BT Ian Livingston
BT's Ian Livingston will join the government as trade minister in December (Reuters)

Almost a billion pounds dropped off the value BT after the Prime Minister David Cameron announced that the telecommunications giant's chief executive, Ian Livingston, would join the government as trade and investment minister by the end of the year.

BT's share price plunged by more than 3.5% after Cameron told the House of Commons during Prime Minister's Questions that Livingston would replace incumbent minister Stephen Green, the former chairman of HSBC and peer.

"It has been an incredibly hard decision to leave BT at such an exciting time," said Livingston, who will be made a peer in December.

"However, the opportunities ahead and the strength of the management team that Gavin will lead mean that the company is in a great position."

As trade and investment minister, Livingston will be responsible for promoting the UK's exporters and importers by encouraging business abroad.

He will have a particular focus on the UK's priority markets, including China, Singapore and Russia, as the government eyes trade beyond the EU to meet its target exports value of £1bn by the end of the decade.

Livingston has been chief executive of BT Group since 2008 and pocketed a £9.1m pay package in 2013. The firm's robust performance in the year saw adjusted profit before tax soaring 11% to £2.7bn.

"Ian has done a tremendous job in transforming BT. His decision to accept a government post demonstrates the sense of public service which many of us know to be characteristic," said Sir Michael Rake, chairman of BT.

"He leaves behind him a very capable team, one which will take forward the strategy that has served BT well and which lays out the path to further success."

Gavin Patterson, BT's chief executive of its retail arm, will replaced Livingston when he joins the government.

"It is a privilege to have been offered the position of chief executive of BT Group, and I am delighted to accept," said Patterson.

"The company is in a strong place. We have great opportunities ahead and are well placed to take advantage of them, in the UK and internationally. We have the people, the technology and the plans we need to build on our current successes. I look forward to leading a dynamic team to ensure we do just that."