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Q1 2008

Ian Livingston Chief Executive. BT Group plc. Forward-looking statements caution. Certain statements in this presentation are forward-looking and are made in reliance on the safe harbour provisions of the US Private Securities Litigation Reform Act of 1995. These statements include, without limita

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Q1 2008

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    1. Q1 2008/9 Results 31 July 2008 BT Group plc

    2. Ian Livingston – Chief Executive BT Group plc

    3. Forward-looking statements caution Certain statements in this presentation are forward-looking and are made in reliance on the safe harbour provisions of the US Private Securities Litigation Reform Act of 1995. These statements include, without limitation, those concerning: expectations of continuing growth in revenue, EBITDA, earnings per share and dividends per share; continued growth in BT Global Services’ revenue, and EBITDA margin improvement; BT Retail EBITDA growth and improving trends in BT Wholesale; continued growth in the broadband market; further cost savings; expectations regarding capital expenditure, and levels of free cash flow; planned investment in fibre-based super-fast broadband; investment in BT’s 21st Century Network and growth of the 21CN Ethernet footprint; and the scope and delivery of next generation services and applications. Although BT believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. Because these statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements. Factors that could cause differences between actual results and those implied by the forward-looking statements include, but are not limited to: material adverse changes in economic conditions in the markets served by BT; future regulatory actions and conditions in BT’s operating areas, including competition from others; selection by BT of the appropriate trading and marketing models for its products and services; technological innovations, including the cost of developing new products, networks and solutions and the need to increase expenditures to improve the quality of service; the anticipated benefits and advantages of new technologies, products and services not being realised; developments in the convergence of technologies; fluctuations in foreign currency exchange rates and interest rates; prolonged adverse weather conditions resulting in a material increase in overtime, staff or other costs; the timing of entry and profitability of BT in certain communications markets; and general financial market conditions affecting BT’s performance and ability to raise finance. BT undertakes no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise

    4. Q1 2008/9 key points Good revenue growth up 3% Strong order intake, growing order pipeline EBITDA* up 1% revenue growth and cost savings effect of LLU higher input costs Working capital weak versus strong Q4 full year cash flow forecast remains EPS* up 2% 25th quarter of growth

    5. Q1 2008/9 revenue by customer

    6. Q1 2008/9 line of business summary

    7. Q1 2008/9 line of business overview Global Services

    8. Global Services £1.9bn order intake in Q1

    9. Q1 2008/9 line of business overview Global Services

    10. Q1 2008/9 line of business overview

    11. Retail new Home Hub Best wireless range of any UK broadband provider Our simplest ever set-up process Improved security More energy efficient allows power consumption control

    12. Q1 2008/9 line of business overview

    13. Q1 2008/9 line of business overview

    14. Priorities Customer service

    15. Customer service Right First Time programme: broadband repair and help – dissatisfaction reduced by a third complaint volumes reduced by a third abandoned calls have more than halved lead times for repair and provision down by a quarter access faults down by 16%

    16. Global platforms

    17. Global platforms Next Generation Access Total investment of c.£1.5bn Available to up to 10m homes by 2012 Majority fibre to the cabinet Basis for nationwide demand led roll out Commencing discussion with Ofcom on regulatory framework

    18. Global platforms 21CN 100% of UK core and metro nodes interconnected ahead of plan 21CN Broadband now available to 1m homes and businesses target 10m by April 2009 21CN Ethernet available from 100 nodes + target 600 nodes by April 2009 underpins mobile deals in BT Wholesale worth £770m Software development kits

    19. Ribbit Silicon Valley based software company Ribbit’s technology brings telephone functionality to the web Ribbit for Salesforce.com integrated into commercial CRM system Open platform thousands of developers using technology to develop applications

    20. Priorities Customer service

    21. Global Services Retail Wholesale Openreach 2008/9 outlook line of business

    22. Hanif Lalani – Group Finance Director BT Group plc

    23. Q1 2008/9 line of business financial headlines Group Global Services Retail Wholesale Openreach 3% Revenue 13% 3% 12% 1% 1% EBITDA* 10% 11% 14% 2%

    24. Global Services Revenue £2.1bn up 13% 45% revenue is non-UK, up 33% Costs & savings network optimisation savings new cost reduction plans EBITDA* £195m up 10% EBITDA* margin 9.5%

    25. Retail Revenue £2.1bn up 3% broadband up 17% calls & lines down 4% Costs & savings gross margin 36.8% up 60 b.p. SG&A reduced by £1m EBITDA* £368m up 11% EBITDA* margin 17.4% up 120 b.p.

    26. Wholesale Revenue £1.2bn down 12% transit & interconnect down 19% private circuits down 15% broadband down 26% managed network solutions up 27% Costs & savings 27% reduction in SG&A customer service efficiencies and productivity improvements EBITDA* £322m down 14%

    27. Openreach Revenue £1.3bn down 1% external up 11% internal down 3% Costs & savings productivity improvements operating costs down 3% superior service EBITDA* £491m up 2%

    28. Profit and loss account

    29. Free cash flow

    30. Margin management & main cost reduction initiatives Operational efficiencies c.£200m

    31. Balance sheet Pension fund £0.6bn post tax deficit at 30 June 2008 on IAS19 basis next triennial funding valuation at 31 Dec 2008 sustainable, modernised pension scheme Liquidity net debt £10.6bn £4.3bn debt raised in last 12 months £2.4bn committed facilities solid investment grade credit rating

    32. 2008/9 outlook Revenue Cost savings c.£800m expected EBITDA* Earnings per share* Capex c.£3.2bn 2008/9, c.£3.1bn 2009/10 Free cash flow c.£1.4bn Dividends per share

    33. Q&A BT Group plc

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