Joint Venture Agreement

BRITISH TELECOMMUNICATIONS PLC
14 October 1999
                              
      BT AND MICROSOFT AGREE TO CREATE MOBILE INTERNET
                    PRODUCTS AND SERVICES

BT and Microsoft today announced an agreement to combine
efforts in developing world-leading mobile Internet and
multimedia applications and equipment.
     The worldwide agreement will lead rapidly to new types
of service with broad consumer appeal.
     The two companies will join forces to:
*   create a mobile multimedia service which allows
    customers to display and access personalised information
    on handheld wireless devices.
*   develop handheld interactive wireless devices based on
    the Microsoft Windows CE operating system.
*   establish an open industry forum for the development of
    third generation (3G) mobile Internet applications.
     Both companies are to commit substantial resources to
collaborative work in the belief that the market for mobile
Internet and multimedia products and services represents a
massive opportunity for rapid business growth, based on
existing mobile networks as well as the forthcoming third
generation (3G) networks, including UMTS.
     Sir Peter Bonfield, BT's chief executive, said: 'By
deepening our relationship with Microsoft we believe we can
create world-class capabilities for our customers. Mobile
access to the Internet is a fantastic growth market.'
     Bill Gates, chairman and CEO of Microsoft Corp. said:
'Mobility is a key component of Microsoft's vision, and we
are excited about working with a world-class network provider
like BT to make that vision a reality.
     'Microsoft's platforms and services combined with BT's
mobile networks will enable users to access rich, interactive
information anytime, anywhere and on any device.'
     The collaboration will give individual, personalised
deliveries of Internet content and services to users of
mobile telephones, laptop computers and a forthcoming new
generation of interactive consumer devices.  This capability
will complement Project Nomad, an existing collaborative
development programme between BT and Microsoft, which lets
users of mobile phones read, send and receive e-mail and
calendar information. Initial customer trials of these
services were announced on October 6, 1999.
     BT will develop additional consumer products, including
games, music and other interactive services.
     The two companies will work together to build a new
generation of mobile handsets and computing devices which
will exploit fully the power of BT's mobile networks to
deliver multimedia content and interactive games.
     They will also found a forum for the development of 3G
and GPRS mobile applications.  This will be an open industry
forum based on Internet standards to encourage development of
new multimedia applications for mobile devices, and the
conversion of existing applications to work in the wireless
mobile environment.
     The first products and services from the new agreement
are expected to become available to customers next year.