BT contract with Redstone

BT Group PLC
16 April 2002



April 16, 2002



           BT CLINCHES £170 MILLION CONTRACT TO RUN REDSTONE'S NATIONAL VOICE
                                        NETWORK

        BT today announced that it has won a £170 million six year contract to
        run communications services provider Redstone's national voice network.

        This is the first time that BT has offered its complete facilities
        management service to cover all aspects of another operator's network
        infrastructure.

              Under the terms of the deal, BT Wholesale will assume ownership
        and responsibility for the day-to-day operations of Redstone's
        infrastructure. Redstone will continue to retain control over critical
        aspects of its operation, but be able to focus on marketing, selling and
        servicing its growing customer base with a range of voice based
        services.

        Paul Reynolds, chief executive of BT Wholesale, said: "We are delighted
        to be signing this deal with Redstone. We believe that it demonstrates
        how our expansion into network facilities management enables us to help
        our clients meet the current and future demands on their networks.
        Redstone is taking an innovative and sensible approach to building its
        business in the current market conditions and we believe this deal gives
        an innovative new model for the wholesale outsourcing market."

              BT Wholesale will be providing the full day-to-day operation and
        management of Redstone's network, which is one of the largest guaranteed
        bandwidth networks in the UK.

              The £170 million contract value includes and protects existing
        interconnect revenues.

        Under the agreement, approximately twenty Redstone employees associated
        with the Redstone network are expected to transfer to BT Wholesale under
        TUPE regulations.

        The deal will allow Redstone, whose customers range from small and
        medium sized businesses to larger corporates such as Thomas Cook,
        Bradford & Bingley and Syngenta, to concentrate its resources on
        developing its solutions portfolio, comprising voice, data, internet and
        telecoms technologies for the highly competitive business communications
        marketplace.

        Ian Brown, Chief Executive Officer of Redstone, said: "Running a
        profitable telecoms network today is a high volume, low margin business.
        This agreement with BT Wholesale allows us to play to our strengths of
        responding to our customers with integrated communications solutions,
        confident in the knowledge that our network is being professionally
        managed by the largest and most experienced telecoms operator in the
        UK."

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        Notes to Editors:

        Redstone: Redstone is a leading national communications services company
        providing a one-stop-shop approach to communications encompassing voice,
        data, telecoms, and internet technologies. The company is an established
        market leader in providing solutions based on convergence such as IP
        telephony, and "Smart B" (Smart Building Management Systems). Redstone
        also provides a wide range of services for communications technologies
        including consultancy, managed services, systems integration, support
        services and resourcing services. Redstone operates throughout the UK,
        based from regional offices, and prides itself in delivering superior
        levels of service to its customers who range from small and medium sized
        businesses to corporate organisations including Thomas Cook, Syngenta
        and the BBC. Redstone employs circa 400 staff, 70% of whom are dedicated
        to the task of servicing the company's customers. The Company operates
        major partnerships with leading industry vendors including BT, Cisco,
        Microsoft, and Compaq to provide solutions to its customers.

        BT Wholesale: BT Wholesale provides comprehensive network services
        within the UK to more than 500 communication companies, network
        operators and service providers, including other BT businesses; BT
        Retail, BT Ignite and BTopenworld. BT Wholesale seeks to build complete
        communications packages working with its customers to help them succeed
        in their businesses. The BT Wholesale portfolio provides a comprehensive
        range of wholesale and service provider products including asymmetric
        digital subscriber line (ADSL), internet protocol (IP) access, the bulk
        delivery of private circuits, frame relay and integrated services
        digital network (ISDN) connections for service providers and operators.




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