Q1 HIGHLIGHTS

Commenting on the results, BT�s new chief executive Ian Livingston said:

Firstly, I’d just like to say how proud and delighted I am to be CEO of your company. I will endeavour to do my absolute best for our shareholders and our customers.

Unlike many companies BT has continued to grow revenue, EBITDA⁽¹⁾ and earnings per share⁽¹⁾ in the first quarter. Despite the challenging economic times it is quite clear that people still want to buy the services we have to sell.

BT Retail performed well with revenue growth of 3% and double digit profit growth. BT Wholesale has won managed network solutions contracts of £1.2 billion over the last twelve months. BT Global Services has increased revenue by 13% with strong growth of 33% outside the UK. Although its margins were lower, EBITDA⁽¹⁾ increased by 10%.

Going forward my priorities are: improving customer service, expanding our global platforms and becoming more agile. An old boss of mine who built a formidable business empire used to say that when he was a small business he tried to act like a big business, and when he became a big business he focused on acting like a small business. That means responding fast to customer needs, being careful about costs and getting things right first time.

I believe that by making customer service a differentiator for BT, we will build on our position both globally and in the UK. Reducing the costs associated with service failure will benefit not only our customers but also our shareholders.

Total revenue of £5,177m, up 3%

EBITDA⁽¹⁾ of £1,433m, up 1%

Operating profit⁽¹⁾ of £742m, up 4%

Profit before tax⁽¹⁾ of £613m, down 7%

Earnings per share (EPS)⁽¹⁾ of 6.1 pence, up 2%

Free cash outflow of £734m

13m broadband end users (DSL and LLU),

of which BT�s retail share was 35%, with 31% of net additions in the quarter.

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