Retail analysts briefing

BT Group PLC
4 December 2001

December 4th, 2001



BT Retail

In a presentation to analysts this morning, BT Retail, part of BT Group, will
be giving the following financial targets for its business:



  * Three percent compound annual growth of revenue for the four years to
    2004/05.

This growth is to be driven from a three pronged push into the following
areas:


        -     The expansion of new wave revenues from existing products, such
        as global conferencing.

        -     New initiatives, such as mobile solutions in partnership with
        the recently demerged mmO2;

        -     Brand extension into directly adjacent markets, such as hassle
        free IT for SMEs;

    These growth areas more than offset the expected erosion in revenues from
    core voice products.

  * Rate of decline in Gross Margin to be reduced to one percentage point
    per annum by 2004/05.

  * Retail Managed Costs productivity savings to amount to £850m gross over
    the three years to 2003/04. The absolute reduction in SG&A costs is £393m
    reflecting the impact of inflation, reinvestment for future growth and
    productivity savings passed on to BT Wholesale.

  * Circa four percent compound annual growth of Free Cashflow (EBITDA less
    Capital Expenditure plus improvements in Working Capital) for the four
    years to 2004/05.



Forward-looking statements - caution advised

The contents of this release are forward-looking and are made in reliance of
the safe-harbour provisions of the US Private Securities Litigation Reform Act
of 1995. Although BT believes that the expectations reflected in these
forward-looking statement 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.

Ends