Posting of Circular

Telecom Plus PLC
07 March 2006


                                7 March 2006

                       Telecom plus plc (the 'Company')

                    Posting of Circular and Notice of EGM

Telecom plus plc has today posted a Class 1 circular to its shareholders in
connection with its proposed arrangements  with Npower Limited (the
'Transaction') as detailed in the announcement dated 16 February 2006.

The circular contains notice of an extraordinary general meeting of shareholders
(the 'EGM') to approve the  Transaction. The Directors and certain other
shareholders have irrevocably undertaken to vote in favour of the ordinary 
resolution in respect of 37,570,536 ordinary shares, representing approximately
55 per cent. of the share capital of  the Company. The EGM will be held at the
Company's offices at Dryden House, The Edge Business Centre, Humber Road, 
London, NW2 6EW at 11.00 am on 23 March 2006.

Extracts from the letter to shareholders from the Chairman of the Board of
Directors are set out below.

A copy of the above document has been submitted to the UK Listing Authority and
will shortly be available for  inspection at the UK Listing Authority's Document
Viewing Facility which is situated at:

Financial Services Authority
25 The North Colonnade
Canary Wharf
London
E14 5HS

Enquiries

Telecom plus plc
Charles Wigoder/Stephen Davis                        020 8955 5000

KBC Peel Hunt
Simon Hayes/Capel Irwin                              020 7418 8900

Gresham PR Ltd                                       020 7404 9000
Neil Boom


Introduction

On 16 February 2006, the Company announced it had agreed to sell the Energy
Companies to npower for a nominal cash consideration of £4 and simultaneously to
enter into the Management Services Agreement with npower and the Energy
Companies. This transaction, if approved, will take effect retrospectively from
1 January 2006.

The Company is also entering into the Put Option Agreement which, together with
the sale of the Energy Companies, is deemed to be a Class 1 transaction for the 
purposes of the Listing Rules and as such requires Shareholders' approval.


Details of the Transaction

The Transaction involves npower assuming the obligation to supply gas and
electricity to the customers of the Group.

It comprises the following principal elements:

sale of the Energy Companies to npower for nominal consideration, which will
mean that npower will thereby become responsible for the supply of gas and
electricity (as applicable) to the customers of those companies.

provision of management services by the Company to the energy customers on
behalf of npower and the Energy Companies. The Company will remain responsible
for managing all aspects of the customer relationship with the energy customers
on behalf of npower and the Energy Companies, including billing (as part of its
multi-utility proposition), customer service, metering, debt collection and
administration, in return for a commission on energy used by the customers.

grant of the put option by the Company - in the event of a change of majority
control of the Company prior to six months after the call options set out below
lapsing, the Company can be required to repurchase the Energy Companies or to
take an assignment of the contracts with the customers of the Energy Companies.
The amount payable to npower in the event that the Put Option is exercised is
£50 per energy service supplied together with a commission of 10 per cent. of
the revenues generated from such customers over the succeeding five years.

In addition, certain Directors, senior employees and connected persons have
granted or intend, prior to Completion, to grant npower an option to acquire
part or all of their shareholdings in the Company amounting in aggregate to
19,817,711 Ordinary Shares, representing approximately 29 per cent. of the
existing issued share capital of the Company. This option is exercisable in the
six months following publication of the Company's results for the year ending 31
March 2009. The price per Ordinary Share payable by npower on exercise of the
Call Option is equal to four times EBITDA for the year ending 31 March 2008 plus
eight times the EBITDA for the year ending 31 March 2009 (net of cash and debt)
divided by the number of Ordinary Shares in issue at the time of exercise of the
Call Option, or market value if higher (based on the average closing price for
the preceding 20 dealing days).

Background to and reasons for the Transaction

On 23 November 2005, the Company issued a trading statement informing
shareholders that the record prices and increasing volatility in the wholesale
energy markets were resulting in substantial losses being incurred on its gas
business. On 13 December 2005, the Company updated shareholders further when it
published interim results for the period to 30 September 2005, which stated that
the Directors were actively exploring strategic options with a view to finding
ways of controlling these losses. Since that date, the wholesale cost of gas has
remained substantially higher than the price the Company has been able to charge
its customers in a competitive market. If these losses had been allowed to
continue, the future viability of the Group would have been placed at risk.

In practice, the Company had two options:

The first option was the immediate sale or closure of the energy businesses.
Although this would have achieved the short term objective of capping these
losses, enabling the Company to survive and avoid an insolvent liquidation, the
Directors considered such closure would have been extremely damaging to the
remaining business in the longer term: it would have destroyed the Company's
current unique market position as the UK's only fully integrated multi-utility
supplier; it would have led to an immediate and significant loss of customers;
it could have been expected to put pressure on future telephony margins as the
Company competed with other alternative telephony suppliers primarily on price;
it would have seriously damaged morale within the Distribution Network, many of
whom would have lost a substantial proportion of their income. Overall, the
Directors' assessment was that by pursuing this option, although the business
would have survived the current crisis, the prospects for future growth and
profitability would have been seriously impaired.

The second option was to try and identify a partner who would take over
responsibility for the physical supply of gas and electricity to the energy
customers, whilst leaving responsibility for managing all other aspects of the
customer relationship with the Company. Under the proposed transaction, the
Company will enter into a management contract with npower under which the
Company will continue to promote an integrated multi-utility proposition to the
customers. All responsibility for purchasing and hedging energy will reside with
npower, whilst the Company will receive an ongoing commission (share of revenue)
on energy used by the customers in the future. This preserves the current
business model and should boost morale within the Distribution Network as
Distributors will continue to receive a share of the revenues generated by the
energy customers and be able to continue offering prospective new customers a
wide range of competitively priced utility services, including gas and
electricity.

In the event that the Resolution is not approved by Shareholders, and in the
absence of additional bank facilities which are not currently in place, the
Board would have to consider appointing an administrator immediately as the
Company would be responsible for paying the full cost incurred by npower since 1
January 2006 in supplying energy (which would amount to an additional cost of
approximately £9.8 million) and up to £500,000 of their legal costs.
Shareholders should note, however, that the Directors and certain other
shareholders have irrevocably undertaken to vote in favour of the Resolution, in
respect of 37,570,536 Ordinary Shares, equivalent to approximately 55 per cent
of the share capital of the Company.

The Directors believe that investors' perception of the Company has been
adversely affected over the last two years by the risks associated with the
increasingly volatile wholesale energy markets. This transaction eliminates
those risks and should enable the company to earn a small positive contribution
from its energy business in future.

Information on the Energy Companies

The Energy Companies were acquired by the Company during December 2005 from
Oxford Power Holdings Limited for an aggregate cash consideration of £575,000.
The rationale for the acquisition was to ensure that the contracts with the
energy customers were held in separate licensed subsidiaries so that a purchaser
of the energy business did not need to transfer the customer contracts to their
own licences.

Gas Plus was incorporated on 6 August 2004. It had contracts to supply gas to
83,403 customers as at 1 January 2006. Until then, it was dormant and it had not
traded, carried on any business or incurred any liabilities. Accordingly, the
financial information available in relation to it is of minor importance only
and there is no financial information available which would influence any
assessment of the assets and liabilities, financial position, profits and losses
and prospects of the Company.

Electricity Plus was incorporated on 6 August 2004. It had contracts to supply
electricity to 97,989 customers as at 1 January 2006. Until then, it was dormant
and, save for the holding of such contracts, it had not traded, carried on any
business or incurred any liabilities. Accordingly, the financial information
available in relation to it is of minor importance only and there is no
financial information available which would influence any assessment of the
assets and liabilities, financial position, profits and losses and prospects of
the Company.

Plus Shipping operates as the licensed gas shipper for Gas Plus. All costs
incurred by Plus Shipping are passed directly through to Gas Plus (previously to
the Company) on a no profit/no loss basis, and consequently the turnover of Plus
Shipping is included in the results for Gas Plus (previously the results of the
Company) as cost of sales. Financial information in relation to Plus Shipping is
set out in the Circular.

Financial effects of the Transaction

The principal financial effect of the Transaction will be to remove the Group's
exposure to volatile wholesale energy prices and enable the Company to earn a
positive contribution towards its earnings from managing all aspects of the
customer relationship in respect of supplying gas and electricity.

The Continuing Group

Notwithstanding the disposal of these subsidiaries, the Company will continue to
offer customers a substantially identical marketing proposition for their
utilities as currently. Customers will continue to receive a single integrated
monthly bill from the Company covering all their services, and the Company will
remain responsible for managing all aspects of the customer relationship
including billing, administration, account management, customer service and debt
collection.

Current trading and prospects

As anticipated in the interim statement, gas prices have remained high and the
Company has incurred significant losses so far this winter. In addition, there
have been substantial exceptional costs incurred in restructuring the Group in
order to enter into the proposed Transaction, and further, in relation to the
proposed Transaction itself. The Directors previously stated that profits before
tax were expected to be significantly lower than last year and also subject to
considerable uncertainty. Overall, it is therefore expected that the outcome for
the full year to 31 March 2006 will be a loss before tax of approximately £1.6
million.

This loss forecast is based upon the following facts and assumptions under the
control of the Board:

there being no material change to the margins within the Group's telephony
businesses or the Group's overhead structure;

the effect of the exceptional restructuring costs referred to above; and

the retail energy tariffs charged by the Company during the period.

In addition, this loss forecast is based on the actual energy costs incurred by
the Company prior
to 31 December 2005, together with the contractual energy costs which will be
payable should the Transaction proceed in respect of energy supplied after that
date under the terms of the Transaction.

This loss forecast has been properly compiled on the basis of facts and
assumptions stated above and the basis of accounting is consistent with the
accounting policies of the Company. It has been prepared from the management
accounts of the Company for the 10 months ended 31 January 2006 and the
Directors' forecasts for the two months ending 31 March 2006.

The Directors believe that the Transaction will leave the Group strongly
positioned as the UK's only integrated multi-utility supplier, clearly focused
on marketing and promoting our services, with no exposure to either future
volatility in the wholesale energy markets or working capital issues relating to
an energy hedge book which would have needed to expand rapidly in line with
rising wholesale energy prices and the steady growth of our customer base.

The Company will not be in a position to pay a dividend for the current
financial year. However, the Directors anticipate being in a position to resume
dividend payments in respect of the forthcoming financial year, although these
will of course be dependant on growth, working capital and the level of
profitability achieved.




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