BT Group plc Results for the Second Quarter and Half Year to 30 September 2009

LONDON, Nov. 12 /PRNewswire-FirstCall/ --

BT (NYSE: BT) Key points for the second quarter:

-- Revenue(1) of 5,122m pounds Sterling, down 3%, or 6% excluding foreign
exchange movements and acquisitions
-- Adjusted EBITDA(1) of 1,436m pounds, up 2% reflecting progress in all
lines of business
-- Continued improvement in BT Global Services with adjusted EBITDA(1) of
95m pounds, up 53% on the first quarter
-- Adjusted earnings per share(1) of 4.5p, down 8%, reported earnings per
share of 5.5p, up 12%
-- Free cash flow of 705m pounds, up 336m pounds including a tax
repayment
and associated interest of 226m pounds
-- Net debt(4) reduced to 9.9bn pounds
-- Total underlying costs(2) down 932m pounds in the half year

-- Interim dividend of 2.3p per share

[NOTE: For full text of this document, contact BT PR; See contact details
below]

2009/10 Outlook:
Previous New

- Revenue(1) decline 4%-5% 3%-4%
- Capital expenditure c.2.7bn pounds c.2.6bn pounds
- Total underlying cost(2)
reductions well over 1bn pounds at least 1.5bn pounds
- Free cash flow(3) over 1bn pounds at least 1.6bn pounds
- Net debt(4) - below 10bn pounds
- Full year dividend - up c.5%

Ian Livingston, Chief Executive, commenting on the results, said:

"We have had another quarter of progress but there remains a lot more to do.
With total cost(2) reductions of over 900m pounds in the first half, we have
made significant headway towards our previous target of well over 1bn pounds
for the full year. We now expect to generate at least 1.6bn pounds of free
cash flow(3) this year, compared with our previous target of over 1bn pounds.

"We are investing in the future of the business with an enhanced and
accelerated programme of fibre deployment and wider roll out of faster
broadband speeds, all within our capital expenditure plans.

"Given our operational performance, we expect to increase dividends by around
5% for the full year. The Board is declaring an interim dividend of 2.3p per
share."

(1) Before specific items, leaver costs and net interest on pensions.
(2) Underlying operating costs and capital expenditure.
(3) Before gross pension deficit payments of 525m pounds, but after cash
costs of BT Global Services restructuring.
(4) Net debt is defined in Note 12.

RESULTS FOR THE SECOND QUARTER AND HALF YEAR TO 30 SEPTEMBER 2009

Group results

Second quarter to 30 September Half year to 30 September
2009 2008(1) Change 2009 2008(1) Change
pounds m pounds m % pounds m pounds m %

Revenue(2) 5,122 5,303 (3) 10,357 10,480 (1)
EBITDA
- adjusted(2) 1,436 1,407 2 2,807 2,824 (1)
- reported 1,309 1,333 (2) 2,594 2,650 (2)
Operating profit
- adjusted(2) 677 722 (6) 1,310 1,448 (10)
- reported 550 648 (15) 1,097 1,274 (14)
Profit before tax
- adjusted(2) 461 490 (6) 888 1,009 (12)
- reported 275 494 (44) 547 991 (45)
Earnings per share
- adjusted(2) 4.5p 4.9p (8) 8.8p 10.0p (12)
- reported 5.5p 4.9p 12 8.3p 9.8p (15)
Interim dividend - - - 2.3p 5.4p (57)
Capital
expenditure 558 766 (27) 1,117 1,568 (29)
Free cash flow 705 369 91 583 (365) n/m
Net debt - - - 9,878 11,028 (10)

Line of business results

Second quarter to Revenue(2) Change(1) EBITDA(2) Change(1)
30 September 2009 pounds m % pounds m %
BT Global Services 2,024 (3) 95 (10)
BT Retail 2,062 (5) 475 11
BT Wholesale 1,125 (4) 328 1
Openreach 1,285 (1) 507 4
Other 10 n/m 31 (48)
Intra-group items (1,384) 5 - -

Total 5,122 (3) 1,436 2

(1) Restated - see Note 1 for details.
(2) Before specific items, leaver costs and net interest on pensions.

Notes:
Unless otherwise stated, any reference to earnings before interest, tax,
depreciation and amortisation (EBITDA), operating profit, and operating costs
is measured before specific items and leaver costs. In addition, adjusted
profit before tax and adjusted earnings per share (EPS) are also shown before
net interest on pensions due to the volatile nature of this item (see Notes 9
and 10). Unless otherwise stated, the change in results is year on year.
Reported EBITDA, reported operating profit, reported profit before tax and
reported EPS are the equivalent unadjusted or statutory measures.

Underlying revenue, underlying operating costs, underlying EBITDA and
underlying capital expenditure refer to the measure excluding foreign exchange
rate movements and acquisitions. Underlying revenue and operating costs are
also stated before specific items, leaver costs and depreciation and
amortisation.

The commentary focuses on the trading results before specific items and leaver
costs. This is consistent with the way that financial performance is measured
by management and we believe allows a meaningful analysis to be made of the
trading results of the group. Specific items are defined in Note 5.

The income statement, cash flow statement and balance sheet are provided on
pages 12 to 16. A reconciliation of group operating profit to EBITDA (as
defined above) is provided in Note 8. A reconciliation of reported profit
before tax (as defined above) to adjusted profit before tax is provided in
Note 9. A reconciliation of reported EPS to adjusted EPS is provided in Note
10. A definition and reconciliation of free cash flow and net debt are
provided In Notes 11 and 12.

The line of business commentaries also discuss operating cash flow before
specific items and leaver costs. Operating cash flow is defined as EBITDA less
direct and allocated capital expenditure (net of capital accrual movements),
working capital movements and movements in provisions and other non-cash
items.

A presentation for analysts and investors will be held in London at 9.00am
today and a simultaneous webcast will be available at www.bt.com/results.

Results for the third quarter to 31 December 2009 are expected to be announced
on 11 February 2010.

About BT
BT is one of the world's leading providers of communications solutions and
services operating in 170 countries. Its principal activities include the
provision of networked IT services globally; local, national and international
telecommunications services to our customers for use at home, at work and on
the move; broadband and internet products and services and converged
fixed/mobile products and services. BT consists principally of four lines of
business: BT Global Services, BT Retail, BT Wholesale and Openreach.

British Telecommunications plc (BT) is a wholly-owned subsidiary of BT Group
plc and encompasses virtually all businesses and assets of the BT Group. BT
Group plc is listed on stock exchanges in London and New York.

For more information, visit www.btplc.com

Forward-looking statements - caution advised
Certain statements in this results release are forward-looking and are made in
reliance on the safe harbour provisions of the US Private Securities
Litigation Reform Act of 1995. These statements include, without limitation,
those concerning: revenue, capital expenditure and total operating cost
reductions, free cash flow and net debt; EBITDA; increased dividends; progress
in Global Services delivery of cost savings; enhanced rollout of fibre and
super-fast broadband; and the group's liquidity and funding position.

Although BT believes that the expectations reflected in these forward-looking
statements are reasonable, it can give no assurance that these expectations
will prove to have been correct. Because these statements involve risks and
uncertainties, actual results may differ materially from those expressed or
implied by these forward-looking statements.

Factors that could cause differences between actual results and those implied
by the forward-looking statements include, but are not limited to: material
adverse changes in economic conditions in the markets served by BT; future
regulatory actions and conditions in BT's operating areas, including
competition from others; selection by BT and its lines of business of the
appropriate trading and marketing models for its products and services;
fluctuations in foreign currency exchange rates and interest rates;
technological innovations, including the cost of developing new products,
networks and solutions and the need to increase expenditures for improving the
quality of service; prolonged adverse weather conditions resulting in a
material increase in overtime, staff or other costs; developments in the
convergence of technologies; the anticipated benefits and advantages of new
technologies, products and services not being realised; the underlying
assumptions and estimates made in respect of major customer contracts proving
unreliable; the aims of the BT Global Services' revised operating model and
restructuring plan not being achieved; completion of the pension fund
actuarial valuation; and general financial market conditions affecting BT's
performance and ability to raise finance. BT undertakes no obligation to
update any forward-looking statements whether as a result of new information,
future events or otherwise.

CONTACT:
Eileen Connolly
eileen.connolly@bt.com
908-410-1419

Diane Noe
703-755-6215
diane.noe@bt.com

SOURCE BT

Eileen Connolly, eileen.connolly@bt.com, +1-908-410-1419; or Diane Noe, +1
703-755-6215, diane.noe@bt.com