1997 is a historic year in the BT story. This is the last Annual Review that you will receive from BT. Once the proposed merger with MCI is completed, all BT shares will become shares in Concert plc. BT will, of course, continue to trade as BT here in the UK.

Concert represents BT's coming of age. We've come a long way since we were privatised back in 1984, and a large number of shareholders have remained loyal to the company throughout those years. We look forward to having you with us on the next stage of the journey - a stage that we believe will be characterised by exciting new opportunities for your new company to seize.

But, of course, things have not stood still while we wait for the merger to be completed. In fact, this year was quite a year for BT. Turnover grew by 3.4 per cent, we continued with our innovative and highly successful marketing campaigns, we made progress on building our presence around the world, and we explored the opportunities offered by the Internet. We were also pleased to be able to recommend a final dividend of 11.95 pence per share, bringing the total for the year to 54.85 pence, including the 35 pence special dividend.

So, what kind of company will Concert be?

First and foremost, it will be a company committed to free and genuine competition in every part of the communications market. The BT story in the UK is proof that competition is the best guarantee of customer benefits. In the last dozen years, customers here have experienced steadily falling prices - now among the lowest in the world - more choice and higher quality. Our partnership with MCI has already begun to help this transformation of the customer experience, with innovative programmes like the hugely popular Friends & Family.

BT and MCI already have a track record of working successfully together. BT has 12 years' experience of competing successfully in the most open communications market in the world, experience that will be invaluable as the local telecommunications market in the US opens to competition. Concert will be uniquely well positioned to benefit from the opening of the European markets on 1 January 1998, and MCI's experience at winning market share from US incumbent AT&T will be vital when we have the chance to compete fully with national telephone operators in France, Germany and elsewhere in Europe.

Everywhere we look around the world, there is huge and exploding demand for communications services. Meeting that demand is the challenge and the opportunity that your new company faces.

 

Sir Iain Vallance Chairman