Full year results special - May 2011

The Big Picture Online is a quarterly presentation with highlights of BT’s financial performance and examples of the actions BT is taking to become a better business with a better future This quarter we share the latest news from BT’s full year financial results to March 2011

Results summary Revenue 1 – down 4% to £20bn Profit before tax 1 – up 20% to £2bn Operating cost savings 3 of over £1bn Free cash flow 2 – up 6% to £2.2bn Full year dividend of 7.4p (up 7%) Key headlines “We have delivered profits and free cash flow ahead of expectations for the year, while making significant investment in the business for the future. ” Ian Livingston BT Group CEO 12 May 2011 “We have delivered profits and free cash flow ahead of expectations for the year, while making significant investment in the business for the future. ” Ian Livingston BT Group CEO 12 May – before specific items 2 – before specific items and pension deficit payments 3 – operating costs before specific items and depreciation and amortisation 0 Global Services order intake up 10% at £7.3bn; cash flow positive a year early Growth in Openreach copper lines as customers recognise advantages of fixed line broadband Cash used to invest in the business; reduce net debt; pay progressive dividends; and support the pension fund. BT put £1.3bn into BT Pension Scheme (BTPS) during fiscal ending March 2011 Expect to grow profits and free cash flow while investing to return BT to growth in 2013 Customer service delivery We experienced challenges this year especially in the UK Service improvements: - Global Services customer faults c.10% - Wholesale broadband faults c.15% - Consumer complaints c.20% - Business complaints c.60%

Driving broadband-based consumer services Being the ‘Brand for Business’ for UK SMEs BT Global Services – a global leader The wholesaler of choice The best network provider A responsible and sustainable business leader A better future A better business HonestyAgility A better future

© British Telecommunications plc 5  BBC iPlayer  HD  Recommendation engine  Broadband New services Differentiated service WiFi  Home Hub 3 with Smart Wireless  Award winning broadband  OnLive gaming  Weekly net adds c.5,000  144,000 customers 5.7m customers  >2.8m hotspots  Lowers churn  Usage more than doubled

© British Telecommunications plc 6  64% share of broadband net adds 1 in Q4 –highest retail net adds for 8 years –highest ever including cable –c.90% of new broadband provides in Q4 were part of a bundle  Active customer loss in Q4 lowest for 4 years  Consumer ARPU up 5% to £326 Consumer ARPU Broadband net adds £ ‘ BTOther DSL & LLUBT share of net adds DSL and LLU

© British Telecommunications plc 7  BT Business line loss in Q4 at lowest level for more than 3 years  New business broadband propositions launched –FY business broadband net adds up c.30% YoY  Focus on IT services and mobility –IT services revenue up 17% FY –Mobility revenue up 14% FY –opportunity to increase market share 16% 4% 80 % Fixed voice & data IT services Mobility IT services Mobility 2011 BT Business revenue c.£2.4bn IT services and mobility revenue trend

© British Telecommunications plc 8  Order intake –£7.3bn in year, up 10%  Contract wins in Q4 –Ecopetrol –BASF  AsiaPac –investment on track –growing pipeline  Strong growth in LatAm  New structure –focus on key global sectors –industry specific solutions –global account management and delivery model Banking & Financial Markets Commerce (Manufacturing, logistics & pharma) Consumer Packaged Goods Gov’t & Health UK EMEA & Latin America United States & Canada Asia Pacific

© British Telecommunications plc 9 External revenue ex transit MNS & IP Other  40% of FY external revenue under long-term contract  Executing on existing MNS contracts  Portfolio evolving from traditional to IP –MNS & IP revenue up 14% FY –IP Exchange minutes up more than 75% FY –fixed Ethernet connections trebled £m

© British Telecommunications plc 10  Copper line base grew for first time since 2006 –up 11,000 FY versus down 326,000 last year  ADSL2+ available to 80% of UK premises by December 2011  Ethernet - 1,000 fibre Ethernet nodes, largest network in the UK  Continued investment overseas –Ethernet, MPLS & city fibre QoQ change in total copper lines ‘000

© British Telecommunications plc 11  Fibre roll out progressing at a good pace –passing around 80,000 new premises per week –5m homes to be passed in next few weeks –c.150,000 end users currently –c.45 CPs selling or trialling services –Cornwall and NI progressing well  Network capabilities –expect to roughly double our FTTC speeds to up to 80Mbps in 2012 –potential for >100Mbps FTTC –FTTP roll out commencing, 1 Gbps trial underway 2/3 premises passed by end of m premises passed shortly >4m premises passed currently 10m premises passed by 2012 Fibre roll out ADSL enabled for c.99% of all premises

For more information about BT’s strategy go to: Team BT 2012 Challenge intranet site ( Investor centre of the BTplc internet site (BT Group annual report published 27 May) (