Shareholder pressure has forced Sir Iain Vallance to resign as chairman of BT from 1 May, sparking rumours of a forthcoming rights issue to cut BT's £30bn mountain of debt.
Vallance has in effect been forced out by city concerns over BT's debt levels.
The company's share price has fallen from 1172p to a low of 469p over the last 12 months, leading to pledges from BT to tackle its debt problem. The telco is facing a further cut in its credit rating, which was reduced last August from "AA to A".
Such a cut would increase the cost of BT's current and future borrowings, thus endangering its ability to make future acquisitions and expand globally.
BT has sold off property, will sell Yell, its directories business, and is hoping to float its Wireless division as it considers its options. The telco has since been reported as planning to sell off its fleet of vans to raise funds.
Its favoured option, though, would be a new rights issue, but city institutional investors have said they would not support such a move unless Vallance and/or chief executive Sir Peter Bonfield left the company.
Vallance is to be replaced as chairman by Sir Christopher Bland, although he will remain as president. Bland is currently head of the BBC state-funded TV network.
But Bonfield may escape the axe after receiving a Bland vote of confidence, at least in the short term. Long term he told BBC Radio 4 news that the relationship is something he and Bonfield will "have to work at".
Shares in BT had fallen from last night's close of 580p to 543p by 10.30am BST today [Thursday].
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