Transcript Document

BT Group plc

Annual General Meeting

19 July 2007

Sir Christopher Bland - Chairman

BT Group – Financial headlines

FY

2006/7 Group revenue £20.2bn

EBITDA (1) £5.6bn

Earnings per share (1) 22.7p

4% 2% 16%

Full year dividend (1) Before specific items 15.1p

27%

EPS – Five years of continuous growth pence 24 20 16 12 8 EPS 22.7p up 16% 4 0 2001/2 2002/3 2003/4 2004/5 2005/6 UKGAAP, April 2001 – March 2004, before exceptional items and goodwill from continuing activities IFRS, April 2004 – March 2007, before specific items 2006/7

Distribution policy • •

Dividends

Two thirds payout ratio reached one year early pence 16 14 Expect to increase dividends, taking into account our earnings growth, cash generation and our ongoing investment needs 12 10 8 •

Share buy back

New

£2.5bn

programme - expected completion March 2009 6 4 2 0 Dividend 15.1p up 27% 2001/2 2002/3 2003/4 2004/5 2005/6 2006/7 Returned £4.8bn in dividends and share buyback over the last 5 years

Share price 150 140 130 120 110 100 90 BT Share price 231.75p on 14/07/06 BT FTSE100 BT Share price 334.25p on 16/07/07

44% 17%

BT Group – 2001 headlines

Bloomin’ Terrible BT turmoil as shares slump 66% in a year

20 Mar ‘01

BT fights to tame £30bn debt

23 Mar ‘01

BT’s wrong numbers

22 Mar ’01

BT poised for cash call dash

26 Mar ‘01

BT at the end of the line

27 Mar ‘01

BT buried in debt

Company seeks to refinance loans 23 Mar ‘01

My original checklist

BT Group strategy

Defend traditional

– Improved service – Price innovation – Reduce costs / improve margin – Aggressive & creative marketing

Long term Partnership with our customers 21 st Century Network Grow new wave

– Networked IT services – Broadband – Mobility

... Consistent delivery

Strategy in action

Delivering today Delivering tomorrow

• Broadband – 11m connections and over 99% coverage • Networked IT services - £4.4 billion annual revenue • Global capability in over 170 countries • BT Vision – multi-channel TV with no compulsory subscription • 21 st century network – leading the world in building a broadband IP network for all • Transformation into a leading service provider

The way we work BT made Company of the Year by Business in the Community Open, constructive relationship with the regulator

Board changes

Board changes

Board changes

Board changes

Board changes

Board changes

Board changes

Board changes

Board changes

BT Group 2006/7 headlines

Magic £3 mark

17 Dec ‘06

A Perfect Day

21 Dec ‘06

BT Bonanza

18 May ‘07

Internet King BT to return £2.5 billion

18 May ‘07

Bland leaves BT set to reach for the sky

18 May ‘07

BT regains top spot in broadband

18 May ‘07

Sir Christopher Bland - Chairman

Bringing it all together

Annual General Meeting

19 July 2007

Ben Verwaayen

Chief Executive

BT Group strategy

Defend traditional

– Improved service – Price innovation – Reduce costs / improve margin – Aggressive & creative marketing

Long term Partnership with our customers 21 st Century Network Grow new wave

– Networked IT services – Broadband – Mobility

... Consistent delivery

FY 2006/7 – Revenue UP 4% £bn

6.3

13.2

7.4

12.8

+ 17% - 3%

Revenue – New wave driving transformation £bn 30% CAGR in 4 years Mobility & Other Broadband Networked IT Services CAGR + 44% + 71% + 20%

BT Global Services – 2006/7 order intake

£9.3bn

Signed 858 new customers

Broadband

Retail The UK’s number 1 broadband retailer

by market share

ISP of the year

Mac Magazine 2006 Awards

Most trusted ISP 2007

Reader’s Digest

Wholesale

>

10.7

million connections at 31/3/07 Mn

11 10 9 8 1 0 3 2 5 4 7 6

LLU Other ISP’s Retail *

BT Total Broadband

Home IT advisor

- 40,000 users

VoIP

- 1.4m registered users

BT Digital Vault

- 125,000 users

Home hubs

- Over 1 million

BT Vision

- National marketing campaign under way

Delivering Value for our customers •

Corporates

– Networked IT services – Local service, global delivery – Expanded portfolio of capabilities •

Consumer

– BT Together – BT Total Broadband – BT Fusion & BT Vision •

Business

– BT Business One Plan – BT IT Manager – BT Office Anywhere •

Other operators

- Managed Service - Broadband - Local access for telephony and broadband

Higher quality Simpler Faster More efficient

From traditional telco… Keys to our transformation

Real time Global Open

… to leading services provider with global capabilities

Transformation to Service Provider •

To enable

– Customer to focus on what they do best – Software solutions – Global delivery and reach •

To reduce

– Complexity – Cost base – Time to market •

To deliver

– Right first time service – Where our customers are – A simplified organisation •

To improve

– Customer service – Efficiency – Free cash flow

Bringing it all together • • • • Strategy built around convergence & innovation – 17% growth in new wave revenues Corporate transformation – From traditional telco to leading services provider with global capabilities Strong momentum with track record of delivery – – –

Twenty

quarters of

EPS

growth

Thirteen

quarters of

revenue

growth

Five

quarters of

EBITDA

growth Continue to grow revenue,

EBITDA*, EPS*

and

dividends

in 2007/8 * Before specific items and leavers

BT Group plc

Annual General Meeting

19 July 2007

Resolution 1

Reports and accounts

Proxy Votes

For Against Vote Withheld

4,690,961,416 7,879,073 1,540,670

Resolution 2

Directors’ remuneration report

Proxy Votes

For Against

3,039,747,846 130,725,306

Vote Withheld

1,529,908,007

Resolution 3

Final Dividend

Proxy Votes

For Against Vote Withheld

4,698,432,613 678,005 1,270,541

Resolution 4

Re-elect Sir Christopher Bland

Proxy Votes

For Against Vote Withheld

4,665,303,524 32,179,017 2,898,618

Resolution 5

Re-elect Andy Green

Proxy Votes

For Against Vote Withheld

4,676,367,376 18,232,668 5,781,115

Resolution 6

Re-elect Ian Livingston

Proxy Votes

For Against Vote Withheld

4,678,250,916 19,041,422 3,088,821

Resolution 7

Re-elect John Nelson

Proxy Votes

For Against Vote Withheld

4,685,502,100 11,541,397 3,337,662

Resolution 8

Elect Deborah Lathen

Proxy Votes

For Against Vote Withheld

4,683,490,802 12,907,229 3,983,128

Resolution 9

Elect François Barrault

Proxy Votes

For Against Vote Withheld

4,684,502,467 11,963,701 3,914,991

Resolution 10

Reappointment of auditors

Proxy Votes

For Against Vote Withheld

4,679,050,873 7,394,391 13,935,895

Resolution 11

Remuneration of auditors

Proxy Votes

For Against Vote Withheld

4,678,136,507 7,977.341

14,267,311

Resolution 12

Authority to allot shares

Proxy Votes

For Against Vote Withheld

4,655,261,395 41,386,501 3,733,263

Resolution 13

Authority to allot shares for cash*

*Special resolution Proxy Votes

For Against Vote Withheld

4,686,626,092 9,444,399 4,310,668

Resolution 14

Authority to purchase own shares*

*Special resolution Proxy Votes

For Against Vote Withheld

4,609,658,522 6,594,827 84,127,810

Resolution 15

Authority to use electronic communications*

*Special resolution Proxy Votes

For Against Vote Withheld

4,680,669,745 12,524,737 7,186,677

Resolution 16

Authority for political donations

Proxy Votes

For Against Vote Withheld

4,579,323,754 62,870,366 58,187,039

Poll on Resolution X

Using your Form of proxy/Admission card:

• If voting all shares “ for ”, place a tick (  ) in “ For ” box • If voting all shares “ against ”, place a tick (  ) in “ Against ” box • If voting all shares “ vote withheld ”, place a tick (  ) “ Vote withheld ” box in • If splitting vote, indicate the number of shares voting “ for ” “ against ” and “ vote withheld ” • Please sign the card • Place completed card in ballot box as you leave • Please ask a marshal if you have any questions

Poll on Amendment to Resolution X

Using your voting paper:

• If voting all shares “ for ” amendment, tick “ For ” box in Column 2, alongside appropriate resolution number • If voting all shares “ against ” amendment, tick “ Against ” box in Column 3 • If splitting vote, enter the appropriate number of shares in Columns 2 and 3 • Write name, address and account number in Box 1 • Sign the voting paper in Box 2 and hand it to marshal at end of row • Please ask a marshal if you have any questions

Poll on Procedural Resolution X

Using your voting paper:

• Delete Box A • If voting “ for ” procedural resolution, place a tick (  ) headed “ For ” in Box 1 • If voting “ against ” procedural resolution, place a tick (  ) headed “ Against ” in Box 2 • If splitting vote, enter the appropriate number of shares in Boxes 1 and 2 • Write name, address and account number in Box 3 • Sign the voting paper in Box 4 and hand it to marshal at end of row • Please ask a marshal if you have any questions`

BT Group plc

Annual General Meeting

19 July 2007