BT reduce charges to mobiles

BT Group PLC
22 January 2003

                                   January 22, 2003

                    BT CUSTOMERS SET TO ENJOY CHEAPER CALLS

                                   TO MOBILES

  BT today confirmed that it plans to reduce its charges for customers calling
 from their fixed lines to mobile phones. The move follows Oftel's announcement
that the four UK mobile operators should reduce their fees for terminating calls
 on their networks by 15 per cent, by July 25, 2003 and by at least RPI-14% for
  the 3 years thereafter. BT will pass on the benefit of these savings to its
                                   customers.

Angus Porter, managing director of BT's consumer division, said: "This is good
news for BT customers. Our feedback showed that the high cost of calls to
mobiles was an issue for consumers. As the charges appeared on their BT bill, it
was often BT that was blamed for the prices they had to pay when in fact we
simply collected a large part of the money on behalf of the mobile operators.

"The Competition Commission's decision to reduce the cost of calls to mobiles
will lead to lower overall bills which means better value for money for our
consumers."

In the last full financial year, 2001/02, BT Retail recorded approximately
£1.2bn of revenue from its customers' calls to mobile phones. In the same period
BT Wholesale also recorded more than £1.2bn in transit revenue from calls
terminating on the networks of the mobile operators.

It is expected that today's ruling will reduce these revenues in both BT's
retail and wholesale arms. Profitability in both areas will remain unaffected
because a large part of these revenues are simply collected by BT and paid on to
the mobile operators.

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Notes to Editors:

Termination Payment

Today's announcement by the Competition Commission refers to the so called
"termination payment" - the amount of money that mobile phone companies get for
telephone calls that are made to mobiles from fixed line phones, and from mobile
phones on other networks. BT customers who call from their fixed lines to a
mobile actually pay BT for that call and BT then passes on the money to the
mobile company. BT has and always will pass on that money. Today's ruling simply
means that if the amount the mobile companies can charge is going to be less,
then the charge to BT customers will also fall by the same amount.

Retention

In order to cover the costs of starting the call on its network and the costs of
collecting and passing on the payments to mobile companies, BT is allowed to
retain a proportion of the total cost to the customer of the call. The amount
that BT can keep in the consumer market comes within the scope of the overall
price control basket.

Price basket

BT's main phone charges for the lowest spending 80 per cent of Residential
customers are regulated as part of an overall "price control basket", in which
prices are capped by RPI-RPI i.e. no overall price increase. The amount BT keeps
from each call made to a mobile phone using its network is one element that
falls within this price control basket.


                      This information is provided by RNS
            The company news service from the London Stock Exchange