Capital expenditure in relation to the group's discontinued activities amounted to £808 million, £1,129 million and £520 million in the 2002, 2001 and 2000 financial years, respectively. Prior to the demerger, mmO2 continued improving the quality and capacity of its digital GSM network. In April 2000, we purchased one of the five 3G licences in the UK Government's auction for £4.03 billion, which we paid in May 2000. A third generation mobile licence in the Netherlands was awarded to Telfort in July 2000 for £267 million.

Of the capital expenditure, £634 million was in Europe, outside UK, in the 2002 financial year and £632 million was spent there in the 2001 financial year, following our acquisition of Esat, Telfort and Viag Interkom, in building out their networks. In the 2000 financial year, £233 million was incurred in North America mainly by Concert Communications before the establishment of the Concert global venture in January 2000.

The group expects capital expenditure in the 2003 financial year to be below £3 billion. Contracts placed for ongoing capital expenditure totalled £740 million at 31 March 2002. We plan to continue to spend on our IP backbone network, in providing web hosting facilities and continuing the expansion of our networks to meet the projected broadband demand. We are focusing capital expenditure on projects with higher and more immediate financial returns. BT expects that future capital expenditure will be provided from net cash inflows from operating activities, and, if required, by external financing.