1. © British Telecommunications plc 1 TSS Union Briefing August 23 rd, 2011 Contents 1.Overview and Strategy 2.Scorecard Performance 3.Efficiency Plans 4.People Update

2. © British Telecommunications plc 2 TSS Organisation Technical Service Solutions manages BT’s global IT estate which supports BT’s e2e processes and external customer services –End-Customer Data Centre Services –Internal IT Services –Enterprise IT Services –Storage & Backup –Midrange Servers and Operating Systems –Enterprise Infrastructure –Data Centres, Power and Cooling TSS is a c. £117m IT organisation with 675 BT FTE across 14 countries supporting BT’s £20 billion businesses Combination of IT C2M, IT Provisioning and IT T2R activities: –C2M & Provisioning 47%, T2R 44%, Other 9% Data Centres Enterprise Infrastructure Server, Storage & Backup Commercial Operations & Transformation IT Provisioning, Change Mgt. and T2R End-Customer Data Centre Services/Enterprise IT/Internal IT Strategy

3. © British Telecommunications plc 3 TSS Organisation & Facts – Our People Figures as per May 2011 Spain 45 US 61 France 104 UK 246 India 3 Belgium 26 Australia 4 China 5 Germany 72 Italy 51 Japan 1 Netherlands 72 Singapore 1 Sweden 2

4. © British Telecommunications plc 4 Transformation – Service Intelligence Competitiveness and Excellence Objectives are not fully underpinned by Transformation, working hard to improve this Progress Metric RAG Status P4 FY RAG Status P4 FY SI Trading Reliability was above Target in Q1, but below Target thus far in Q2 (particularly in Openreach) Trading Reliability Improvements CAREagile EEI and PCI remain strong relative to BT Group, However, we need to address the slight downward trend in the Q1 CAREagile results TSS Total Labour Costs TSS 3 rd Party Costs People (OCI & Care) TSS Scorecard – P4 YTD and FY Outlook TSS Service Basket Measures Slight overspend on 3 rd Party IT costs in Q1 addressed by the EMC deal. Need to deliver non-UK mitigation plan and avoid budget oversights Forecast is on-Target until August, then it gets more challenging due to lack of and/or delays with enablers. Subcon savings are compensating Consolidated TSS Service Basket Scorecard is now in place. All measure are slightly above Target apart from As-is IT Provisioning which is slightly below Target

5. © British Telecommunications plc 5 At end-Q1, TSS was 36% UK and 64% non-UK –The 246 UK FTE were 68% Managers, 32% Team Members and zero Agency 2011/12 UK efficiency challenge is net 14% (incl. Absorbed Growth) 24 UK efficiencies have already been delivered YTD, 12 opportunities are still in progress as follows: 2 * Transfer to C6 Transformation 3 * Transfer to EoSL activities 4 * Positive Selection and subsequent Transfer to CTC 3 * Transfer Out with no Budget 11/12 Resourcing Update

6. © British Telecommunications plc 6 TSS CARE Agile Q2 Lowest scoring questionsQ2 Things are changing for the better in my business unit 3.01 Our senior leaders are making the right decisions to make BT a better business. 3.13 Highest scoring questionsQ2 I feel like my manager cares about me as a person 4.21 My manager values people who do the right thing for the customer 4.19 TSS Care Agile Results EEI PCI B&H(Yes) B&H & PTNS Q1 3.62 3.81 14% 21% Q2 3.66 3.83 9% 20%

7. © British Telecommunications plc 7 Sickness / Stress Increased productivity must not come at the expense of spoiling our sickness trends % Calendar Days Lost SI (mth/YTD) Breakdown view of TSS UK population:

8. © British Telecommunications plc 8 A deep dive was completed to fully understand the Q1 CAREagile feedback and variances between the teams. Ongoing actions are as follows: 1.Improve communication of our transformation achievements to date and future plans 2.Ensure that we make our strategy meaningful and credible for our people 3.Harness for transformation the energy and sense of purpose we have when dealing with a crisis 4.Provide clear guidance and an escalation process for handling perceived harassment from customers, project managers etc… 5.Ensure our own Line Managers do not bully or harass 6.Review the way we carry out performance management to ensure consistency, fairness and a clear understanding of its purpose 7.Ensure all our people have monthly 1:1s 8.Monitor workloads and hours worked more effectively 9.Review our training and accreditation requirements and plan accordingly 10.Review issues around tools and working with other units People Update - TSS Engagement Plan

9. © British Telecommunications plc 9 Questions Service Intelligence How we think How we deliverHow we behave where people feel supported to try, learn and succeed recognise and reinforce the positive contribution our people make managing services across the organisation to delight customers in their overall experience prioritise our efforts and the investment in people, processes and systems getting better everyday in everything we do PRINCIPL E 1 PRINCIPL E 2 PRINCIPL E 3 PRINCIPL E 4 PRINCIPL E 5 Confidence to Try Recognise Our Contribution Understand Our Customers Invest Intelligently Continuous Improvement

10. © British Telecommunications plc 10 Back Up Slides

11. © British Telecommunications plc 11  20,000+ servers covering the UK, US, Netherlands & Germany. Key technologies include ESX VMware, Linux, Solaris and Windows  13,296TeraBytes of SAN and NAS storage  16,710 Backup clients, 26,893 Terabytes of Backup data, 937 Cartridge Drives  20,000+ servers covering the UK, US, Netherlands & Germany. Key technologies include ESX VMware, Linux, Solaris and Windows  13,296TeraBytes of SAN and NAS storage  16,710 Backup clients, 26,893 Terabytes of Backup data, 937 Cartridge Drives TSS Organisation & Facts Enterprise Infrastructure Servers, Storage and Backup Data Centres (Managed by BTO)  4,300 Sites, 640,000 Ethernet Ports, 15,500 devices, 29,000 Components  7,300 WAN links, 140,000 BT DNS entries  30 million IP Addresses  4,300 Sites, 640,000 Ethernet Ports, 15,500 devices, 29,000 Components  7,300 WAN links, 140,000 BT DNS entries  30 million IP Addresses  Data Centres covering the UK (20), Benelux (3), Hong Kong (1), US (3) and numerous IT locations  UK DC Power: 63 generators, 62 transformers, 104 UPS, 594 PDS, 5498 battery cells, 36 chillers plants and +561ACUs  Data Centres covering the UK (20), Benelux (3), Hong Kong (1), US (3) and numerous IT locations  UK DC Power: 63 generators, 62 transformers, 104 UPS, 594 PDS, 5498 battery cells, 36 chillers plants and +561ACUs End -Customer Data Centre Services / Enterprise IT / Internal IT  ICT: Supporting £150M+ GS revenue with 150+ customers  Enterprise IT: Maintain & support system stack providing more than £3 Billion in GS revenue  Internal IT: Support more than 14.000 users in Asia Pac and migrations to the strategic BT systems stack  ICT: Supporting £150M+ GS revenue with 150+ customers  Enterprise IT: Maintain & support system stack providing more than £3 Billion in GS revenue  Internal IT: Support more than 14.000 users in Asia Pac and migrations to the strategic BT systems stack Data Centres Enterprise Infrastructure Server, Storage & Backup Commercial Operations & Transformation IT Provisioning, Change Mgt. and T2R End-Customer Data Centre Services/Enterprise IT/Internal IT Strategy