,240,000.
After the auction, EE reduced its overall share of spectrum but remained the market leader with around 35 percent. Vodafone held approximately 27 percent, O2 increased to about 20 percent, and Three rose to roughly 18 percent. The position Patterson leaves at BT ensures the company a dominant footing in mobile services for its successor.
Openreach split
BT had long resisted calls from industry rivals and some policymakers to separate Openreach, the division that runs the UK’s national fibre broadband network, from its retail operations. In 2017 Ofcom concluded that BT had both the incentive and the ability to favour its own retail business when making strategic decisions about Openreach’s network investments.
To address concerns about competition and impartial access to infrastructure, BT Group agreed in March 2017 to establish Openreach as a distinct company with its own staff and management. Legally, the network assets remained owned by BT for contractual reasons, and Openreach Limited continued as a wholly-owned subsidiary of BT’s parent holding company, but the governance changes were designed to offer greater operational independence.
Competitors and some MPs had argued BT was slow to open the network to rivals and had under-invested in UK broadband. In the same month the Openreach changes were announced, BT was fined a record £42 million for delays in installing high-speed lines.
Reflecting on the decision to separate Openreach, Patterson said that the move would serve the long-term interests of households, businesses and service providers that rely on the network and would help reduce uncertainty while supporting further investment in digital infrastructure. He acknowledged the review had been challenging and that the company had listened to criticisms and agreed to make fundamental changes to how Openreach operates.
Although BT would have preferred to keep Openreach more closely integrated, the split represents a regulatory-driven shift rather than a voluntary retreat. Even with the restructuring, Ofcom’s 2017 Communications Market Report estimated BT’s fixed broadband market share at around 37 percent, well ahead of nearest rival Sky at about 24 percent. In short, BT remains the dominant player in fixed broadband.
TV services
When BT was privatised in 1984, it was barred from providing television services over its telecommunications network to protect new entrants. That restriction was lifted in January 2001, and BT chose to enter the market via IPTV with the BT Vision service rather than launching a traditional cable network.
BT’s television ambitions grew significantly in 2012 when it secured a share of Premier League rights and launched the BT Sport channels. Those rights have been central to BT Sport’s success, drawing subscribers who value live football coverage.
However, the TV landscape is shifting as OTT platforms expand into sports and premium content. Amazon’s acquisition of some Premier League rights for Prime members is one example of how digital players are encroaching on traditional broadcasters’ territory. That trend threatens pay-TV suppliers across the market.
Critics have argued BT’s investment in sports rights was expensive and has not delivered the anticipated strategic payback. Neil Wilson, Chief Market Analyst at Markets.com, said the expensive push into football rights suggested management lost focus under Patterson and that the TV effort had failed to generate the broadband customer growth BT expected.
For the quarter ending 31 December, BT reported a decline of 5,000 TV subscribers. The rising popularity of OTT services such as Netflix and Amazon Prime Video creates a broad industry threat to bundled TV packages. At present, BT’s ability to offer quad-play bundles helps support its TV business, but with subscriber numbers falling, the long-term viability of that approach remains uncertain.
Conclusion
Patterson’s five years at BT are a mix of strategic wins and difficult compromises. He leaves the company in a strong position in mobile and fixed broadband: the EE acquisition solidified BT’s mobile scale, and the Openreach reforms clarified infrastructure governance while preserving BT’s market-leading presence in fixed broadband.
The TV business is the more challenging legacy, facing structural shifts in how consumers access video and live sports. That challenge is shared across the industry and not unique to BT.
“It’s been an honour to lead BT since 2013 and serve as a member of the board for the last 10 years,” Patterson said. “BT is a great business and with the new management team I’ve recently put in place, I believe it is very well-positioned to thrive in the future.”
BT expects to appoint Patterson’s successor later this year.
What are your thoughts on Gavin Patterson’s tenure as BT CEO? Let us know in the comments.