Taking over from a well-respected finance director will always be a daunting
task. When it’s at a FTSE 100 company in the public eye it can be a less than
Nevertheless, this is the very decision that Hanif Lalani took when he
succeeded Ian Livingston, now chief executive of BT Retail, as the telecoms
company’s group finance director in February 2005.
So far, so good, however. When the Ugandan-born CFO was appointed, the share
price was at roughly 190p. At the time of going to press the day’s trading
closed at 266.25p.
‘I think there was more of a challenge in my own mind than anything else,’ he
says, rather modestly, because he is a self-assured finance director. But
confidence is what the market wants and needs in a FTSE 100 FD.
‘I’m a good communicator and if you can share with investors the drivers of
the business and where you are in that strategy, then they will appreciate the
honesty and frankness.’
So far, investors are pleased with what he’s doing. If he does have critics
they are withholding public judgement at present. Shareholders like his
no-nonsense, open approach.
One investor says: ‘He makes himself avail-able; that should be applauded. He
has a goo grasp of the business and the politics. The level of disclosure has
improved under Hanif. He’s in the process of building his reputation.’
Lalani, 44, is no stranger to BT, or the telecoms market. He is what you call
a ‘BT insider’. He joined in 1983 and worked his way around the business in a
variety of finance and management roles in the group’s UK and international
Between 1998 and 2002, he worked in Northern Ireland first as FD of BT
Northern Ireland, and then within a year he was promoted to chief executive. He
returned to London in September 2002 where he took up the post of CFO at BT
But far from being staid, he is rather dynamic, offering a fresh take on
business management. He sees his long-standing tenure at BT as only advantageous
to his position.
‘I don’t think I aspired to be on the board when I joined, but the advantage
it does give you is that you understand the culture and the direction of all the
little businesses we have. Having been in an organisation so long, you begin to
live the values and you know exactly what levers to pull, what action to take
and who to call and what to do to make things happen,’ he says.
Despite his obvious loyalty to the telecoms business, he isn’t blinded to its
failings. ‘I think the “stand up and speak your mind culture” doesn’t exist.
When you’ve come through the civil service you do what you’re told and I think
there’s a characteristic that’s still there and one that you would really want
to break. You want people to stand up and give their views and I think people
are reluctant to do that. As we bring more people in, you can see that changing
slowly. But I don’t think it’s one of those natural things here. That said
execution here is absolutely fantastic.’
Begun under Livingston and continued under Lalani, BT’s finance function has
undergone far-reaching change to haul the system of finance into the 21st
century. Although BT modernised its service to match customer needs, the
internal finance function remained that of an ex-public sector body. ‘We have
made 20-25% changes in the finance team. We have streamlined the way we work,
taking out £65m worth of costs over the past three years in the finance
organisation,’ Lalani says.
Finance systems and the team are now centralised, removing duplication in
almost every department. ‘It’s very easy for a big organisation to become
divisionalised and silo-based, for every division to have finance within the
team. We moved away from doing everything everywhere to doing it once for the
organisation,’ Lalani says.
Much of the high volume, low value transactional work has been outsourced to
companies both in the UK and abroad. ‘If you start partnering with companies,
then that gives you more flexibility. You don’t have to do everything for
yourself. It doesn’t have to be in the UK. When you get to that level of
managing your supply chain then you move from being a fixed cost base to a
flexible one,’ Lalani says.
He has also overhauled the finance staff too, bringing in new blood to
revitalise the team and training up those staff ‘willing to change’.
‘We’ve brought in new people who have worked in different companies and
sectors who bring with them different experiences, scars and new ideas. It was
important to mix the two together. I want a highly motivated finance team that
thrives on change and wants to make changes because we’re in a fast-changing
industry. If you approach people, there’s an openness now,’ he adds.
He’s no tyrant, but seemingly rules with a firm hand. ‘When you’re in an
environment of rapid change then a consensus style – which is great to get
everyone involved in and drive and motivate – doesn’t always work to get the
right result. Being coercive at times isn’t a bad thing.’ With a finance team of
1,400, it would be a tough job to be democratic all the time. Although Lalani
says ‘my natural style is a consensus one as you want to take people with you
and engage with them and convince them that what you’re doing is the right
He reveals an entrepreneurial spirit more typical of non-finance people. But
then entrepreneurialism was one of the qualities his parents were determined to
instil in him from a young age, having been successful entrepreneurs in their
native Uganda themselves. Lalani and his family sought asylum in the UK from the
tyrannical regime of former Ugandan president Idi Amin. His first memories of
the UK are arriving early one morning on a frosty winter’s day at an RAF base
Ability to adapt
Lalani presides over a modern business, but with the economic climate set to
get tougher, and competition stiffer, it’s essential for the FD to ensure the gr
oup has the ability to adapt to changing times. Thankfully, he says the
correlation between GDP growth and the telecoms sector isn’t as strong today as
in the past.
‘What we’ve found is that with technology moving on and a substantial price
reduction over the past two decades, the correlation has become much smaller.
Will there be an impact of a downturn? Yes. Will it be significant impact? No,
because price and costs are no longer so material,’ he says.
Moreover the services BT provides, he argues, have become fundamental, rather
than a bonus, to today’s lifestyles and business.
In the meantime, to reduce costs and create a flexible cost base so the group
can swell and contract as the economy shifts, meaning no more long-term
contracts for suppliers or staff and less certainty for all, Lalani will
potentially have to tackle the public’s animosity to more foreign outsourcing.
For the group, this is clearly desirable, as the option offers the ability to
keep BT competitive in the face of an intense and evolving marketplace. Lalani
is, however, savvy enough to juggle competing interests.
Relishing the competition
Competition is stiff in the telecoms marketplace. New technologies such as
broadband telephony are cropping up fast to change the marketplace, but BT FD
thinks the FTSE 100 company is well placed now that it has shed many of the old
structures of a public service organisation and established a flexible cost
‘Our strategy is very clear. We expect to be in a competitive marketplace and
expect to be very innovative and very agile.
‘If you look at the broadband marketplace, we believe there will be a number
of different propositions and challenges, but, ultimately, those that sell
purely on price, we don’t believe they will succeed.’
Lalani is betting on consumers taking ‘high bandwidth and connectivity for
granted’ and only paying for services via the internet. ‘Our differentiation has
been all around what services we are offering,’ he explains.
BT will be playing catch up as far as voiceover internet protocol is
concerned, but it has big plans to go up against the leaders in this field and
the big mobile phone operators. ‘If you live in an area that has poor coverage,
your mobile signal can come off your broadband, rather than going to a cell
site. And because it goes over the broadband line your call charges are
substantially lower than the charges you would pay for a mobile operator.’
And they’re not forgetting their small business customers either.‘With small
businesses, what we’ve started to offer is a broadband service where we can
access your PC through the broadband connection remotely, so if you have a
problem we can fix it. We have the ability to remotely diagnose a problem,’ he
‘Competitive world yes, clear differentiation yes.’
The next five years will prove how successful the BT strategy has been.
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