2005/6 | financial headlines

(1) Underlying excluding cuts in mobile termination rates, Albacom and Infonet (2) Before specific items(3) Excluding receipts from disposals

Group turnover £19.5bn 6% / 3% (1)

Profit before tax (2) £2.2bn 5%

Earnings per share (2) 19.5p 8%

Free cash flow £1.6bn 8% (3)

Full year dividend 11.9p 14%

Net debt £7.5bn 5%

Operational highlights of 2005/6

•8million Broadband connections

•New wave revenues now one third of total business

• Investment in 21st century network

•Regulatory settlement – launch of Openreach

•Continued targeted acquisitions – Atlanet, Cara, Total Network Solutions

Boardchanges

CorporateSocial Responsibility

DividendsYears ended 31 MarchTotal pence

15

10

5

02002 2003 2004 20062005

11.910.4

8.5

6.5

2.0

BT’s vision

To be dedicated to helpingcustomers thrivein a changing world

Consistent strategy

Helping our customersthrive in a changing world

21st Century Network

Defend traditionalImproved servicePrice innovationReduce costs/improve margin Aggressive and creative marketing

Grow new waveNetworked IT servicesBroadbandMobility

Consistent delivery

5.0

4.0

3.0

2.0

1.0

0

(1.0)

(2.0)

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2003/4 2004/52002/3 2005/6

%

Revenue | strong underlying* growth

* 2002/3 growth is adjusted to take account of Concert unwind* 2004/05 and 2005/6 excludes impact of mobile termination and revenues from Albacom and Infonet

Consumers | a broadband centric service provider

What is our strategy?Broadband-centred convergent services; a service culture

What do consumers want?Simple, high quality services; clear pricing; value for money

Examples of new services:High definition voice; BT Vision; BT Fusion; WiFi cordless phones; 8Mb broadband

Broadband Britain

Coverage 60% 99.7%2002 2006

BT Wholesale DSL Price£30.00 £8.40 per month

Take-up 200k 8 million

Speed 512kb up to 8Mb

BT Retail Services Internetaccess and email

Home MonitoringOpenzone

BT Yahoo!Home NetworkingBroadband Talk IT Manager

BT Fusion

BT Vision MusicEntertainment

Broadband | our services

Centred on the Home HubBringing it all together

Communications BT Fusion High DefinitionVoice

Home MonitoringDigital VaultManage Life

Small and medium businesses | a partner for changeWhat do businesses want? Personalised, localised service; reduced complexity;improved productivity

What is our strategy? Being an IT partner; BT Local Business

Examples of new services: Networked IT services; OneBill; BT Fusion for enterprise

Mobility | convergence is here

42% growth in revenue year on year to £292m

Converged products and servicesFusion, Onebill, Openzone

Wireless cities

Personalsafety

Remoteworking

Wirelessconnectivity

Car parkmonitoring

Wholesale customers | convergent network solutionsWhat do Wholesale customers want?High quality service, reliable delivery;equality of service/price

What is our strategy?Providing managed network solutionsfor fixed and mobile operators

Examples of new services: 21CN based services; BT Movio

Corporates | growing around the world

What do corporates want?Enterprise-wide solutions; a one-stop shop;reliability and security

What is our strategy? Providing global reach with local presence;building long-term customer relationships

Examples of new services:Converged wireless portfolio;sector specific propositions

Networked IT services | enhancing our capabilities

Reach Infonet, Albacom, KDDI joint venture

WAN & LANsCara, Skynet & TNS

Retail NSB, BT Expedite & dabs.com

Motor industryAtlanet

Bringing it all together

Financial ServicesRadianz

6

5

4

3

2

1

2003/4 2004/52002/3 2005/6

£Bn7 CAGR

0

+ 49%

Revenue | new wave growth accelerating

+ 83%

Mobility & OtherBroadbandNetworked IT Services

+ 24%

Basic earnings per share*Years ended 31 MarchPence

* From continuing activities

20

10

5

02002

15

2003 2004 20062005

19.518.116.9

14.4

9.0

IFRSUK GAAP

Bringing it all together

Strategy built around convergence & innovation

Consistently successful in competitive & dynamic marketsNew wave now accounts for a third of group revenueNetworked IT services provider of choice

Strong momentum with track record of deliverySIXTEEN quarters of EPS growthNINE quarters of revenue growthFIVE quarters of improvement in EBITDA trend

Positive operational trends will continueGrowing revenues, profits & dividends