Questions from the 2005 AGM held in Harrogate

At the 2005 AGM Chairman Sir Christopher Bland and his fellow Board members answered questions from shareholders on a range of issues, including:

Awarding Twenty-first Century Network (21CN) contracts

A shareholder asked why the company has awarded 21 CN contracts to foreign suppliers. The awarding of contracts to Marconi would not necessarily have been in the best interests of either shareholders or customers. In addition a number of world class suppliers had been chosen that have operations in the UK and as a result jobs will be created in this country. More than 300 companies had expressed an interest in tendering for the contracts. All companies had to meet stringent criteria related to technology, operational infrastructure and commercial terms. Whilst Marconi had been able to satisfy BT’s needs with regards to the first two they could not meet BT’s commercial requirements.

Ofcom’s Strategic Review of Telecomunications

A number of questions were asked about BT’s response to the Ofcom Review:

What is BT’s strategy to deal with the new level of competition that equal access to BT’s network will bring? The Chairman made it clear that BT will compete in the marketplace in a hard and fair manner. The settlement with Ofcom will see regulation rolled back and this will free BT to compete effectively with over 150 potential competitors. It will do this by continuing to offer better deals to customers - some have already been announced - and by providing a greater range of services to its customers.

To what extent will the creation of the new Access Service Division (ASD) harm BT’s overall performance and will the ASD have sufficient freedom and independence to invest where it needs to? The Chairman informed shareholders that he and the Board believed that the creation of ASD was in the best interests of the business and that they considered it to be a good deal for BT. The settlement with Ofcom ensures that there will be regulation where it is needed to ensure the best outcomes for consumers and that regulation would be rolled back elsewhere. Whilst ASD will be operationally separate it will remain a part of BT and be able to develop in an appropriate way to meet the needs of the marketplace and regulator.

Is the Board confident that it can make equality of access work and thus stave off the threat of referral to the Competition Commission? Sir Christopher said that both BT and Ofcom are confident that BT can deliver equality of access as a result of the proposed settlement and creation of the ASD. It will provide transparency and equal access and our Equality of Access Board (EAB) will monitor the ASD’s performance. The Chairman made it clear that both he and the Board have complete confidence in the new arrangements. In response to a further question the Chairman made it clear that the BT Board is satisfied that the EAB, under the Chairmanship of non-executive Director Carl Symon, will be run in a fair and balanced way.

How does the company plan to keep the 30,000 BT employees who will be affected by the creation of the ASD informed about the new arrangements and will their terms and conditions or career prospects be affected? The Chairman informed the meeting that an active communications and engagement plan was in place that would ensure that all those employees affected would be kept informed at all times. BT has already begun early consultation with the Unions. Sir Christopher also reassured shareholders that ASD employees will remain part of the BT family of companies and that their employment rights will be unaffected.

Premium rate lines

The Chairman was asked what BT is doing to prevent unscrupulous operators from ripping off consumers. Sir Christopher acknowledged the problem and informed shareholders that, whilst it is not of BT’s making, the company is doing everything it can to help customers deal with the issue that 0870 numbers raises. To that end BT has just announced the offer of free BT Privacy software to its customers that will effectively block unwanted internet diallers.