Full year results special - May 2011

The Big Picture Online is a quarterly presentation with highlights of BT’s financial performance and examples of the actions BT is taking to become a better business with a better future

This quarter we share the latest news from BT’s full year financial results to March 2011

Results summary

Revenue1 – down 4% to £20bn

Profit before tax1 – up 20% to £2bn

Operating cost savings3 of over £1bn

Free cash flow2 – up 6% to £2.2bn

Full year dividend of 7.4p (up 7%)

Key headlines

“We have delivered profits and free cash

flow ahead of expectations for the year, while making

significant investment in the business for the

future.”Ian Livingston BT Group CEO

12 May 2011

“We have delivered profits and free cash

flow ahead of expectations for the year, while making

significant investment in the business for the

future.”Ian Livingston BT Group CEO

12 May 2011

1 – before specific items2 – before specific items and pension deficit payments3 – operating costs before specific items and depreciation and amortisation

0

Global Services order intake up 10% at £7.3bn; cash flow positive a year early

Growth in Openreach copper lines as customers recognise advantages of fixed line broadband

Cash used to invest in the business; reduce net debt; pay progressive dividends; and support the pension fund. BT put £1.3bn into BT Pension Scheme (BTPS) during fiscal ending March 2011

Expect to grow profits and free cash flow while investing to return BT to growth in 2013

Customer service delivery

We experienced challenges this year especially in the UK

Service improvements: - Global Services customer faults c.10% - Wholesale broadband faults c.15% - Consumer complaints c.20% - Business complaints c.60%

Driving broadband-based consumer services

Being the ‘Brand for Business’ for UK SMEs

BT Global Services – a global leader

The wholesaler of choice

The best network provider

A responsible and sustainable business leader

A better future

A betterbusiness

Honesty Agility

A betterfuture

© British Telecommunications plc

5

BBC iPlayer HD Recommendation

engine

Broadband Newservices

Differentiatedservice WiFi

Home Hub 3 with Smart Wireless

Award winning broadband

OnLive gaming

Weekly net adds c.5,000

144,000 customers

5.7m customers

>2.8m hotspots Lowers churn Usage more

than doubled

© British Telecommunications plc

6

64% share of broadband net adds1

in Q4

– highest retail net adds for 8 years

– highest ever including cable

– c.90% of new broadband provides in Q4 were part of a bundle

Active customer loss in Q4 lowest for 4 years

Consumer ARPU up 5% to £326

Consumer ARPU

Broadband net adds

££

2009 20102008200720062005 2011

‘000

2009

BT Other DSL & LLU BT share of net adds

2010 2011

1 DSL and LLU

© British Telecommunications plc

7

BT Business line loss in Q4 at lowest level for more than 3 years

New business broadband propositions launched

– FY business broadband net adds up c.30% YoY

Focus on IT services and mobility

– IT services revenue up 17% FY

– Mobility revenue up 14% FY

– opportunity to increase market share

16%16%

4%4%

80%80%

Fixed voice & data

IT services

Mobility

IT services Mobility

2011 BT Business revenue c.£2.4bn

IT services and mobility revenue trend

© British Telecommunications plc

8

Order intake– £7.3bn in year, up 10%

Contract wins in Q4– Ecopetrol– BASF

AsiaPac– investment on track– growing pipeline

Strong growth in LatAm

New structure– focus on key global sectors

– industry specific solutions

– global account management and delivery model

Banking &

Financial Markets

Commerce (Manufacturing,

logistics & pharma)

Consumer Packaged

Goods

Gov’t & Health

UK

EMEA & Latin America

United States & Canada

Asia Pacific

© British Telecommunications plc

9

External revenue ex transit

MNS & IP Other

40% of FY external revenue under long-term contract

Executing on existing MNS contracts

Portfolio evolving from traditional to IP

– MNS & IP revenue up 14% FY

– IP Exchange minutes up more than 75% FY

– fixed Ethernet connections trebled

£m

© British Telecommunications plc

10

Copper line base grew for first time since 2006

– up 11,000 FY versus down 326,000 last year

ADSL2+ available to 80% of UK premises by December 2011

Ethernet - 1,000 fibre Ethernet nodes, largest network in the UK

Continued investment overseas

– Ethernet, MPLS & city fibre 2010 2011

QoQ change in total copper lines

‘000

© British Telecommunications plc

11

Fibre roll out progressing at a good pace– passing around 80,000 new premises per week– 5m homes to be passed in next few weeks– c.150,000 end users currently– c.45 CPs selling or trialling services– Cornwall and NI progressing well

Network capabilities– expect to roughly double our FTTC speeds to up to 80Mbps in 2012– potential for >100Mbps FTTC– FTTP roll out commencing, 1 Gbps trial underway

2/3 premises passed by end of 2015

2/3 premises passed by end of 2015

5m premises passed shortly

5m premises passed shortly

>4m premises passed currently

>4m premises passed currently

10m premises passed by 2012

10m premises passed by 2012

Fibre roll out

ADSL enabled for c.99% of all premises

ADSL enabled for c.99% of all premises

For more information about BT’s strategy go to:

Team BT 2012 Challenge intranet site (http://2012challenge.intra.bt.com/our-strategy/index.htm)

Investor centre of the BTplc internet site (BT Group annual report published 27 May)

(http://www.btplc.com/sharesandperformance/index.cfm)