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Quarterly analysis of turnover and profit
(UNAUDITED) YEAR ENDED 31 MARCH 1999

	Quarters	1st	2nd	3rd	4th	Total
		Łm	Łm	Łm	Łm	Łm
-----------------------------------------------------------------------------------------	----------------------------------------------------------------
Total turnover - ongoing activities		4,239	4,403	4,684	4,897	18,223
Group's share of associates' and joint ventures' turnover		(196)	(246)	(410)	(418)	(1,270)
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Group turnover - ongoing activities		4,043	4,157	4,274	4,479	16,953
Other operating income		37	34	31	66	168
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Group operating profit - ongoing activities		898	913	1,012	993	3,816
Group's share of operating loss of associates
and joint ventures		(78)	(56)	(101)	(107)	(342)
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Total operating profit - ongoing activities		820	857	911	886	3,474
Profit on sale of fixed asset investments and
group undertakings (a)		-	1,107	-	-	1,107
Net interest payable		(97)	(86)	(53)	(50)	(286)
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Profit on ordinary activities before taxation		723	1,878	858	836	4,295
Tax on profit on ordinary activities:
Corporation and similar taxes		(224)	(544)	(266)	(259)	(1,293)
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Profit on ordinary activities after taxation		499	1,334	592	577	3,002
Minority interests		(13)	-	3	(9)	(19)
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Profit for the financial period		486	1,334	595	568	2,983
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Basic earnings per share		7.6p	20.7p	9.2p	8.8p	46.3p
Basic earnings per share before exceptional items		7.6p	8.7p	9.3p	9.1p	34.7p
Diluted earnings per share		7.4p	20.2p	9.0p	8.6p	45.3p
Diluted earnings per share before
exceptional items		7.4p	8.5p	9.1p	8.9p	34.0p
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(a)Including gain on MCI shares sold		-	1,133	-	-	1,133
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(UNAUDITED) YEAR ENDED 31 MARCH 1998
	Quarters	1st	2nd	3rd	4th	Total
		Łm	Łm	Łm	Łm	Łm
-----------------------------------------------------------------------------------------	----------------------------------------------------------------
Total turnover - ongoing activities		3,844	4,003	4,083	4,109	16,039
Total turnover - discontinued activities		584	580	208	-	1,372
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Total turnover, including discontinued activities		4,428	4,583	4,291	4,109	17,411
Group's share of associates' and joint ventures' turnover		(630)	(632)	(352)	(157)	(1,771)
-----------------------------------------------------------------------------------------	----------------------------------------------------------------
Group turnover - ongoing activities		3,798	3,951	3,939	3,952	15,640
Other operating income (a)		25	26	279	42	372
-----------------------------------------------------------------------------------------	----------------------------------------------------------------
Group operating profit - ongoing activities		891	813	1,149	804	3,657
Group's share of operating profit (loss) of associates
and joint ventures		28	(68)	(81)	(75)	(196)
-----------------------------------------------------------------------------------------	----------------------------------------------------------------
Total operating profit (loss):
Ongoing activities		862	783	1,062	729	3,436
Discontinued activities		57	(38)	6	-	25
		919	745	1,068	729	3,461
Profit (loss) on sale of fixed asset investments and
group undertakings		20	(2)	45	-	63
Net interest payable		(58)	(59)	(94)	(99)	(310)
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Profit on ordinary activities before taxation		881	684	1,019	630	3,214
Tax on profit on ordinary activities:
Corporation and similar taxes		(278)	(215)	(285)	(199)	(977)
Windfall tax		-	(510)	-	-	(510)
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Profit (loss) on ordinary activities after taxation		603	(41)	734	431	1,727
Minority interests		(4)	6	(14)	(13)	(25)
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Profit (loss) for the financial period		599	(35)	720	418	1,702
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Basic earnings (loss) per share		9.4p	(0.5p)	11.3p	6.5p	26.6p
Basic earnings per share before exceptional items		9.4p	7.4p	8.3p	6.5p	31.7p
Diluted earnings (loss) per share		9.3p	(0.5p)	11.1p	6.4p	26.2p
Diluted earnings per share before
exceptional items		9.3p	7.3p	8.2p	6.4p	31.2p
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(a) Including MCI merger break up fee net of expenses		-	-	238	-	238
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Financial statistics

Financial ratios
YEARS ENDED 31 MARCH
	1995	1996	1997	1998	1999
------------------------------------------------------------------------------	----------------------------------------------------------------
Basic earnings per share - pence	27.8	31.6	32.8	26.6	46.3
Growth in dividends per share % (a)	6.0	5.6	6.1	6.4	7.4
Return on capital employed % (b)	15.7	18.4	19.1	19.5	18.4
Gearing - net debt to equity % (c)	17.8	7.4	1.6	36.1	6.3
Interest cover (d)	10.3	16.9	19.7	11.2	12.1
Dividend cover (a) (e)	1.6	1.7	1.7	1.8	1.7
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(a) 1997 and 1998 figures exclude the effects of the special dividend of 35p per share paid in September 1997.
(b) The ratio is based on profit before tax and interest on long-term borrowings, to average capital employed. Capital employed is represented by total assets less current liabilities, excluding corporate taxes and dividends payable, and provisions other than those for deferred taxation. Year-end figures are used in the computation of the average, except in the case of short-term investments and borrowings where average daily balances are used in their place.
(c) The ratio is based on borrowings net of cash and short-term investments to capital and reserves and minority interests.
(d) The number of times net interest payable is covered by operating profit. In 1995 and 1997, net interest excludes the premium paid on the repurchase of bonds.
(e) The number of times dividends are covered by earnings. The figure for 1998 excludes the effect of the windfall tax charge and the figure for 1999 excludes the gain on sale of the MCI shares.

Expenditure on research and development
YEARS ENDED 31 MARCH
	1995	1996	1997	1998	1999
	Łm	Łm	Łm	Łm	Łm
------------------------------------------------------------------------------	----------------------------------------------------------------
Total expenditure	271	282	291	307	268
------------------------------------------------------------------------------	----------------------------------------------------------------

Expenditure on tangible fixed assets
YEARS ENDED 31 MARCH
Plant and equipment
Transmission equipment	1,060	1,114	1,131	1,219	1,416
Exchange equipment	605	566	445	512	411
Other network equipment	378	491	503	502	558
Computers and office equipment	343	333	350	372	464
Motor vehicles and other	214	195	175	230	230
Land and buildings	75	87	143	211	205
Decrease in engineering stores	(4)	(15)	(28)	(16)	(15)
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Total expenditure on tangible fixed assets	2,671	2,771	2,719	3,030	3,269
Decrease (increase) in creditors	(33)	(224)	104	(10)	(49)
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Cash outflow on purchase of tangible fixed assets	2,638	2,547	2,823	3,020	3,220
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Financial statistics have been restated where necessary to provide consistency with the presentation of the 1999 financial year figures.

Operational statistics and regulatory information

Call growth
YEARS ENDED 31 MARCH
	1995	1996	1997	1998	1999
	----------------------------------------------------
% growth in fixed network call volumes over the previous year:
Inland	7	6	7	7	9
International (a)	5	9	7	9	11
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(a) Outgoing, incoming and transit.

Growth is estimated by reference to turnover growth attributable to calls, adjusted to eliminate the effect of price changes.

Exchange line connections
AT 31 MARCH
Business( '000)	6,459	6,798	7,160	7,521	7,982
% growth over previous year	5.4	5.2	5.3	5.0	6.1
Residential ('000)	20,613	20,500	20,393	20,130	20,067
% growth (reduction) over previous year	0.7	(0.5)	(0.5)	(1.3)	(0.3)
--------------------------------------------------------------------------------------------------	----------------------------------------------------
Total exchange line connections ('000)	27,072	27,298	27,553	27,651	28,049
% growth over previous year	1.8	0.8	0.9	0.4	1.4
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BT Cellnet (Cellular telephones in the UK)
AT 31 MARCH
Digital GSM ('000)	34	353	1,125	2,303	4,163
Analogue ('000)	1,700	2,036	1,573	774	359
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Total ('000)	1,734	2,389	2,698	3,077	4,522
% growth over previous year	70.2	37.8	12.9	14.0	47.0
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Optical fibre
AT 31 MARCH
Fibre - kilometres in the network ('000)	2,782	3,043	3,302	3,591	4,058
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Payphones
AT 31 MARCH
Total public payphones in the UK ('000)	129	133	136	138	142
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People employed
AT 31 MARCH
Total employees ('000)	137.5	130.7	127.5	124.7	124.7
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Classified directory business in the UK
The company is providing the following information with respect to its classified directory business in the UK in accordance with undertakings made with the Office of Fair Trading in 1996. For the year ended 31 March 1999, the classified directory business of BT made an operating profit of Ł190m (1998 - Ł179m) on turnover of Ł439m (1998 - Ł420m) and, at 31 March 1999, it employed net assets of Ł151m (1998 - Ł136m). Since the classified directory business is integrated with the company's wider operations, this financial information incorporates the effects of certain apportionments and allocations of expenditures and assets.

BT is required to submit annual audited accounts in respect of the classified directory business to the Director of the Office of Fair Trading within nine months of the company's financial year end. Copies of these accounts, when available, may be obtained free of charge from the Financial Director, Yellow Pages at Queens Walk, Reading, RG1 7PT.

Additional information for shareholders

Background
The company was incorporated under the laws of England and Wales on 1 April 1984 as a public limited company wholly owned by Her Majesty's Government of the United Kingdom. In a series of three offers to the public, HM Government reduced its holding from 100% in December 1984 to less than 1% in July 1993. HM Government now owns less than 0.2% of the outstanding ordinary shares.

Listings
The principal listing of BT's ordinary shares is on the London Stock Exchange. The shares are also listed on the Tokyo Stock Exchange. American Depositary Shares (ADSs), each representing 10 ordinary shares, have been issued by Morgan Guaranty Trust Company of New York, as Depositary for the American Depositary Receipts (ADRs) evidencing the ADSs, and are listed on the New York Stock Exchange. ADSs also trade, but are not listed, on the London Stock Exchange. Trading on the New York Stock Exchange is under the symbol "BTY". BT shares are traded on the Tokyo Stock Exchange under the Code "9484".

Share and ADS prices
	Pence per ordinary share		US$ per ADS
	--------------------------		--------------------------
	High	Low	High	Low
	pence	pence	$	$
	--------------------------		--------------------------
YEAR ENDED 31 MARCH 1997
1 April - 30 June 1996	382.5	326.5	58.625	49.25
1 July - 30 September 1996	397	336	60.5	53
1 October - 31 December 1996	410	345	68.75	54.125
1 January - 31 March 1997	461.5	393	73.75	66.375
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YEAR ENDED 31 MARCH 1998
1 April - 30 June 1997	482.5	424	78.75	69.5
1 July - 30 September 1997	501.5	379.5	82.5	60.875
1 October - 31 December 1997	483.5	439.5	81.75	71.875
1 January - 31 March 1998	685	480.75	113.875	79.875
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YEAR ENDED 31 MARCH 1999
1 April - 30 June 1998	757	630	125.4375	102.25
1 July - 30 September 1998	902	745.5	148.75	124.25
1 October - 31 December 1998	908	676	154.25	116.375
1 January - 31 March 1999	1,118.5	899.5	179 .9375	148.25
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YEAR ENDING 31 MARCH 2000
1 April - 18 May 1999	1,089	970	175.125	159
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The prices are the highest and lowest closing middle market prices for BT ordinary shares, as derived from the Daily Official List of the London Stock Exchange and the highest and lowest sales prices of ADSs, as reported on the New York Stock Exchange composite tape.
Fluctuations in the exchange rate between the pound sterling and the US dollar affect the dollar equivalent of the pound sterling price of the company's ordinary shares on the London Stock Exchange and, as a result, are likely to affect the market price of the ADSs on the New York Stock Exchange.

Relative TSR performance over the five financial years to 31 March 1999

Relative TSR performance over five financial years to 31 March 1999 - graph

Total Shareholder Return (TSR) is the measure of the returns that a company has provided for its shareholders, and is therefore a good indicator of a company's overall performance. The TSR indices on the above graph are the product of share price movement plus gross dividends reinvested in the shares to July 1997 and net dividends thereafter.

Analysis of shareholdings			Ordinary shares of 25p each
Size of shareholding			-----------------------------
	Number of shareholders	Percentage of total	Number of shares held (millions)	Percentage of total
AT 31 MARCH 1999	Number of shareholders	Percentage of total	Number of shares held (millions)	Percentage of total
------------------------------------------------------------------------------------------	------------------------------------------------------------------
1 - 399	859,404	45.1	183	2.8
400 - 799	550,734	29.0	298	4.6
800 - 1,599	332,355	17.5	363	5.6
1,600 - 9,999	154,331	8.1	412	6.4
10,000 - 99,999	3,589	0.2	89	1.4
100,000 - 999,999	1,291	0.1	452	7.0
1,000,000 - 4,999,999	393	-	833	12.9
5,000,000 and above (a)(b)(c)	175	-	3,839	59.3
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Total	1,902,272	100.0	6,469	100.0(d)
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(a) Under the BT Executive Share Plan, the BT Performance Share Plan and the BT Deferred Bonus Plan 6.9 million shares were held in trust in respect of contingent awards of shares which have been granted to 905 participants.
(b) Under the BT Employee Share Ownership Scheme 32 million shares were held in trust on behalf of 126,851 participants who were beneficially entitled to the shares.
(c) Approximately 93 million shares were represented by ADSs and a further 11 million shares were held by a nominee of the Tokyo Stock Exchange on behalf of investors. Analysis by size of holding is not available for these holdings.
(d) 18.9% of the shares were in 1,857,208 individual holdings, of which 165,266 were joint holdings, and 81.1% of the shares were in 45,064 institutional holdings.
So far as the company is aware, no person is the beneficial owner of more than 10% of the company's ordinary shares, nor is the company directly or indirectly owned or controlled by another corporation or by HM Government or any other foreign government. There are no arrangements known to the company the operation of which may at a subsequent date result in a change in control of the company.
At 18 May 1999, there were 6,470,161,894 ordinary shares outstanding. At the same date, approximately 9.2 million ADSs (equivalent to 92 million ordinary shares, or approximately 0.14% of the total number of ordinary shares outstanding on that date) were outstanding and were held by 2,172 record holders of ADRs.

CREST: London Stock Exchange settlement system

The company's ordinary shares are settled in CREST, the computerised system for settling sales and purchases of shares. CREST is a voluntary system which enables shareholders, if they wish, to hold and transfer their shareholdings electronically rather than by paper. Shareholders who wish to retain their certificates are able to do so.

Personal equity plans (PEPs) and individual savings accounts (ISAs)

PEPs are no longer eligible for new subscriptions. Information about investing in BT shares through an ISA may be obtained from Halifax Share Dealing Limited, Westbank, Water Lane, Leeds LS11 5TL (telephone 0990 33 66 44). ISAs are also offered by other organisations.

Dividends

The Board expects to recommend in respect of each financial year an interim and a final divided, which will normally be payable in February and September, respectively. The proposed 1999 final dividend will be paid on 20 September to shareholders on the register on 20 August 1999.

The dividends paid or payable on BT shares and ADSs for the last five years are shown in the following table. The dividends on the ordinary shares exclude the associated tax credit. The dividends on the ADSs paid before 5 April 1999 include the associated UK tax credit available to certain beneficial owners who are resident in the United States or Canada for tax purposes, but before deduction of UK withholding taxes. The amounts shown are not those that were actually paid to holders of ADSs. For the tax treatment of dividends paid on or after 6 April 1999 see Taxation of dividends below. Dividends have been translated from pounds sterling into US dollars using exchange rates prevailing on the date the ordinary dividends were paid.

	Per ordinary share			Per ADS			Per ADS
YEARS ENDED	Interim	Final	Total	Interim	Final	Total	Interim	Final	Total
31 MARCH	pence	pence	pence	Ł	Ł	Ł	US$	US$	US$
------------------------------------------------------------	---------------------------------			--------------------------------			--------------------------------
1995	7.05	10.65	17.70	0.881	1.331	2.212	1.375	2.055	3.430
1996	7.45	11.25	18.70	0.931	1.406	2.337	1.422	2.181	3.603
1997 (a)	7.90	11.95	19.85	0.987	1.494	2.481	1.582	2.391	3.973
1998	7.55	11.45	19.00	0.944	1.431	2.375	1.540	2.400	3.940
1999	8.10	12.30	20.40	1.012	(b)	(b)	1.644	(b)	(b)
------------------------------------------------------------	---------------------------------			--------------------------------			--------------------------------

(a) In addition a special dividend of 35p per share, excluding the associated tax credit or Ł4.375 (US$7.002) per ADS, including the UK associated tax credit, was paid at the same time as the final dividend for the 1997 financial year.

(b) Qualifying holders of ADSs on record as of 20 August 1999 are entitled to receive the final dividend which will be paid on 27 September 1999, subject to approval at the annual general meeting. The US dollar amount of the final dividend of Ł1.23 per ADS to be paid to holders of ADSs will be based on the exchange rate in effect on 20 September 1999, the date of payment to holders of ordinary shares. This dividend will be the first to be paid under the new arrangements described in Taxation of dividends below.

The dividends for the 1998 and 1999 financial years include an adjustment to take account of the effect of the 1997 special dividend.

The level of dividends will continue to be influenced by such factors as the effects of competition and regulation in the UK, together with investment needs and opportunities in the UK and in other countries. Past relationships between the interim and final dividends are not necessarily indicative of the future.

As dividends paid by the company are in pounds sterling, exchange rate fluctuations will affect the US dollar amounts received by holders of ADSs on conversion by the Depositary of such cash dividends.

The expected dividend payment dates in 2000 are:

2000 interim dividend payable	February 2000
2000 final dividend payable	September 2000
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Dividend mandate
Any shareholder wishing dividends to be paid directly into a bank or building society account should contact the Registrar for a dividend mandate form. Dividends paid in this way will be paid through the Bankers Automated Clearing System (BACS).
Share dividend plan
Shareholders could elect to receive additional shares in lieu of a cash dividend under the BT share dividend plan for the following three dividends:
		Price per share pence
	Date paid	Price per share pence
--------------------------------------------------------------------------------------------------------------------	------------------------------------------
1998 interim	16 February 1998	480.35
1998 final	21 September 1998	835.00
1999 interim	15 February 1999	950.20
--------------------------------------------------------------------------------------------------------------------	------------------------------------------

Dividend investment plan

The share dividend plan has now been withdrawn and is being replaced by a dividend investment plan which will be available to ordinary shareholders in respect of the proposed 1999 final dividend to be paid on 20 September 1999. The last date for lodging mandates for the BT dividend investment plan in respect of the final dividend is 20 August 1999. Under the plan, the cash from participants' dividends is used to buy further BT shares in the market.

ADR Shareholder Services Programme

Details of the Morgan Guaranty Trust shareholder services programme, including reinvestment of dividends, are available from Morgan Guaranty Trust Company of New York on 1 800 749 1687 (toll free in the United States) or +1 781 575 4328 (from outside the United States), or on written request to the ADR Depositary.

Results announcements
Expected announcements of results:
1st quarter	29 July 1999
2nd quarter and half year	11 November 1999
3rd quarter and nine months	February 2000
4th quarter and full year	May 2000
2000 annual report and accounts published	June 2000
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ShareGift
The Orr Mackintosh Foundation operates a charity share donation scheme for shareholders with small parcels of shares whose value makes it uneconomic to sell them. Details of the scheme can be obtained from the BT Shareholder Helpline. Information is also available on the ShareGift Internet site www.sharegift.org
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Exchange rates
BTpublishes its consolidated financial statements expressed in pounds sterling. The following table details certain information concerning the exchange rates between pounds sterling and US dollars based on the noon buying rate in New York City for cable transfers in pounds sterling as certified for customs purposes by the Federal Reserve Bank of New York (the Noon Buying Rate).

YEARS ENDED 31 MARCH	1995	1996	1997	1998	1999
	-----------------------------------------------------------------------------------
Period end	1.62	1.53	1.64	1.68	1.61
Average (a)	1.57	1.52	1.60	1.65	1.65
High	1.64	1.56	1.71	1.70	1.72
Low	1.46	1.50	1.49	1.58	1.60
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(a) The average of the Noon Buying Rates in effect on the last day of each month during the relevant period.

On 18 May 1999, the most recent practicable date for this annual report, the Noon Buying Rate was US$1.62 to Ł1.00.

Taxation (US Holders)

This is a summary only of the principal US federal income tax and UK tax consequences to beneficial owners of ADSs who either are resident in the United States or hold ordinary shares or ADSs as assets effectively connected with a US trade or business (US Holders). It is not a complete analysis or listing of all potential tax consequences of the purchase, ownership and disposal of ordinary shares or ADSs.

Investors are advised to consult their tax advisers with respect to the tax consequences of their holdings, including the consequences under applicable state and local laws. The statements of UK and US tax laws and practices set out below are based on the laws in force and as interpreted by the relevant taxation authorities as of the date of this annual report. The statements are subject to changes occuring after that date in UK or US law or practice, in the interpretation thereof by the relevant taxation authorities, or in any double taxation convention between the United States and the UK.

In particular, this summary is based on the current convention between the United States and the UK for the avoidance of double taxation with respect to taxes on income and capital gains (the Treaty) and the US Internal Revenue Code of 1986, as amended. The Treaty is currently under renegotiation.

Taxation of dividends

For dividends paid on or before 5 April 1999, US Holders were generally entitled to receive the cash dividend plus a Treaty payment from the Inland Revenue of one quarter of the dividend, subject to a UK withholding tax of 15% of the aggregate amount paid. As an example for illustration purposes only, a US Holder who was entitled to a dividend of Ł80 was also entitled to a Treaty payment of Ł20, reduced by the withholding tax of 15% on the gross amount of Ł100, i.e, Ł15, leaving a net cash payment of Ł85. The full dividend plus the full Treaty payment including the UK tax withheld was taxable income for US purposes, and the US tax withheld generally was available as a US credit or deduction.

For dividends paid on or after 6 April 1999, the Treaty payment reduces to one ninth of the dividend (i.e. one tenth of the gross payment). As a result of the UK withholding tax (which cannot exceed the amount of the hypothetical Treaty payment), US Holders will no longer receive any Treaty payment. In the above example, the cash dividend would be Ł80, and the hypothetical Treaty payment would be Ł8.89 (one ninth of Ł80). However, since the UK withholding tax (15% of Ł88.89) would exceed the amount of the hypothetical Treaty payment, no Treaty payment will be made and the US Holder will receive only the cash dividend (here, Ł80). A US Holder will be taxable in the US on the full dividend and full hypothetical Treaty payment (Ł88.89), and will be treated as having paid a foreign tax equal to the hypothetical Treaty payment (here, Ł8.89). The foreign tax deemed paid generally will be available as a US credit or deduction.

For US federal income tax purposes, a distribution will be treated as ordinary dividend income to the extent paid out of current or accumulated earnings and profits, and thereafter as return of capital. Dividends paid by the company will not be eligible for the US dividends received deduction. The amount of any dividend paid in pounds sterling will equal its US dollar value based on the spot rate in effect on the date the dividend is received. Additional gain or loss resulting from a subsequent conversion or other disposition of the pounds sterling will be ordinary income or loss.

Taxation of capital gains

Unless a US resident carries on a trade through a branch or agency in the UK, and the disposal of ordinary shares and/or ADSs is related to the activities of that trade, UK capital gains tax is not charged on US residents who dispose of ordinary shares and/or ADSs.

For US federal income tax purposes, a US Holder will recognise a gain or loss on the sale or other disposition of shares or ADSs. Such gain or loss will be a capital gain or loss if the shares or ADSs disposed of are held as capital assets. Capital gains of an individual US Holder are subject to US tax at preferential rates if specified holdings periods are met.

US information reporting and back-up withholding

Dividends paid on and proceeds received from the sale or disposition of ordinary shares or ADSs may be subject to information reporting to the IRS and back-up withholding at a 31% rate. Back-up withholding will not apply, however, to a holder who provides a correct taxpayer identification number or certificate of foreign status and makes any other required certification or who is otherwise exempt.

UK stamp duty

A transfer for value of an ordinary share will generally be subject to UK stamp duty or to UK stamp duty reserve tax. No UK stamp duty will be payable on the transfer of an ADS, provided that the separate instrument of transfer is not executed in, and always remains outside, the UK.

Inheritance and gift taxes

US-domiciled holders of ordinary shares and ADSs generally will not be subject to UK inheritance tax on a gift of ordinary shares and/or ADSs if the gift would be subject to US federal gift tax. Similarly, ordinary shares and/or ADSs passing on the death of a US-domiciled shareholder generally will not be subject to UK inheritance tax if the estate would be subject to US estate tax.

Exchange controls and other limitations affecting security holders

There are currently no government laws, decrees or regulations in the United Kingdom that restrict the export or import of capital, including, but not limited to, UK foreign exchange control restrictions, or that affect the remittances of dividends or other payments to non-resident holders of the company's ordinary shares, except as otherwise described in Taxation (US Holders) above and except in respect of the government of, or any resident of, Iraq or any person treated as so resident or in respect of the governments of the Federal Republic of Yugoslavia, and of Serbia. There are no limitations under the laws of the United Kingdom restricting the right of non-residents to hold or to vote shares in the company.

Publications

BT produces a series of documents reporting on the company's financial, economic, social and environmental performance. These publications are available to shareholders on request.

Document	Publication date
-----------------------------------------------------------------------------------------------------------------------------------	-----------------------------
Annual Review and summary financial statement	June
Annual Report and Form 20-F	June
Report for Shareholders	February and September
Quarterly results releases	February, May,
	July and November
Historical Cost Financial Statements for the Businesses and Activities (as required by Oftel)	July
Current Cost Financial Statements for the Businesses and Activities,
including long-run incremental cost information for the Network Business (as required by Oftel)	September
Group Current Cost Financial Statements	September
Environmental Performance Report	October
Social Report (An issue of responsibility)	June
Statement of Business Practice	June
Sustainability Report	October
Quality of Service Report	May and November
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Most documents may be accessed on the Internet at www.bt.com/shares
For printed copies contact the BT Shareholder Helpline on Freefone 0808 100 4141 or, alternatively, contact The Registrar in the UK, BT North America Inc. in the United States or The Toyo Trust & Banking Co. Limited in Japan at the addresses on page 115 of the printed document.


The Registrar	BT Shareholder Helpline
Lloyds TSB Registrars (450)	Tel Freefone 0808 100 4141
The Causeway	Fax (01903) 833062
Worthing, West Sussex	From overseas:
BN99 6DA, United Kingdom	Tel +44 1903 833950
	Fax +44 1903 833062

	e-mail bt@lloydstsb-registrars.co.uk
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BT North America Inc.	ADR Depositary
Investor Relations	Morgan Guaranty Trust Company
40 East 52nd Street	of New York
New York, NY 10022,	ADR Service Center
United States	P.O. Box 8205
Tel 1 800 331 4568	Boston, MA 02266-8205
(toll free within the United States and Canada)	United States
or +1 212 418 7787	Tel 1 800 634 8366 (toll free)
(from outside the United States and Canada)	or (781) 575 4328
Fax +1 212 418 7788
	e-mail adr@jpmorgan.com
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BT (Japan) KK	Share Handling Agent in Japan
ARK Mori Building	The Toyo Trust & Banking Co. Limited
12-32 Akasaka 1-Chome	Tokyo Office:
Minato-Ku, Tokyo 107-6024	10-11 Higashisuna 7-Chome
Tel (03) 5562 6000	Koto-Ku, Tokyo 137-8081
	(Corporate Agency Department)
	Tel (03) 5683 5111

	Osaka Office:
	6-3 Fushimi-machi 3-Chome
	Chuo-Ku, Osaka 541-8502
	(Corporate Agency Department)
	Tel (06) 222 3111
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Shareholder enquiries	General enquiries
Lloyds TSB Registrars maintain BT's share register and the separate BT Employee Share Ownership Scheme register. They also provide a BT Shareholder Helpline service. Shareholders should contact the Registrar (details above) if they have any enquiries about their shareholding.	British Telecommunications plc
	BT Centre
	81 Newgate Street
	London EC1A 7AJ
	United Kingdom
	Tel (0171) 356 5000
	Fax (0171) 356 5520
	From overseas:
	Tel +44 171 356 5000
	Fax +44 171 356 5520

	A full list of BT contacts, and an electronic feedback facility, is available at www.btplc.com/feedback/feedback.cfm

Glossary of terms and US equivalents

Term used in UK annual report	US equivalent or definition

Accounts	Financial statements
Advance corporation tax (ACT)	No direct US equivalent. Tax payable on cash dividends treated as advance payments on the company's UK income tax due
Associates	Equity investees
Capital allowances	Tax depreciation
Capital redemption reserve	Other additional capital
Creditors	Accounts payable and accrued liabilities
Creditors: amounts falling due within one year	Current liabilities
Creditors: amounts falling due after more than one year	Long-term liabilities
Debtors: amounts falling due after more than one year	Other non-current assets
Employee share schemes	Employee stock benefit plans
Employment costs	Payroll costs
Finance lease	Capital lease
Financial year	Fiscal year
Fixed asset investments	Non-current investments
Freehold	Ownership with absolute rights in perpetuity
Inland calls	Local and long-distance calls
Interests in associates and joint ventures	Securities of equity investees
Loans to associates and joint ventures	Indebtedness of equity investees not current
Net asset value	Book value
Operating profit	Net operating income
Other debtors	Other current assets
Own work capitalised	Costs of group's employees engaged in the construction
	of plant and equipment for internal use
Profit	Income
Profit and loss account (statement)	Income statement
Profit and loss account
(under 'capital and reserves' in balance sheet)	Retained earnings
Profit for financial year	Net income
Profit on sale of fixed assets	Gain on disposal of non-current assets
Provision for doubtful debts	Allowance for bad and doubtful accounts receivable
Provisions	Long-term liabilities other than debt and specific
	accounts payable
Recognised gains and losses (statement)	Comprehensive income
Redundancy charges	Early release scheme expenses
Reserves	Shareholders' equity other than paid-up capital
Share premium account	Additional paid-in capital or paid-in surplus (not distributable)
Shareholders' funds	Shareholders' equity
Stocks	Inventories
Tangible fixed assets	Property, plant and equipment
Trade debtors	Accounts receivable (net)
Turnover	Revenues

Cross reference to Form 20-F

The information in this document that is referred to in the following table shall be deemed to be filed with the Securities and Exchange Commission for all purposes.

Item	Page
1 Description of business
Business review
- Introduction	8
- Global venture with AT&T	8-9
- Concert Communications Services	9-10
- Europe	10
- Asia Pacific	11
- Latin America	11
- Syntegra	11
- The UK	11-17
- Research and development	17
- Organisation and employees	17-18
- Regulation, competition and prices	19-23
- Relationship with HM Government	23
Additional information for shareholders
- Background	109

2 Description of property
Business review
- Property	17

3 Legal proceedings
Business review
- Legal proceedings	23
Note 27 to the financial statements
- Financial commitments and contingent liabilities	85

4 Control of registrant
Report on directors' remuneration
- Directors' interests	52-54
Additional information for shareholders
- Analysis of shareholdings	110

5 Nature of trading market
Additional information for shareholders
- Listings	109
- Share and ADS prices	109
- Analysis of shareholdings	110

6 Exchange controls and other limitations
affecting security holdings
Additional information for shareholders
- Exchange controls and other limitations
affecting security holders	113

7 Taxation
Additional information for shareholders
- Taxation (US Holders)	112-113

8 Selected financial data
Five year financial summary	24-25
Additional information for shareholders
- Dividends	111-112
- Exchange rates	112

9 Management's discussion and analysis of financial condition and results of operations


Financial review	26-39

Item	Page
9A Quantitative and qualitative disclosures about market risk

Financial review
- Treasury policy	33-34
- Foreign currency and interest rate exposure	34
Note 33 to the financial statements
- Financial instruments and risk management	90-93

10 Directors and officers of registrant
Board of directors	40-41
Report of the directors	42-43
Corporate governance
- The Board	44
- Principal Board committees	44
Report on directors' remuneration
- Directors' service agreements and
- contracts of appointment	55

11 Compensation of directors and officers
Report on directors' remuneration	47-55

12 Options to purchase securities from registrant or subsidiaries

Report on directors' remuneration
- Directors' interests	52-54
Note 31 to the financial statements
- Employee share schemes	87-89

13 Interest of management in certain transactions
13 Interest of management in certain transactions
Report of the directors
- Interest of management in certain transactions	42

14 Description of securities to be registered
n/a

15 Defaults on senior securities
n/a

16 Changes in securities and changes in security for registered securities

n/a

17 Financial statements
n/a

18 Financial statements
Report of the auditors	58
Accounting policies	59-61
Group profit and loss account	62
Group statement of total recognised gains and losses	63
Group cash flow statement	64
Balance sheets	65
Notes to the financial statements	66-96
United States Generally
Accepted Accounting Principles	97-101
Subsidiary undertakings, joint ventures
and associates	102-103