AGM Statement

BT Group PLC
16 July 2003



                                                                   July 16, 2003

                      BT REAPS REWARD FOR TOUGH DECISIONS

Sir Christopher Bland, BT chairman, today outlined how the company has
transformed itself over the past two years.

Addressing shareholders at its annual general meeting in London, Sir Christopher
explained how, by taking tough decisions early on, the company has reaped the
benefits and had another good year.

He said: "We were one of the first incumbent telcos in Europe to recognise the
need for a strong balance sheet, and to take decisive action to reduce debt
through a rights issue and asset sales. This was underpinned by strong and
continuing cash generation. These strengths have enabled us to enhance our
dividend payout and reward our shareholders."

     He pointed out that just two years ago the company's debt had reached £28
billion; it had forgotten how to generate free cash flow; its strategy was
unclear; and the morale of customers, employees and shareholders was low.

     He continued: "Since then a transformation has occurred. A new board and
management team have built the foundations for a sustainable future. We have
established, and started to execute, a new strategy. We have set stretching
targets. We have reduced our debt substantially through improved operations and
driving hard for cash.

"Last year, when I had the pleasure of welcoming you to BT Group's inaugural
AGM, following the demerger of mmO2, that transformation was just beginning.
Today, at our second AGM, its effects are there for all to see.

"We have transformed uncertainty into clarity; low morale into enthusiasm; loss
into profit; a suspended dividend into a significant one."

Sir Christopher added that last year earnings per share grew by 61 per cent and
that BT generated operating free cash flow of £1.7 billion, surpassing its 2004/
05 target. BT cut its net debt to £9.6 billion, two years ahead of schedule.

He warned that while these numbers demonstrate that decisive action delivers
results there remains a lot to do.

Sir Christopher said: "Looking at the share price of your company since its
demerger in November 2001, we have outperformed the UK and European telecoms
sector in a declining market. Our share price has suffered with the fall in the
FTSE 100 even though our performance, in earnings per share, has moved strongly
upwards

     "However, total shareholder return also includes the dividend - and here
there has been positive news for shareholders.

"As we announced in May, we are proposing a final dividend of 4.25 pence for
last year. This gives a full year dividend to our shareholders of 6.5 pence,
more than 45 per cent of our earnings.

"Next year, and in subsequent years, we believe it will be possible to pay out a
greater proportion of earnings, moving further towards the 50 per cent mark.

"This belief is based on the progress we have made to date; our confidence in
our ability to generate cash; and our firm commitment to delivering a return to
shareholders."

Sir Christopher emphasised that well-managed, motivated people are fundamental
to the company's success. He highlighted the success of company's celebrations
at Alton Towers three weeks ago where BT entertained around 19,000 BT employees
with more than 30 years service.

In total, BT welcomed almost 47,000 people - employees, their families and
friends

"I don't believe there is another UK private sector employer who could match
that score." Sir Christopher said.

He concluded that BT had built solid foundations for a sustainable future and
continues to be a market leader and an innovator with a powerful brand and
significant opportunities for profitable growth.

"Above all, our results demonstrate that we are delivering what our customers
want. And ultimately that is the strongest foundation for success.

"BT today feels to me like a new company - and we share a new optimism about the
future," he said.

                           -------------------------

Inquiries about this news release should be made to the BT Group Newsroom on its
 24 hour number: 020 7356 5369. From outside the UK dial [phone]. All
    news releases can be accessed at our web site: www.btplc.com/mediacentre



   A full copy of Sir Christopher Bland's speech is available on www.bt.com/
                                 investorcentre





Forward-looking statements - caution advised

Certain statements in this news release are forward-looking and are made in
reliance on the safe harbour provisions of the US Private Securities Litigation
Reform Act of 1995. These statements include, without limitation, those
concerning: expectations regarding customer growth, investment plans, strategy,
and the benefits of new initiatives; the possible or assumed future results of
operations of BT and/or its lines of business; expectations regarding product
volume, revenue targets and/or growth, capital expenditure, network
infrastructure and savings, customer satisfaction, free cash-flow, market share,
cost reductions and cash savings, productivity improvements, and profitability.

Although BT Group believes that the expectations reflected in these
forward-looking statements 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.

Factors that could cause differences between actual results and those implied by
the forward-looking statements include, but are not limited to: material adverse
changes in economic conditions in the markets served by BT and its lines of
business; future regulatory actions and conditions in BT's operating areas,
including competition from others in the UK and other international
communications markets; selection by BT and its lines of business of the
appropriate trading and marketing models for its products and services;
fluctuations in foreign currency exchange rates and interest rates;
technological innovations, including the cost of developing new products and the
need to increase expenditures for improving the quality of service; prolonged
adverse weather conditions resulting in a material increase in overtime, staff
or other costs; developments in the convergence of technologies; the anticipated
benefits and advantages of new technologies, products and services, including
broadband and other new wave initiatives, not being realised; the timing of
entry and profitability of BT and its lines of business in certain communication
markets; significant changes in market shares for BT and its principal products
and services; to the extent that BT chooses to sell assets or minority interests
in its subsidiaries, prevailing market levels for such sales; general financial
market conditions affecting BT's performance; and the reintegration of Concert.
BT Group undertakes no obligation to update any forward-looking statements,
whether as a result of new information, future events or otherwise.




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