Alliance with Hewlett Packard

BT Group PLC
04 May 2004


 BT AND HP ANNOUNCE $1.5 BILLION DEAL AND GLOBAL IT AND COMMUNICATIONS ALLIANCE

      Agreement Transforms Supplier Relationship into Strategic Alliance;
      Managed Services Agreement Forms Basis for Joint Go-to-Market Effort


NEW YORK, May 4, 2004 -- BT and HP today announced plans to develop a strategic
go-to-market alliance that will address mutual growth opportunities in the
global information and communications technology (ICT) marketplace.  As the
communications and IT sectors continue to converge, the companies see this as a
major opportunity to utilize their combined capabilities in delivering enhanced
service offerings to the growing global ICT market.

As a first step, the companies have signed managed services agreements with a
combined value of $1.5 billion over the next seven years.  Under these
agreements, HP will manage BT's midrange and desktop information technology (IT)
infrastructure in the UK, and BT will manage HP's voice and data network and
product support call centers within the EMEA (Europe, Middle East and Africa)
region.

These agreements build upon each company's core capabilities and provide a
strong foundation for the longer-term alliance. The immediate focus of the
companies is to implement successfully the managed service agreements over the
coming months, while concurrently developing the joint go-to-market approach.

"Connections matter more than ever today, and in a world where business and
technology are inextricably linked, bringing together IT and communications into
one seamless environment creates a solid foundation for growth," said Carly
Fiorina, HP chairman and chief executive officer. "When we capitalize on our
combined strengths, we not only take our own capabilities to a new level, but we
then bring the very same standard of simplicity and excellence to our own
customers, quickly, securely and reliably."

Ben Verwaayen, BT chief executive officer, commented, "This is a great
opportunity for BT that delivers key components of our ICT strategy. The global
market for ICT provides us with a substantial growth opportunity that can
significantly benefit both companies' revenues. In a consolidating industry, we
believe it makes sense to create a strong alliance between a world-class
communications company and a global IT company."

Starting this summer, the companies plan initially to address targeted European
enterprises, plus the UK mid-market, consumer and small- and medium-size
business (SMB) markets through a combination of service offerings.
Subsequently, other markets will be added as conditions and opportunities
develop, in order to ultimately provide global solutions capability via the
alliance.

The companies are evaluating the development of world-class propositions in
segments such as ICT infrastructure, application management, mobility, workplace
solutions and contact center services. The approach will include the creation of
a common service delivery model that is designed to improve the technical
alignment across both companies in order to deliver, both together and
separately, seamless ICT services.

Photographs of the New York press event are available via the Associated Press
Photo Network and on the Internet at Feature Photo Services Link at
www.newscom.com

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About BT


BT Group plc is the listed holding company for an integrated group of businesses
providing voice and data services in the UK and elsewhere in Europe.  British
Telecommunications plc, a wholly-owned subsidiary of BT Group, holds virtually
all businesses and assets of the BT group.

BT is one of Europe's leading providers of telecommunications services.  Its
principal activities include local, national and international
telecommunications services, higher-value broadband and internet products and
services, and IT solutions.  In the UK, BT serves over 20 million business and
residential customers with more than 29 million exchange lines, as well as
providing network services to other licensed operators.

BT consists principally of three lines of business:

•    BT Retail, serving businesses and residential customers and including BT 
     Openworld, one of the UK's leading ISPs.

•    BT Wholesale, providing network services and solutions within the UK,
     including ADSL, conveyance, transit, bulk delivery of private circuits, 
     frame relay and ISDN connections.

•    BT Global Services, BT's managed services and solutions provider, serving 
     multi-site organizations worldwide.  Its core target market is the top
     10,000 global multi-site organizations with European operations.

There are a number of other businesses within the BT group, including BT Exact,
an internationally renowned centre of excellence in IT and networking
technologies. It is also BT's technology and research and development business.

In the year ended 31 March 2003, BT's turnover was £18,727m. with profit before
taxation of £1,829m.

For more information, visit www.bt.com


About HP

HP is a technology solutions provider to consumers, businesses and institutions
globally. The company's offerings span IT infrastructure, personal computing and
access devices, global services and imaging and printing. For the last four
fiscal quarters, HP revenue totaled $74.7 billion. More information about HP
(NYSE, Nasdaq: HPQ) is available at www.hp.com.

This news release contains forward-looking statements that involve risks and
uncertainties, as well as assumptions that, if they never materialize or prove
incorrect, could cause the results of HP and its consolidated subsidiaries to
differ materially from those expressed or implied by such forward-looking
statements. All statements other than statements of historical fact are
statements that could be deemed forward-looking statements, including any
projections of earnings, revenues, or other financial items; any statements of
the plans, strategies, and objectives of management for future operations; any
statements concerning proposed new services or developments; any statements
regarding future economic conditions or performance; statements of belief and
any statement of assumptions underlying any of the foregoing. The risks,
uncertainties and assumptions referred to above include employee management
issues; the timely development, production and acceptance of services and their
feature sets; the challenge of managing asset levels, including inventory; the
difficulty of keeping expense growth at modest levels while increasing revenues;
and other risks that are described from time to time in HP's Quarterly Report on
Form 10-Q for the period ended Jan. 31, 2004, and HP's other Securities and
Exchange Commission reports filed after HP's Annual Report on Form 10-K for the
fiscal year ended Oct. 31, 2003. HP assumes no obligation and does not intend to
update these forward-looking statements.



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