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  Annual review and summary financial statement 2003
Financial discipline

During the past two years, the success of our debt reduction programme enabled us to resume paying dividends to our shareholders, spend money in the pursuit of new, profitable revenue opportunities and invest in the network of the future.

In the past two years, our debt has been reduced from £27.9 billion as at 31 March 2001 to £9.6 billion as at 31 March 2003, as a result of the sale of non-core assets, such as our stake in Cegetel, and increased cash generation.

We also achieved greater integration of BT Global Servicesí European businesses through product harmonisation, network and customer service centre consolidation and people realignment. And by the end of the 2003 financial year, all major European operations in BT Global Services had become EBITDA (earnings before interest, taxation, depreciation and amortisation) positive.

As a result of continuing to attract customers by driving up service levels, enhancing the customer experience and learning from the success of packages such as BT Together, we have been able to boost our drive in new-wave markets, specifically those for broadband, mobility, ICT and solutions.

All parts of BT have rigorous cost reduction targets. Our BT Retail business, for example, is in year two of a £800 million cost transformation programme, and our BT Wholesale business is in the second year of a £650 million cash cost reduction programme. Both programmes are focused on efficiency and working smarter, and both are on track for delivery by 2005.

And, of course, we have challenging financial targets relating to all the new things we are doing as well.

Exercising rigorous financial discipline
Financial discipline is not just about rigorous cost control - itís also about targeting investment so that it best supports our strategy. We have to make a compelling case for every new investment we make. And we have to continue to do the things we have always done cost effectively, so that we create the scope to do new things as well.
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