BT Group plc. Sir Michael Rake Chairman

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2 BT Group plc Sir Michael Rake Chairman

3 2011 summary of the year Progress towards making BT a better business Improving profitability and free cash flow A responsible and sustainable business leader Investing in the business for a better future

4 2011 group results 2011 Results Change In line with or ahead of outlook Revenue 1 20,076m 4% Cost savings 1 1,087m 1 Profit before tax 1 2,083m 20% Free cash flow 2 2,223m223m 6% Net debt 8,816m 467m 1 before specific items 2 before specific items and pension deficit payments

5 Dividends Proposed final dividend 5.0p 9% Full year dividend 7.4p 7% Committed to progressive dividends at same time as: investing for the future reducing net debt supporting pension scheme

6 Pensions BT s pension scheme is one of the largest private schemes in the UK Accounting deficit has reduced from 5.7bn to 1.4bn, due to: recovery in asset prices BT has paid more than 2bn into the scheme over two years The Pensions Regulator s review of December 2008 funding valuation now on hold

7 2011 and beyond Incentivising management Board and senior management changes Regulatory environment

8 2011 and beyond Corporate responsibility

9 2011 and beyond London 2012 Olympic and Paralympic Games

10 Total Shareholder Return* 60% 57% 50% 40% 30% 20% 10% 7% 16% 0% BT FTSE100 European Telco Sector * TSR = Total Shareholder Return is the measure of the returns that a company has generated for its shareholders, reflecting share price movement and dividends. Measured from 1 April 2010 to 31 March 2011

11 Financial strategy to Invest in the business Reduce net debt Support the pension fund Pay progressive dividends

12 BT Group plc Ian Livingston Chief Executive

13 The UK market

14 nth, PPP P per mo UK has lowest landline prices amongst major countries ti UK USA Spain Germany Italy France International Communications Market, December 2010 Ofcom; weighted average of best-value tariff from each of the three largest operators by market share in each country, for 600 outbound minutes; July 2010 PPP adjusted. Based on a family of two parents and two children, who are cost conscious and favour using the fixed-line phone whenever possible, which gets fairly heavy use. Includes line rental and cost of purchasing enhanced tariffs that offer reduced prices.

15 UK also has highest broadband availability 56k) bscribe verage (25 could sub dband cov holds that Broad % househ Germany Italy USA Spain France UK Source: OECD Broadband Portal August 2010

16 How is BT doing?

17 Focusing on our strategic priorities to build a better future 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 Customer service delivery Cost transformation Investing for the future A better business

18 Customer service delivery Challenges in the year Q4 service improvements Global Services customer faults c.10% Wholesale broadband faults c.15% Consumer complaints c.20% Business complaints c.60% More to do

19 Cost transformation c. 2.8bn reduction in costs over 2 years, driven by improved service and processes procurement savings a more agile organisation substantial investment

20 Driving broadband-based consumer services Super-fast fibre based broadband Award winning broadband for cost conscious consumers Broadband d Over 50% share of DSL net additions 5.7m customers New services Home Hub 3 with Smart Wireless Differentiated service WiFi

21 Being the Brand for Business for UK small and medium sized enterprises (SME) SME line loss at lowest level for more than 3 years New business broadband propositions launched Business broadband net adds up c.30% Opportunity to increase market share in IT services and mobility IT services revenue up 17% Mobility revenue up 14% 20% 15% 10% 5% 0% -5% IT services and mobility revenue trend IT services Mobility

22 BT Global Services a global leader Order intake of 7.3bn, up 10% Contract wins with major international companies and government departments Investment in Asia Pacific region growing pipeline of orders Banking & Financial Markets Commerce UK Consumer Packaged Goods Gov t & Health Strong growth in Latin America EMEA & Latin America New structure to focus on key global sectors United States & Canada Asia Pacific

23 The wholesaler of choice Europe s largest telecoms wholesaler Provides infrastructure for the UK telecoms industry Managed Network Services now 24% of revenue* More than 700 communications providers Supplies / supports all major mobile network operators Increasing revenue from new technology IP based services / Ethernet * external revenue

24 The best network provider s lin nes Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Copper line base grew for first time since 2006

25 The best network provider - fibre Fibre roll out progressing at pace now over 5m premises passed passing c.80,000 new premises per week Cornwall and Northern Ireland public/private partnerships progressing well Future pass two thirds of premises by end of 2015 potential to pass 90% of premises with government support expect to roughly double our fibre to the cabinet (FTTC) speeds to up to 80Mbps in 2012 Fibre to the premises (FTTP) trialling at 100Mbps and 1Gbps

26 Free cash flow * 2,500 2,000 2,106m Tax benefit & one-offs 2,223m m 1,500 1, m Free cash flow * nearly trebled over 2 years * before cash specific items and pension deficit payments

27 Outlook & 2013 Revenue 1 Growth in 2012/13 Profit 2 Growth to above 6bn in 2012/13 Free cash flow 3 Above 2010/11 level in 2011/12 and 2012/13 Dividends Progressive dividend 1 underlying revenue excluding transit 2 earnings before interest, tax, depreciation and amortisation, before specific items 3 before specific items and pension deficit payments

28 Progress made More to do

29 BT Group plc Annual General Meeting 13 July 2011

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31 Resolution 1 Reports and accounts Resolution 3 Final Dividend

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33 Resolution 1 Reports and accounts Resolution 3 Final Dividend

34 Resolution 2 Directors remuneration report Resolutions Employee share plans and executive portfolio

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36 Resolution 2 Directors remuneration report Resolutions Employee share plans and executive portfolio

37 Resolutions 4 12 Re-election election of directors Resolutions Election of directors

38 Resolution 17 Authority to allot shares Resolution 18 Authority to allot shares for cash* *Special resolution Resolution 19 Authority to purchase own shares* *Special resolution

39 Resolution 15 Reappointment of auditors Resolution 16 Remuneration of auditors Resolution 20 Notice of general meetings* *Special resolution Resolution 21 Resolution 21 Authority for political donations

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41 Poll on all Resolutions Using your Admission Card/Proxy Card: If voting all shares for, place a cross (X) in For box If voting all shares against, place a cross (X) in Against box If withholding vote, place (X) in Vote withheld box 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

42 For & Discretion Against Res No. Description Total % Total % Overall Total For & Discretion Against Res No. Description Total % Total % Overall Total 01 Reports and accounts 4,649,815, % 43,718, % 4,693,534, Remuneration report 4,399,658, % 244,422, % 4,644,080, Final dividend 4,691,979, % 1,256, % 4,693,236, Re-elect Sir Michael Rake 4,613,566, % 39,904, % 4,653,470, Re-elect Ian Livingston 4,684,154, % 7,712, % 4,691,866, Re-elect Tony Chanmugam 4,683,139, % 8,171, % 4,691,310, Re-elect Gavin Patterson 4,683,867, % 7,498, % 4,691,365, Re-elect Tony Ball 4,650,491, % 40,580, % 4,691,072, Re-elect J Eric Daniels 4,650,663, % 40,252, % 4,690,915, Re-elect elect Rt Hon Patricia Hewitt 4,638,102, % 86% 53,395, % 14% 4,691,498, Re-elect Phil Hodkinson 4,678,229, % 12,700, % 4,690,929, Re-elect Carl Symon 4,641,713, % 49,050, % 4,690,763, Elect Nick Rose 4,678,816, % 11,636, % 4,690,453, Elect Jasmine Whitbread 4,678,089, % 12,437, % 4,690,526, Reappointment of auditors 4,632,595, % 22,119, % 4,654,715, Remuneration of auditors 4,682,489, % 8,019, % 4,690,508, Authority to allot shares 4,541,405, % 92,929, % 4,634,334, Authority to allot shares for cash 4,659,634, % 31,086, % 4,690,721, Authority to purchase own shares 4,664,833, % 26,898, % 4,691,731, days' notice of meetings 4,326,715, % 365,392, % 4,692,107, Authority for political donations 4,582,914, % 104,970, % 4,687,884, Renewal of sharesave scheme 4,666,466, % 23,795, % 4,690,261, Renewal of intl sharesave scheme 4,664,670, % 24,449, % 4,689,119, Renewal of share investment plan 4,669,025, % 21,203, % 4,690,229, Renewal of stock purchase plan 4,666,641, % 23,067, % 4,689,709, Renewal of executive portfolio 3,361,679, % 1,206,149, % 4,567,829,340

43 For & Discretion Against Vote Withheld Overall For & Discretion Against Res No. Description Total % Total % Total % Total Overall % Total Res No. Description Total % Total % 01 Reports and accounts 4,649,815, % 43,718, % 6,714, % 4,700,248, % 01 Reports and accounts 4,649,815, % 43,718, % 4,693,534, Remuneration report 4,399,658, % 244,422, % 56,140, % 4,700,221, % 02 Remuneration report 4,399,658, % 244,422, % 4,644,080, Final dividend 4,691,979, % 1,256, % 7,073, % 4,700,310, % 03 Final dividend 4,691,979, % 1,256, % 4,693,236, Re-elect Sir Michael Rake 4,613,566, % 39,904, % 46,753, % 4,700,224, % 05 Re-elect Ian Livingston 4,684,154, % 7,712, % 8,428, % 4,700,295, % 04 Re-elect Sir Michael Rake 4,613,566, % 39,904, % 4,653,470, Re-elect Tony Chanmugam 4,683,139, % 8,171, % 8,932, % 4,700,243, % 05 Re-elect Ian Livingston 4,684,154, % 7,712, % 4,691,866, Re-elect Gavin Patterson 4,683,867, % 7,498, % 8,868, % 4,700,233, % 06 Re-elect Tony Chanmugam 4,683,139, % 8,171, % 4,691,310, Re-elect Tony Ball 4,650,491, % 40,580, % 9,155, % 4,700,227, % 07 Re-elect Gavin Patterson 4,683,867, % 7,498, % 4,691,365, Re-elect J Eric Daniels 4,650,663, % 40,252, % 9,304, % 4,700,220, % 08 Re-elect Tony Ball 4,650,491, % 40,580, % 4,691,072, Re-elect Rt Hon Patricia Hewitt 4,638,102, % 53,395, % 8,768, % 4,700,267, % 09 Re-elect J Eric Daniels 4,650,663, % 40,252, % 4,690,915, Re-elect Phil Hodkinson 4,678,229, % 12,700, % 9,283, % 4,700,213, % 10 Re-elect elect Rt Hon Patricia Hewitt 4,638,102, % 86% 53,395, % 14% 4,691,498, Re-elect Carl Symon 4,641,713, % 49,050, % 9,435, % 4,700,199, % 11 Re-elect Phil Hodkinson 4,678,229, % 12,700, % 4,690,929, Elect Nick Rose 4,678,816, % 11,636, % 9,752, % 4,700,205, % 12 Re-elect Carl Symon 4,641,713, % 49,050, % 4,690,763, Elect Jasmine Whitbread 4,678,089, % 12,437, % 9,668, % 4,700,195, % 13 Elect Nick Rose 4,678,816, % 11,636, % 4,690,453, Reappointment of auditors 4,632,595, % 22,119, % 45,521, % 4,700,237, % 16 Remuneration of auditors 4,682,489, % 8,019, % 9,723, % 4,700,232, % 17 Authority to allot shares 4,541,405, % 92,929, % 65,895, % 4,700,230, % 18 Authority to allot shares for cash 4,659,634, % 31,086, % 9,519, % 4,700,240, % 19 Authority to purchase own shares 4,664,833, % 26,898, % 8,495, % 4,700,227, % days' notice of meetings 4,326,715, % 365,392, % 8,112, % 4,700,220, % 21 Authority for political donations 4,582,914, % 104,970, % 12,361, % 4,700,246, % 22 Renewal of sharesave scheme % % % % For & Discretion Against Vote Withheld Overall For & Discretion Against Res No. Description Total % Total % Total % Total Overall % Res No. Description Total % Total % Total 01 Reports and accounts 4,649,815, % 43,718, % 6,714, % 4,700,248, % 14 Elect Jasmine Whitbread 4,678,089, % 12,437, % 4,690,526, Remuneration report 4,399,658, % 244,422, % 56,140, % 4,700,221, % 15 Reappointment of auditors 4,632,595, % 22,119, % 4,654,715, Final dividend 4,691,979, % 1,256, % 7,073, % 4,700,310, % 16 Remuneration of auditors 4,682,489, % 8,019, % 4,690,508, Re-elect Sir Michael Rake 4,613,566, % 39,904, % 46,753, % 4,700,224, % 17 Authority to allot shares 4,541,405, % 92,929, % 4,634,334, Re-elect Ian Livingston 4,684,154, % 7,712, % 8,428, % 4,700,295, % 06 Re-elect Tony Chanmugam 4,683,139, % 8,171, % 8,932, % 4,700,243, % 18 Authority to allot shares for cash 4,659,634, % 31,086, % 4,690,721, Re-elect Gavin Patterson 4,683,867, % 7,498, % 8,868, % 4,700,233, % 19 Authority to purchase own shares 4,664,833, % 26,898, % 4,691,731, Re-elect Tony Ball 4,650,491, % 40,580, % 9,155, % 4,700,227, % days' notice of meetings 4,326,715, % 365,392, % 4,692,107, Re-elect J Eric Daniels 4,650,663, % 40,252, % 9,304, % 4,700,220, % 21 Authority for political donations 4,582,914, % 104,970, % 4,687,884, Re-elect Rt Hon Patricia Hewitt 4,638,102, % 53,395, % 8,768, % 4,700,267, % 11 Re-elect Phil Hodkinson 4,678,229, % 12,700, % 9,283, % 4,700,213, % 22 Renewal of sharesave scheme 4,666,466, % 23,795, % 4,690,261, Re-elect Carl Symon 4,641,713, % 49,050, % 9,435, % 4,700,199, % 23 Renewal of intl sharesave scheme 4,664,670, % 24,449, % 4,689,119, Elect Nick Rose 4,678,816, % 11,636, % 9,752, % 4,700,205, % 24 Renewal of share investment plan 4,669,025, % 21,203, % 4,690,229, Elect Jasmine Whitbread 4,678,089, % 12,437, % 9,668, % 4,700,195, % 15 Reappointment of auditors 4,632,595, % 22,119, % 45,521, % 4,700,237, % 25 Renewal of stock purchase plan 4,666,641, % 23,067, % 4,689,709, Remuneration of auditors 4,682,489, % 8,019, % 9,723, % 4,700,232, % 26 Renewal of executive portfolio 3,361,679, % 1,206,149, % 4,567,829, Authority to allot shares 4,541,405, % 92,929, % 65,895, % 4,700,230, % 18 Authority to allot shares for cash 4,659,634, % 31,086, % 9,519, % 4,700,240, % 19 Authority to purchase own shares 4,664,833, % 26,898, % 8,495, % 4,700,227, % days' notice of meetings 4,326,715, % 365,392, % 8,112, % 4,700,220, % 21 Authority for political donations 4,582,914, % 104,970, % 12,361, % 4,700,246, % 22 Renewal of sharesave scheme % % % %

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45 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 gpaper p in Box 2 and hand it to marshal at end of row Please ask a marshal if you have any questions

46 Poll on Procedural Resolution Using your voting paper: Delete Box A If voting for procedural resolution, place a tick ( ) in Box 1 headed For If voting against procedural resolution, place a tick ( ) in Box 2 headed Against 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

47 Poll on an adjournment Using your voting paper: Delete Box B If voting for an adjournment, place a tick ( ) in Box 1 headed For If voting against an adjournment, place a tick ( ) in Box 2 headed Against 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

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