BT backs tech guns-for-hire with £30m stake

BT has sunk £30m into a start-up offering tech guns-for-hire to clients seeking to overhaul their systems, as it steps up it own modernisation efforts.

The telecoms giant is taking a stake and board seat at Distributed, which provides developers with expertise in artificial intelligence and cloud computing. 

The company is led by its co-founder Callum Adamson, a former professional musician in a country band.

It is the latest step in chief executive Philip Jansen’s revamp of BT, which included last year’s hiring of the tech executive Harmeen Mehta as chief digital and innovation officer.

Ms Mehta, who joined from the Indian telecoms operator Bharti Airtel, said the investment in Distributed would help “accelerate the digital revolution within BT and help to make it and the UK a key hub for the digital innovation economy.”

BT is under pressure to deliver growth after Patrick Drahi, its biggest shareholder, increased his stake in December from 12pc to 18pc in a move that stoked speculation that he was preparing a takeover bid.

Mr Jansen has been pressing for change at the FTSE 100 firm after becoming frustrated by the layers of bureaucracy since joining from the payments software specialist Worldpay three years ago.

BT has been working through 13,000 job cuts, slashing 270 of its 300 UK offices, while moving to new headquarters London’s Aldgate to forge a more modern and agile business.

The Distributed stake is the first investment BT has made through a new unit set up to pinpoint and back a new generation of fast-rising tech firms.

Mark Murphy, a BT technology executive, will take a board seat at Distributed. 

BT’s start up growth director will also join, as an observer.

Callum Adamson, the chief executive and co-founder of Distributed, said the tie-up with BT was a “huge milestone” in the use of on-demand talent.

BT is in the middle of offloading its live sports TV business, while spending £15bn on upgrading 25m homes and business to full-fibre by 2026.

Earlier this month, BT rebuffed the sports streaming provider Dazn backed by Leonard Blavatnik, one of Britain’s richest men, in favour of a partnership with the American broadcaster Discovery.

Mr Jansen has also supported Vodafone chief executive Nick Read’s calls to shore up margins across the telecoms industry by allowing more  consolidation.

“If you look across Europe, the telecoms market has been challenged,” Mr Jansen said at the beginning of February.

“So, my philosophy is exactly the same: there is no question that consolidation could help the industry to make sure there are more economic rational decisions made as huge capital investments are executed.”

Ofcom, the telecoms watchdog, clarified its position on industry’s mergers last week by saying it would review takeovers based on their benefits and pitfalls, rather than by the number of competitors.

Such comments have opened the door to mergers in the UK, with Vodafone and Three UK said to be considering a deal. 

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