British Telecom, which acquired Esat Telecom for $1.9 billion earlier this year in a hotly-contested take-over battle with Norwegian group Telenor, has sprung a surprise with the appointment of chief financial officer Mr Neil Parkinson as Esat's new chief executive.

Mr Parkinson replaces Denis O'Brien as Esat chief executive, but Mr O'Brien will be remaining with Esat as a non-executive chairman.

Following the take-over, there was speculation that the chief executive of Esat's highly successful Digifone mobile phone associate, Mr Barry Maloney, would become chief executive of Esat under its new ownership, largely on the basis that the Digifone operation he headed was the main contributor to the Esat group, accounting for about two-thirds of Esat's total value.

Informed sources told The Irish Times, however, that relations between Mr Maloney and Mr O'Brien had deteriorated over the way Digifone should be run. Mr Maloney felt that Digifone should operate autonomously from Esat, which owned 49.5 per cent of the mobile phone company, while Mr O'Brien is understood to have felt that Digifone should be run much more as an arm of the Esat Telecom group.

But the sources added that ultimately, the appointment of a new Esat chief executive was very much BT's call, although Mr O'Brien - as non-executive chairman - may have had an advisory role.

Mr Maloney, however, is remaining as chief executive of Digifone under a new divisional structure being put in place by British Telecom, which now controls the mobile business. BT has restructured Esat in three business lines: the mobile sector under Mr Maloney, the fixed line market and corporate Internet and consumer Internet. Senior appointments to the two non-mobile parts of the business will be made "in due course", BT stated.

Mr Parkinson (38)joined Esat in November 1996 as chief financial officer. From 1992 to 1996, he was financial controller of Colorman, a privately-owned Irish printing company.

As chief financial officer, he was responsible for Esat's flotation on the Nasdaq and Easdaq in November 1997 as well as for a number of equity and bond placings, which raised more than $1 billion. He was also responsible for negotiating the agreement whereby Esat uses CIE's rail lines for its telecom network and also the joint venture with Racal.

As a member of Esat's senior management team, Mr Parkinson was one of the beneficiaries of the BT takeover and received around £5.3 million for his shares and options.