BT Group plc
2015 Annual General Meeting
15 July 2015
BT Group plc
Sir Michael Rake, Chairman
Investing for growth
 Our investments will help us deliver our goal of sustainable, profitable revenue growth
 Our investment in fibre broadband is transforming the UK
– Rollout is on budget and ahead of schedule
– We will take the UK from ‘superfast’ to ‘ultrafast’
 BT Sport
– Extended our FA Premier League content
– Exclusive UEFA Champions League and UEFA Europa League from
this summer on
 £12.5bn acquisition of EE
– Approved by shareholders
– Awaiting approval from Competition and Markets Authority
© British Telecommunications plc
Delivering returns for our shareholders
Dividend per share
Outlook
10.9p
9.5p
6.9p
2009/10
+7%
7.4p
2010/11
8.3p
+14%
12.4p
+10-15%
+15%
+14%
+12%
2011/12
2012/13
2013/14
2014/15
2015/16
8.5p proposed final dividend, up 13%, giving a full year dividend of 12.4p, up 14%
© British Telecommunications plc
Share price performance
Since last AGM1
Update
these
from last year?...
Last
3 financial
years1
40%
140%
123%
35%
120%
29%
30%
100%
25%
20%
20%
15%
80%
60%
10%
40%
5%
0%
FTSE
1 Total
28%
20%
0%
-5%
69%
0%
Sector
Shareholder Return which includes dividends; to 30 June 2015
© British Telecommunications plc
BT
FTSE
Sector
BT
Our purpose: to use the power of communications to
make a better world
We care about our customers’
experience. Always.
We bring the benefits of a
connected society to everyone.
We support our communities
through our people and technology.
 We are taking a more inclusive approach to growth
– Our products and services will help 10m people overcome social disadvantage by 2020
 Our industry can help the world live within its resources
– Our products and services are helping customers reduce their carbon impact
 Our people want to work for a company that has a deep sense of purpose
–
–
–
–
Our people and technology generated over £83m for good causes this year
More than 1 in 4 BT people volunteered time
MyDonate is the only online giving platform that is both non profit and takes no commission
We launched a new ambition to help 5m children receive better teaching in computing and
tech skills by 2020
© British Telecommunications plc
Financial objectives
Deliver sustainable, profitable revenue growth
Grow EBITDA
Grow free cash flow
Invest in
business
© British Telecommunications plc
Reduce
net debt
Support pension
fund
Pay progressive
dividends
BT Group plc
Gavin Patterson, Chief Executive
Overview
 A ground-breaking year for BT
 Strong financial discipline is helping us fund strategic investments
 Key strategic decisions made
– Planned acquisition of EE
– New FA Premier League rights
– Ultrafast broadband investment
© British Telecommunications plc
FY 2014/15 group results1
Revenue
Profit before tax
EPS
Free cash flow3
1 before
specific items
change in underlying revenue excluding transit
3 before specific items, pension deficit payments and the cash tax benefit of pension deficit payments
2 year-on-year
© British Telecommunications plc
YoY change
£17,851m
(0.4)%2
£3,172m
12%
31.5p
12%
£2,830m
16%
Our purpose, goal, strategy and culture
Our purpose
Our goal
To use the power of communications to make a better world
A growing BT: to deliver sustainable profitable revenue growth
Broaden and deepen our customer relationships
Our strategy
Deliver superior
customer service
Fibre
Our culture
© British Telecommunications plc
TV and
content
Transform
our costs
Mobility
and
future voice
Invest for
growth
UK business
markets
A healthy organisation
Leading
global
companies
Deliver superior customer service
Achieved so far
-25%
 Consumer complaints down >25%
-11%
 Business complaints down 11%
Future plans
Acting on insight
–
Keeping customers connected
–
60
 All 60 Ofcom minimum service levels
exceeded by Openreach
+3,000
 2,500 new engineers and >500 new
contact centre agents recruited
Measuring customer interactions on and offline,
allowing prompt intervention
Targeted network maintenance to reduce faults
Creating great systems and tools
–
Easy-to-use interfaces for our contact centre
advisors and customers, with engineer tracking
Working end-to-end
+25%
+4.7%
 Speed of delivery of main Global Services
products improved by 25%
 ‘Right First Time’ improvement across BT
© British Telecommunications plc
–
All lines of business contributed
–
Improving customer and supplier processes and
interactions
Supporting our people
–
New training to encourage ownership and
accountability
Customer service and cost transformation work together
 Legacy copper cabinets
–
Typically have high fault rates
© British Telecommunications plc
 Next generation copper cabinets
–
–
–
–
Will save c.35,000 faults in 2015/16
Will reduce installation time
Use fewer components, and
Cost less
Cost transformation
6-year cost base1 reduction
£1,471m
Capex
£3,088m
£1,016m
£949m
£1,308m
£132m
£611m
Opex
£16,305m
Capex
£2,326m
Opex
£11,580m
2008/9
© British Telecommunications plc
2009/10
1
2010/11
2011/12
2012/13
2013/14
2014/15
opex is before specific items, depreciation & amortisation. Capex is before purchase of telecommunications licences. 2008/9 opex estimated for
impact of historic Other Operating Income restatement
2014/15
Invest for growth – Fibre
Fibre take-up
 Rollout on budget and ahead of schedule
 >22m premises passed
Over three-quarters of the UK
Building in hard-to-reach areas
 c.4.2m now connected
–
–
Up >50%, 19% of those passed
1.2m external fibre customers, more than
doubled YoY
 Ultrafast trials starting
 Ten-year vision of up to 500Mbps across
most of the UK
–
Premium 1Gbps fibre broadband service
for high-demand customers
© British Telecommunications plc
19%
18%
16%
% of premises passed
–
–
20%
14%
12%
10%
8%
6%
4%
2%
0%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2012/13
2013/14
2014/15
Invest for growth – TV and content
BT TV
New set-top boxes
 1.14m BT TV customers, up 14% YoY
 New services and capabilities introduced
in year
Without recording
With recording
New content
Coming in September
– Extra Box, our multi-room service
– Buy-to-Keep movies and box sets
– TV Everywhere, enabling customers
to watch on multiple devices
– Sky Sports 1&2 on YouView
© British Telecommunications plc
Invest for growth – TV and content
BT Sport
Wide football portfolio
 Continued growth
–
Expected number of matches per year FA Premier League
clubs will be featured on BT Sport1
3.3m direct customers, 5.2m including wholesale
>115
 Encouraging viewing figures
–
Average daily audience up 15% YoY
–
FA Premier League viewing up 10% YoY
–
26 matches last season peaked >1m viewers
c.60
54
 An exciting future, with key content secured
–
FA Premier League football secured until 2019 –
doubling the number of matches
–
Exclusive UEFA Champions League and UEFA Europa
League from the summer – free to BT TV customers
–
Aviva Premiership Rugby extended until 2021
© British Telecommunications plc
1
16
c.15
38
42
Current
rights
From
2016/17
Based on number of times FA Premier League clubs have appeared, averaged
over the past three UEFA Champions League & UEFA Europa League seasons
Invest for growth – Mobility and future voice
Launched this year
EE acquisition
 Business
 Creating the UK's leading converged
communications provider
– New 4G mobile plans
–
Selling top 20 most popular handsets
–
A true UK ‘digital champion’
– BT One Phone
 Approved by shareholders in April
 Consumer
–
– Three ‘SIM-only’ deals offering:
From £5
per month
–
4G plus unlimited access to >5m
BT Wi-fi hotspots
–
Free BT Sport on the App
–
Family-friendly features like
spending caps
– >100,000 customers already
 Good for competition, investment and innovation
 Consumers and businesses will benefit from:
–
–
© British Telecommunications plc
Awaiting approval from Competition and Markets
Authority (expected by 31 March 2016)
The best of fibre broadband and wi-fi (from BT)
and the best 4G connectivity (from EE)
New services and bundles that offer great value
for money
Invest for growth – UK business markets
From sole traders to UK corporates
 Building on strength in connectivity
to underpin customer relationships
–
–
Investment
3 key products
in VoIP
launched
portfolio
1
2
Strong growth in business fibre – base up c.60% YoY
Data & networking seeing accelerating growth
 Developing strong hosted voice products
to attract new customers and reduce churn
 Developing more bundled products
to increase cross-selling, helped by system and sales
organisation improvements
3
1
 Continued investment in IT services
–
Focused on higher-margin managed services
© British Telecommunications plc
2
3
Multiple numbers
to one phone
Invest for growth – Leading global companies
 Serving c.6,500 large corporate and public sector
customers in >170 countries
–
Consolidated our position as a global leader for
managed networked IT services
 New products and services launched
–
Cyber security services - BT Assure Threat Defence
–
High-quality conferencing services
 9% revenue increase in high-growth regions
–
New cloud-based unified comms services in AMEA
–
New cloud-enabled data centres in Argentina,
Colombia and South Africa
 Targeted investment in our network
© British Telecommunications plc
In conclusion: a strong platform for growth
 We’ve delivered on the numbers – particularly cash flow
 An improving picture on customer service
 Good progress on cost transformation
 We are in a position to invest for the future
 EE acquisition will help us become the UK’s leading communications provider
© British Telecommunications plc
BT Group plc
2015 AGM
15 July 2015
For & Discretion
Res No.
Description
Against
Vote Withheld
Overall
Total
%
Total
%
Total
%
Total
12
Re-elect Jasmine Whitbread
5,168,220,498
99.30%
25,193,408
0.48%
11,024,871
0.21%
5,204,438,777
13
Elect IsabeI Hudson
5,187,593,388
99.68%
5,454,257
0.10%
11,385,472
0.22%
5,204,433,117
14
Reappointment of auditors
4,901,099,731
94.17%
196,006,184
3.77%
107,336,746
2.06%
5,204,442,661
15
Remuneration of auditors
5,001,459,863
96.10%
94,954,477
1.82%
108,030,615
2.08%
5,204,444,955
16
Authority to allot shares
4,883,621,911
93.84%
298,203,216
5.73%
22,623,155
0.43%
5,204,448,282
17
Authority to allot shares for cash*
5,150,424,040
98.96%
17,056,984
0.33%
36,965,190
0.71%
5,204,446,214
18
Authority to purchase own shares*
5,179,841,032
99.53%
12,298,289
0.24%
12,298,880
0.24%
5,204,438,201
19
Articles of Association*
5,174,349,999
99.42%
16,225,282
0.31%
13,852,680
0.27%
5,204,427,961
20
14 days’ notice of meetings*
4,753,408,788
91.33%
437,303,705
8.40%
13,738,468
0.26%
5,204,450,961
21
Authority for political donations
5,071,062,456
97.44%
117,694,173
2.26%
15,673,058
0.30%
5,204,429,687
* Special Resolutions
Resolution
Description
1
Reports and accounts
2
Remuneration report
3
Final Dividend
4-12
Re-election of directors
13
Elect Isabel Hudson
14
Reappointment of auditors
15
Remuneration of auditors
16
Authority to allot shares
17
Authority to allot shares for cash*
18
Authority to purchase own shares*
19
Articles of Association*
20
14 days’ notice of meetings*
21
Authority for political donations
* Special Resolutions
Poll on all Resolutions
Using your Admission Card/Proxy Card:
• If voting all shares “for”, place a cross (X) in “For” box
• If voting all shares “against”, place a cross (X) in “Against” box
• If withholding vote, place (X) in “Vote withheld” box
• If splitting vote, indicate the number of shares voting “for” “against” and “Vote withheld”
• Please sign the card
• Place completed card in ballot box as you leave
• Please ask a marshal if you have any questions
For & Discretion
Res No.
Description
Against
Vote Withheld
Overall
Total
%
Total
%
Total
%
Total
12
Re-elect Jasmine Whitbread
5,168,220,498
99.30%
25,193,408
0.48%
11,024,871
0.21%
5,204,438,777
13
Elect IsabeI Hudson
5,187,593,388
99.68%
5,454,257
0.10%
11,385,472
0.22%
5,204,433,117
14
Reappointment of auditors
4,901,099,731
94.17%
196,006,184
3.77%
107,336,746
2.06%
5,204,442,661
15
Remuneration of auditors
5,001,459,863
96.10%
94,954,477
1.82%
108,030,615
2.08%
5,204,444,955
16
Authority to allot shares
4,883,621,911
93.84%
298,203,216
5.73%
22,623,155
0.43%
5,204,448,282
17
Authority to allot shares for cash*
5,150,424,040
98.96%
17,056,984
0.33%
36,965,190
0.71%
5,204,446,214
18
Authority to purchase own shares*
5,179,841,032
99.53%
12,298,289
0.24%
12,298,880
0.24%
5,204,438,201
19
Articles of Association*
5,174,349,999
99.42%
16,225,282
0.31%
13,852,680
0.27%
5,204,427,961
20
14 days’ notice of meetings*
4,753,408,788
91.33%
437,303,705
8.40%
13,738,468
0.26%
5,204,450,961
21
Authority for political donations
5,071,062,456
97.44%
117,694,173
2.26%
15,673,058
0.30%
5,204,429,687
* Special Resolutions
Poll on all Resolutions
Using your Admission Card/Proxy Card:
• If voting all shares “for”, place a cross (X) in “For” box
• If voting all shares “against”, place a cross (X) in “Against” box
• If withholding vote, place (X) in “Vote withheld” box
• If splitting vote, indicate the number of shares voting “for” “against” and “Vote withheld”
• Please sign the card
• Place completed card in ballot box as you leave
• Please ask a marshal if you have any questions
Poll on all Resolutions
Using your Admission Card/Proxy Card:
• If voting all shares “for”, place a cross (X) in “For” box
• If voting all shares “against”, place a cross (X) in “Against” box
• If withholding vote, place (X) in “Vote withheld” box
• If splitting vote, indicate the number of shares voting “for” “against” and “Vote withheld”
• Please sign the card
• Place completed card in ballot box as you leave
• Please ask a marshal if you have any questions
Poll on all Resolutions
Using your Admission Card/Proxy Card:
• If voting all shares “for”, place a cross (X) in “For” box
• If voting all shares “against”, place a cross (X) in “Against” box
• If withholding vote, place (X) in “Vote withheld” box
• If splitting vote, indicate the number of shares voting “for” “against” and “Vote withheld”
• Please sign the card
• Place completed card in ballot box as you leave
• Please ask a marshal if you have any questions