Turnover grew 13.3 per cent on a pro forma basis to £1,062 million for the quarter Improvement in underlying EBITDA accelerated

Total active customer base was 16.78 million at September 30, 2001

Data as a percentage of service revenues was 10.7 per cent for the month of September and 9.9 per cent for the six months ended September 30, 2001

BT Cellnet service revenues grew 11.0 per cent to £614 million for the quarter, with a continuing reduction in post-pay churn

Viag Interkom's turnover increased 32 per cent on a pro forma basis to £221 million for the quarter, with EBITDA losses more than halved

Telfort's customer base grew to 1.3 million at September 30, 2001 with 376,000 added from the Postbank agreement

Digifone's customer base grew by 11 per cent to 1.1 million with the EBITDA margin in the quarter at 32 per cent

Genie WAP page impressions grew by 50 per cent over the quarter to an average of 150 million per month

Demerger and transformation update

At the meetings held on October 23, 2001, BT shareholders voted in favour of the scheme of arrangement and demerger of mmO2 to create two new listed companies and the BT Group reduction of capital. The scheme of arrangement and reduction of capital are to be considered by the High Court in the coming days and, if approved, the demerger is expected to become effective on November 19 and the reduction of capital on November 21. Dealings in BT Group and mmO2 shares will commence at 8.00 am on November 19 when the two companies will be entirely separate. BT shareholders just before the demerger will receive one BT Group plc share and one mmO2 share for each existing BT share held. It is expected that share certificates in the two new companies will be despatched to shareholders by November 30. The old BT share certificates will cease to have any value at the date of the demerger.

The demerger is the latest in the series of transactions undertaken in the last six months designed to transform the group and reduce its debt. During this period, we have successfully raised £5.9 billion through the rights issue which closed in June, sold our Japanese investments for £3.7 billion, sold the Yell directories business for approximately £2 billion and completed the sale of other investments for a total of £1.5 billion. We have announced the unwinding of the Concert joint venture and the exit from AT&T Canada.

Additionally, we have announced that we have decided that it is not appropriate at this time to pursue the legal separation of the BT Group's retail and wholesale businesses.

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