BT at war in the boardroom

BT is being rocked by an increasingly acrimonious power struggle between Frenchman Pierre Danon, head of the retail division, and ambitious finance director Ian Livingstone.

Danon is seen as the natural successor to chief executive Ben Verwaayen, who is expected to stand down within two years. But Livingstone's supporters claim that Danon is 'on the way out' and should carry the can for BT's depressed share price and failure to boost revenues.

However, Livingstone looks increasingly isolated this weekend after Verwaayen and chairman Sir Christopher Bland gave their backing to Danon.

In a statement that significantly failed to mention Livingstone, a spokesman said: 'Pierre has the support of the BT board - that is Ben Verwaayen and Sir Christopher. The non-executives are extremely enthusiastic about what Pierre is trying to do.'

Danon hit back at his critics. 'There is a smell of bad briefings,' he told Financial Mail. 'When you are involved in a massive programme cutting thousands of jobs and changing others, there are always critics. Some senior managers and even one or two directors are not on board.'

Danon was responding to growing internal disquiet over his own performance. In particular, critics cite his failure to deliver on a promise to attract half-a-million customers for the key BT Broadband service by last summer. Despite a £23 million advertising campaign featuring stars such as Pulp singer Jarvis Cocker, by then only 140,000 had signed for this faster online service.

And though BT still talks about huge growth in 'new wave' revenue, much of it is generated from major contract wins, including a giant NHS computerisation project and work for big companies such as Unilever.

According to insiders, the credit for this should go to fellow board director Andy Green's global services division, not Danon. 'It is impossible to separate,' insisted Danon. 'Andy and I are a team. My division sells, but Andy delivers services.'

The whispering campaign against Danon coincides with news that BT's share of the domestic phone market has fallen for the first time in 15 quarters.

Danon was interviewed recently for the job of chief executive at BSkyB, but friends say he is loyal to BT.

One said: 'Pierre was approached for another FTSE 100 job last week, but would not even go for an interview. He'll be around for two years at least unless a top 20 company asks for him.' Danon still has fans in the City and is seen as a candidate for the top job when Verwaayen leaves.