FULL YEAR PROFITS UP 18 PERCENT AT BT IRELAND

BT announces latest investment in next generation network, despite challenging economic environment

BT today reported excellent progress at its all island operation for the full year to 31st March 2009 with improved margins and a major uplift in free cash flows. EBITDA* increased by 18 percent year on year as a result of strong cost management and the successful execution of the company's transformation into a managed services leader. Gross margin improved by 9 percent while underlying revenues excluding foreign exchange movement declined by 4 percent to £800.8 million.

Over the course of the year BT reached a major milestone in its stated ambition to be the leading networked IT services provider on the island by winning a number of landmark managed services contracts with the private and public sectors.

Telefonica O2 Ireland has selected BT as a managed services partner in a multi-million euro deal. As part of the seven year contract, O2 has outsourced part of its network services to BT and successfully transitioned a number of highly skilled O2 employees to BT.

The company has signed a concession agreement with the Department of Communications, Energy and Natural Resources to provide the State's Emergency Call Answering Service (ECAS), bringing to bear its expertise in providing a similar mission critical service for over 60 years in Northern Ireland.

BT has also been chosen by 3 Ireland to be the principal sub-contractor for the delivery of the National Broadband Scheme (NBS) in the Republic of Ireland. The deal will see BT deliver the radio site infrastructure and backhaul transmission to support the network rollout.

The company further grew its share of the ICT market through new deals with American Airlines, Barclays, Consilium Technologies, Danske Bank, DSG, Enterprise Northern Ireland, EMC, Kilsaran Concrete, Welch Allyn, Department of Finance & Personnel (NI), Department of the Environment (NI), the Police Service of Northern Ireland and UTV.

BT's successful collaboration with other key IT brands in the Irish market to deliver and execute these customer contracts has been recognised by a host of awards including Cisco Gold Partner of the Year, Avaya Service Provider of the Year and the largest partner to HP in Ireland.

In the broadband market BT remains Northern Ireland's most popular broadband company with more than 167,000 consumer and business connections (up 9 percent year on year). In the Republic of Ireland., where BT has 81,000 broadband connections, the company has successfully refocused its broadband acquisition to target the exchange areas where BT can offer a truly differentiated service to its customers via local loop unbundling. This allows the company to bring speeds of up to 24M/bs and competitive prices to Irish consumers over BT's next generation network. BT also reported steady growth in the wholesale provision of broadband to other communications providers in Northern Ireland and the Republic of Ireland.

Chris Clark, CEO, BT said; 'It has been a tough year with revenues impacted by the slowdown in overall business activity and heightened competition. However we have made exceptional progress on profitability through our relentless focus on cost management and securing major managed services contracts.'

'We are performing very well against our strategy of being the leading networked IT services provider as borne out by the nature of these landmark contracts we are winning in both the private and public sectors. We believe that this is a direct result of the global expertise, capabilities and investment we have brought to bear in the Irish marketplace.'

In an increasingly difficult economic climate, BT has continued to make a number of strategic investments in its network infrastructure to expand the range of next generation services it provides to customers across all market segments while simultaneously reducing prices. Over 330,000 homes and businesses in the Republic of Ireland have access to superfast broadband speeds of up to 24Mb/s following BT's investment in unbundling 22 telephone exchanges in the country. In Northern Ireland Belfast was chosen as one of the first areas in the UK to benefit from broadband speeds of up to 40Mb/s through BT's investment in fibre to the cabinet technology (FTTC). The company also introduced Ethernet services — uncontended, faster bandwidth for a fraction of the cost of traditional networks.

BT today revealed the next phase of its investment in the rollout of its next generation network. The company will extend its network capability on the island by directly linking Letterkenny, Derry, Belfast and Dublin and also connecting with over 1,270 cities worldwide through BT's extensive global network.

The latest development from BT will address the limited choice of high capacity communications networks, particularly in the North West. By enhancing its infrastructure BT will bring higher bandwidth, competitive pricing, and next generation services to businesses in these locations.

BT is utilising two links between each location to ensure that there is both a primary network and secondary back up network to guarantee 99.99 percent reliability. The infrastructure is also future-proofed to allow BT to expand the network when required to support the growing demand for broadband services.

Chris Clark said, 'Navigating through challenging economic times means we need to seize any opportunities that will give us a competitive edge. Our strategy is straightforward — the development of a world class next generation network will help all of us to seek out future growth opportunities whether through access to new markets, attracting foreign direct investment, or driving productivity and efficiency in our organisations.'

The fibre optic network, which is operational from August of this year, will extend from Dublin to Letterkenny connecting Belfast and Derry along the route through Points of Presence (PoPs).** Initial speeds of up to 10 Gigabytes per second are available but can be scaled up where required by customers.

For more information on BT's operations in Ireland visit www.btireland.ie