BT MSL – How are we doing? DNO Team Update

1. BT MSL – How are we doing? DNO Team Update 15th September 2011

2. Today’s Topics • How are we doing? • Scorecard results - where are we today? • Current Issues • Building a Better Business • Performance Management • Refocus on objectives - Refresh • CARE -  EEI result & OCI view • Recognition • MSL Talent pool • Q&A’s In Commercial Confidence

3. Current Issues • 2G TCH Network Availability • Shared network KPI well below target • Partly down to us not clearing TRX faults quickly enough • Brought people back from MEAS • Loaned people into London • Showing on track to achieve end of month deadline • KPIs generally poor • Challenged on volumes • NSN removed REH upgrades • Once TCH performance is resolved need to bring other KPIs up quickly • Back-log clearance affects results – need to flush through • Need to recruit for long term • Vacancies in North West, North East and London • Applicants being short listed • Temporary back-fill with contractors • Finance challenges in current year • All costs need to be managed

4. Recent Opportunities • Vodafone RAN First Line Maintenance • In progress in Reading area – extending to London • Growth helps meet finance challenge • Huawei 2G RAN Refresh for Everything Everywhere • Cardiff trial close to completion • Training plans being rolled out • Northern Ireland next • MEAS • Set to continue through the next year • Very good feedback for our Engineers and Riggers • Olympics First Line Maintenance (FLM) with NSN • New opportunity being evaluated • Others subject to NDA (none disclosure agreements)

5. THANK YOU! FOR ALL YOU HAVE DONE TO IMPROVE OUR RESULTS AND DEVELOP THESE NEW OPPORTUNITIES

6. MSL Scorecard Status

7. Building a Better Business - Program timeline Appointments made Phase 1: Iain Hill – Head of NMO Brian Stebbings – Head Of KCOM Service Mark Wrightson – KCOM NMC Manager

8. What does this mean for you? • As part of the MSL senior management team, I and my colleagues, are working to integrate all the individual contracts into a cohesive business unit; this initiative is called ‘Building a Better Business’. • BaBB’s high level objective is to change to meet needs of the customer and encourage interworking between the contracts, this will be achieved in part by bringing common activities such as Field Engineering under a single function with common line management. The benefits for this will be: • Synergies between contracts at a Geographical level reducing travel for some skill groups such as Power. • Standardisation of performance measures and implementation for a common Field function. • Continuity of communication and direction given by a specifically aligned function. In Commercial Confidence

9. Organisation Design - Sprints Andy Wood, with the support of Tony Hodge, Steve Young and Su Morgan will be leading the development of the detailed organisation design. How we will work as a cross customer service organisation? • Increased focus and engagement across BT MSL will take place during Quarter 3. Resulting in a high level Organisation Design being prepared for review by the end of September. • Our Organisation Design plans will be created during a series of Sprint workshops held in September, where we intend to capture input from across the MSL team and give you the opportunity to influence our plans.

10. Getting involved • Participants in the workshops will be communicated, so even if you are not directly involved you will know who will be representing your team, and can provide input through them. • Team Leaders are encouraged to ensure that if any members of your team are invited to contribute at the Sprint workshops, that every effort is made to ensure they can participate. • Further briefings will be circulated with specific details of how you can register your input and get involved in the Organisation Design process over the next few weeks.

12. Performance Management Timeline For more info about performance management at BT go to:- http://humanresources.intra.bt.com/index/managing_performance.htm

13. Objectives Refresh • WHAT’S THIS ABOUT? • Business expectation that all personal objectives will be reviewed, and refreshed where necessary at the half year point • This is a specific action on e-performance that needs to be done now • WHEN? • During September 2011 • WHY? • Only 7 months of year left to deliver business requirements • Check performance is tracking in right direction • Take recovery action where necessary, or make changes • REVIEW WHAT? • Achievement year to date – is it on track, ahead, falling behind? • Are the measures still appropriate? Could more be achieved? • Are the weightings still appropriate? Has an objective become more important? • Have any new projects come along that are more important and should become an objective? • HOW? • Top down • Through 121’s in lead up to Q2 levelling • Review progress at Q2 levelling

14. A Positive Work Environment - Today • Q2 Care Agile Survey – What did it tell us? • Engagement falling – EEI = 3.53 (Q1 = 3.64) VERBATIM THEMES: From - I love my job and doing it well gives me a high sense of achievement. To - Little sense of achievement as the goal posts constantly shift and there is always something else needing done. Performance management process is a common issue • Primary Style = Oppositional • look for mistakes • stay detached and perfectly objective • Secondary Style = Perfectionistic • never make a mistake • view work as more important than anything else • Security and task focus = keep your head under the radar and just get things done Our Culture

15. A Positive Work Environment - Future • Aiming for an environment where:- • Plans are in place to achieve challenging goals which are pursued with enthusiasm • People are able to enjoy their work and develop themselves • Everyone is managed in a supportive and helpful way • Co-operation and teamwork are expected and valued • Interpersonal relationships matter as much as achieving the goal • People are involved as far as possible in decisions that affect them

16. Recognition and Rewards • Rewards Home Page: https://www.rewardscentral.bt.com/ •  Has someone made the difference in the team? •  Send an e-card choosing one of the capabilities - Heart, Trustworthy, Helpful, Inspiring, Straightforward. • Remind the person that they have made the difference, are recognised and appreciated: •  5 cards can lead to £25 to spend on what you want. •  Instant financial recognition awards available when someone really went out of their way to support the customer and team needs •  Some recent examples of thank-you’s • Covering sick member of the team with very little notice. • Taking on additional work when pressure on the team to achieve challenging targets. • Helping others to achieve within the team. • Giving up family time to help the business achieve its targets.. •  It doesn’t take 2 minutes to send an e card - brighten someone’s day and send one soon ... 

17. MSL Talent Pool • Commitments from BT MSL to its talent pool members: • A formal annual career development review • Events and access to build individual knowledge, visibility and networks • Developmental career moves and short term opportunities • Creating and delivering a development plan which could include: • Access to leadership development programmes • Job-specific development • Mentoring from a senior manager • Coaching from a senior manager • Commitments expected from talent pool members: • Continued exceptional performance • achievement of objectives • role model capabilities and behaviours • evidence of commitment to BTMSL and our values • demonstrated support of the expected culture and service delivery model • Event/ Programme attendance • Talent networking – development of relationships • Contribute to acquisition and development of other talent • Accountability for their own development and related action planning.

18. Well done for being accepted into the 2011 MSL Talent Pool Kenny Fitzpatrick     -  Engineer - DNO Graham Slorach– Engineer - DNO Paul Coop                  – Engineer - DNO Paul Ellis                    – Engineer - DNO Neil Leahy                  – Senior Engineer - DNO Steve Jones               – Team Manager - DNO Pete Richardson       – Team Manager - DNO Steve Hazon              – Lead Regional Voice & Data Engineer - Virgin Media Brendan Sturgeon    - Planning, Routeing & Numbering Team Leader - Virgin Media Darren Clark              – Development Team Manager - Harlequins Ami Mandrekar– Application Support Manager - Harlequins Richard Linstead– Manager of IT Design and Development - Harlequins Chris Johnson          - Operations Performance Analyst - Infrastructure Sarah Carr                 – Team Administrator – Infrastructure

19. Any Questions?

20. Reward – Choices 2011 Selection NB If an employee is on leave during the enrolment window they can e-mail Group Reward to register in a different way – details in 17 August comms

21. Linked BT Strategies for information

22. BT Group How we’re doing - strategy • Consumer – now over 200,000 BT Infinity customers (around a third of them new to BT Retail); over 600,000 BT Vision customers; over 3m wi-fi hotspots (new deal with Hilton Worldwide) • Business – IT services and mobility revenue up 7%, as small businesses move to a single supplier • BTGS – good opportunities in AsiaPac; largest ever contract in LatAm region (Brazilian Post Office and Telegraph Company - Correios) • BT Wholesale – growing CP customer base for IP Exchange and fibre products; continued growth of Ethernet circuits • Network – more than 5m premises passed by our super-fast broadband network; almost treble the number of customers using the service in last six months

23. BT Operate’s strategy C What it means for us We will… A1 Information Driven Business A2 Optimise financial planning A 3 Production & operational planning Operate 2014 Operate 2014 B1 Lean Service L2C B2 Lean ServiceT2R A B C1 C2M uplift C2 Network & IT capacity managment C3 Rationalise products C4 Rationalise applications C5 Rationalise networks C6 Rationalise data centres & locations C7 Purchasing excellence & optimisesuppliers Operate 2014 Operate 2014 D1 Role clarity & accountability D2 Leadership impact and employee involvement D3 Location strategy KEY - Level of involvement Directly Partially Not really D

24. BT Wholesale Strategy Service as a differentiator Improve margins and cost Grow the business Wholesaler of choice, growing revenue and profit Make this a great place to work 24

25. BT Wholesale improve margins and reduce costs 1 Improve profitability of existing products and contracts We need to continue to attack all cost areas Deliver underlying SG&A costs reduction 2 Drive down cost of sales for products and contracts Deliver Underlying TLC Reduce 3rd party costs 3 Improve costs after gross margin Reduce internal costs (BTO/BTID) 4 Reduce SLG payments Create process efficiencies within BTW and across Group

26. Sell more Managed Services In managed services, continuing success will require better and broader delivery skills Develop new growth concepts Evolve core products and services 26