Playford steps aside in wide-ranging Ionica shake-up

Ionica, the struggling wireless phones operator, yesterday responded to intense City criticism with a shake-up that included replacing Nigel Playford, its founder, as chief executive.

Chris Godsmark, Business Correspondent, reports on the group's attempt to regain investors' confidence after last year's dramatic share price plunge.

The wide-ranging management and operational changes announced yesterday were the work of Mike Biden, a former British Telecom executive appointed last November as Ionica's chief operating officer.

The company said Mr Biden was taking over the chief executive's job from Mr Playford, who will become an executive deputy chairman. The management cull also includes the resignation as finance director of John Edwards, who is taking a year's "gardening leave".

"We felt that was the fairest way of recognising John's contribution," Mr Biden said, adding that it was less expensive for Ionica to continue to pay Mr Edwards' salary over a year, than to give him a lump sum pay- off.

Two other senior managers have also stepped aside. Derek Laval, the commercial director who had been with Ionica since 1991, resigned, while another executive, Bob Lindsey, resigned his board seat.

The shake-out follows the plunge in Ionica shares since the group's flotation last July. The shares, floated at 390p, plummeted from a peak of 399p to a low of 58.5p. They rose 4p yesterday, to 91.5p.

The crash came after Ionica warned that it could not cope with customer demand, while new technology to increase the capacity of wireless base stations would arrive late. Figures released yesterday showed a 12.7 per cent rise in phone lines between October and December, to 38,610. But 2,627 customers were disconnected during the period, down only slightly on the previous quarter.

Mr Biden said he had identified three "big hitters" to join the management team. He also revealed that Mr Playford would not sit on a new executive board, despite his title as an executive deputy chairman.

Ionica's founder said his pounds 250,000 a year salary had "absolutely not" been cut, though Mr Biden added that a pay review would be carried out in the summer.

Mr Playford, who had faced intense City criticism over Ionica's problems, admitted the company needed a "change of style."

He said his new job would be too look at Ionica's long-term strategy, adding that staff would not have been happy if he had left the group altogether. "They see me as the founder ... my role is now very clearly future focused."

Analysts broadly welcomed the news. "The main thing is that Playford has moved to one side and that can only be positive," said one.

Coupled with the management changes, Ionica said that it was seeking outside partners to build the rest of its UK phone network in an attempt to cut costs.

So far the company has expanded into three regions, East Anglia, the Midlands and South Yorkshire, but said it needed to preserve its pounds 170m cash pile.

Mr Biden said Ionica would ask Oftel, the phones watchdog, to extend its operating licence which obliges the company to build a network in England and Wales by 2000.

"Because we don't have the revised five-year plan yet it's very likely that we won't meet that requirement."

Potential partners approached so far included Nortel, the Canadian telecoms equipment maker behind Ionica's wireless phone technology, Racal and NTL, the cable group.

"We're having some very positive discussions with Nortel," said Mr Biden.