Telecom and Oil: Ericsson Exec Goes to BP

Posted by: Stanley Reed on June 25

BP and Royal Dutch Shell watch each others’ every move very closely. After all, the two are seen as local champions in London—even though Shell is now mostly based in the Hague—and their shares are frequently played off against each other by financial traders.

So it’s fair to ask whether BP is imitating Shell by hiring Carl-Henric Svanberg, CEO of Swedish telecom equipment maker Ericsson, as its new Chairman. The move invites comparison to Shell’s appointment of Jorma Ollila, the former CEO of Finnish telecom whizz Nokia, as Chairman in 2006 following a scandal over misreporting oil reserves.

The answer may be that for these very global companies the Nordic countries are a logical place to look for senior business figures to grace their boards. The Nordics are politically non-controversial and their telecom makers are among the most outward looking of global companies, having long been forced to develop markets outside their own rather small home bases. Svanberg will be familiar with such key developing markets as Russia and China, as well as the U.S.

BP has struggled to find a Chairman to replace Peter Sutherland, an Irishman, who is retiring. Svanberg, who gets good marks for turning around Ericsson after its near death experience in the previous recession, doesn’t look an absurd choice—though he may lack Ollila’s gravitas and may not be familiar with the issues that an oil giant confronts.

Svanberg, who takes over on Jan, 1, 2010, will be replaced at Ericsson by Hans Vestberg, currently EVP and CFO. That transition was expected, though its timing comes as a surprise.