Retail price control update

BT Group PLC
24 July 2002

                                                                   July 24, 2002

             BT ACCEPTS OFTEL'S PROPOSALS ON RETAIL PRICE CONTROLS

BT today announced that it is accepting Oftel's proposals for new retail price
controls, in line with Oftel's statement published last month.

      The proposals will mean that the price control on BT's lowest spending 80
per cent of residential customers will be amended from August 1, 2002 from the
current level of RPI minus 4.5 per cent to a new level of RPI minus RPI. On
average, customer bills will be reduced in real terms by the rate of inflation,
which gives an appropriate balance between consumer protection and the
flexibility needed by BT.

     At the same time the amount BT keeps from each call made to a mobile phone
using its network is being brought within the price control basket, rather than
having a separate price cap of RPI minus 7 per cent.

BT has also agreed to launch a new wholesale line rental product from September
1, 2002. The initial product will be similar to BT's existing "Calls & Access"
product for service providers, but there will be a programme of enhancements
after September.

Once Oftel is satisfied that the new wholesale line rental product is fully
implemented and starting to have an impact on the retail market, the retail
price control will be further revised to allow bills to increase at the rate of
inflation (RPI plus 0).

BT has also agreed to some minor changes to the workings of its Light User
Scheme, including provisions to extend the number of customers potentially
qualifying if the standard exchange line rental rises significantly.

A BT spokesman said that this was an innovative package. The company did not
like every individual element, but overall it balanced the needs of both BT's
customers and shareholders.

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