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Full Year Results25 May 2006: 

Full Year Results 25 May 2006


This presentation contains forward-looking statements that are based on current expectations or beliefs, as well as assumptions about future events. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as anticipates, target, expect, estimate, intend, plan, goal, believe, will, may, should, would, could or other words of similar meaning. Undue reliance should not be placed on any such statements because, by their very nature, they are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results, and Cable andamp; Wireless’ plans and objectives, to differ materially from those expressed or implied in the forward-looking statements. There are several factors that could cause actual results to differ materially from those expressed or implied in forward-looking statements. Among the factors that could cause actual results to differ materially from those described in the forward-looking statements are changes in the global, political, economic, business, competitive, market and regulatory forces, future exchange and interest rates, changes in tax rates and future business combinations or dispositions. A summary of some of the potential risks faced by Cable andamp; Wireless is set out in the Company’s most recent Annual Report. Cable andamp; Wireless undertakes no obligation to revise or update any forward-looking statement contained within this presentation, regardless of whether those statements are affected as a result of new information, future events or otherwise.

Full Year Results25 May 2006: 

Full Year Results 25 May 2006

Richard Lapthorne: 

Richard Lapthorne Chairman

Cable & Wireless new Group structure: 

Cable andamp; Wireless new Group structure From 1 April 2006, creation of two self-contained operational units – International and UK Change to role of the corporate centre Three Group Managing Directors Tony Rice, Managing Director, Central and Finance Director Harris Jones, Managing Director, International John Pluthero, Managing Director, UK

Tony Rice: 

Tony Rice Group Managing Director, Central and Finance Director


Introduction Financial results for 2005/06 Increased dividend New organisation structure and philosophy Group structure now in place All about delivery and execution Create and realise value for shareholders Toolkit for delivery

Group financial headlines: 

Group financial headlines Revenue EBITDA1 Total operating profit1 Net cash flow before financing Cash and cash equivalents Earnings per share1 Share buy back cancelled £m 3,230 411 189 (649) (33)% (3)% 10% 1 Excluding exceptional items 2 Positive percentage represents improvement (1)% 14% 9% (44)% %2 1,127 %2 Y-o-Y change excl Bulldog Y-o-Y change incl Bulldog investment NM NM 5.2p 9% (40)% NM

Net cash flow before financing: 

Net cash flow before financing Interest received £107m 2005/06 versus £88m in 2004/05 Working capital increased - £(104)m Provisions decreased - £(156)m Acquisitions and disposals - £(484)m

Exceptional items: 

Exceptional items Exceptional charges: UK asset review - £237m Charges for restructuring - UK, International, Central - £41m Hurricane Ivan - £6m Exceptional credits Progress in resolving legacy Group issues (eg. US exit and Pender - £140m) Disposals - Mobile One, Sakhalin, Spain, Coventry College - £101m Hurricane insurance receipts - £6m Others - £30m Net Pandamp;L charge of £7m Net cash impact of exceptional items – £21m inflow

Pensions – UK scheme: 

Pensions – UK scheme Latest valuation at 31 March 2005 Main UK scheme now fully funded, on an ongoing basis, based on the March 2005 valuation Top-up payment of £98m on 31 March 2006 Latest mortality tables used Annual contribution of £13m IAS 19 deficit of £89m (main difference between valuations is the rate of return on assets)


Dividend Full year dividend of 4.5p per share; Final dividend - 3.1p Increase of 18% over 2004/05 full year 42% payout excluding Bulldog and exceptionals

Portfolio management approach: 

Portfolio management approach Two separate businesses with limited overlap Central as portfolio manager More autonomy for business units with their own Boards Managing shareholders’ capital for value creation and realisation Reserved powers at the centre Smaller central function with £27m saving in 2006/07 but £7m transferred to International Role of downsized central Monitor, support and incentivise stronger financial performance Group cash position Manage the Group’s treasury, tax and pensions Mandamp;A execution Group governance

Harris Jones: 

Harris Jones Group Managing Director, International

International financial headlines: 

Revenue increased 6% to £1,212m Mobile revenue increased 17% to £360m Broadband revenue increased 72% to £57m EBITDA up 6% to £417m Operating profit up 3% to £333m Operating cash flow at £245m International financial headlines 1 Constant currency 2Before exceptionals 3Net cash inflow before financing less disposal proceeds 1 2 2 3

What we are and where we operate: 

33 countries around the world Vanuatu, Fiji andamp; the Solomon Islands What we are and where we operate Macau Bahrain Afghanistan Tunisia andamp; Algeria Guernsey, Jersey andamp; Monaco Diego Garcia, Maldives andamp; the Seychelles Caribbean andamp; Bermuda The Falklands St. Helena andamp; Ascension Panama 24 Subsidiaries 9 Joint Ventures andamp; Associates

Liberalisation path: 

2000 2001 2002 2003 2004 2005 2006 Jamaica mobile andamp; internet 03/00 Macau mobile andamp; internet 03/01 Jamaica domestic fixed 09/01 Guernsey internet andamp; fixed 12/02 Panama fully liberalised 01/03 Guernsey mobile 04/03 Maldives internet 05/03 Anguilla internet 06/03 Barbados Mobile 07/03 Eastern Caribbean fully liberalised 04/02 Jamaica fully liberalised 03/02 Cayman mobile 02/04 Barbados domestic fixed 09/04 Anguilla fully liberalised 01/05 Trinidad andamp; Tobago fully liberalised 12/05 Cayman fully liberalised 04/04 Anguilla mobile 07/04 Maldives mobile 08/05 Barbados fully liberalised 02/05 Turks andamp; Caicos fully liberalised 01/06 Liberalisation path Bahrain mobile 03/03 Bahrain fixed 07/04

Solid recovery: 

Solid recovery 0 100 200 300 400 500 600 2001/02 2002/03 2003/04 2004/05 2005/06 EBITDA, NCFbF £m 1,000 1,050 1,100 1,150 1,200 1,250 1,300 1,350 1,400 Revenue £m Net cash flow before financing EBITDA Revenue Source: CWI management accounts at actual rates

Commitments delivered: 

Commitments delivered Increased mobile market growth Broadband penetration model Exploited fixed line network assets Leveraged operational scale Cultural transformation

Mobile performance: 

Mobile performance Leader in 18 out of 22 markets Effective defence in newly liberalised markets Anticipate launches in Jersey,BVI and Isle of Man 22% 22% 17% 25% Customers Revenues 0 0.5 1.0 1.5 2.0 2.5 3.0 2003/04 2004/05 2005/06 0 50 100 150 200 250 300 350 400 2003/04 2004/05 2005/06 £m million

Broadband performance: 

97% Customers Broadband performance 58% 72% Revenues Leader in 21 out of 21 markets 9 markets exceed UK/US penetration rate Launched VoIP in 8 of our broadband markets 701% 0 10 20 30 40 50 60 2003/04 2004/05 2005/06 0 50 100 150 200 250 300 2003/04 2004/05 2005/06 £m 000s

Commitments delivered: 

Increased mobile market share growth Broadband penetration model Exploited fixed line network assets Leveraged operational scale Cultural transformation Commitments delivered

Cash repatriation: 

Subsidiary cash generated2 Candamp;W share of cash generated3 Repatriation to Candamp;W Group Cash repatriation 2005/06 £m 127 117 92% 31 148 1All numbers at actual exchange rates 2Net cash flow after external financing 3Candamp;W share of net cash flow after external financing Repatriation efficiency Dividends received from joint ventures andamp; associates Total operational cash repatriated 1 205

Priorities for 2006/07: 

Priorities for 2006/07 Mobile market share leadership through best customer experience Continue aggressive broadband penetration model Leverage global scale to improve efficiency of opex and capex Cash repatriation at 100% of operating cash flows Ongoing cultural change Investor update in September 2006

John Pluthero: 

John Pluthero Group Managing Director, UK

Bulldog 2005/06 financial performance: 

Bulldog 2005/06 financial performance 2005/06 Revenue Outpayments and network costs Staff costs Other costs Total operating costs EBITDA Net cashflow before financing 33 (66) (28) (44) (138) (105) (163) 2004/05 11 (13) (12) (14) (39) (28) (57) £m £m

Bulldog progress since November 2005: 

1 LLU customers represent customers on our unbundled products as at period end and does not include customers on BT’s wholesale product 2 Average revenue per residential LLU customer. Calculated from the monthly bill runs Bulldog progress since November 2005 Mar 06 Revenue Residential ARPU 2 Service £5,119k 112k £36 Nov 05 £3,995k 64k £35 Change £1,124k 48k £1 Business 6k 5k 1k LLU customers 1 Total 118k 69k 49k Orders provided on time (%) 88% 77% 11% Order to delivery time (days) 14 20 6 Percentage of faults resolved andlt; 5 days andgt;90% 67% andgt;23%

Greater UK: 2005/06 financial performance: 

1 Candamp;W includes UK, Europe, US and Asia excluding intercompany elimination 2 Energis results are post acquisition excluding intercompany elimination and are aligned with Candamp;W accounting policies 3 Total includes £17m elimination of intercompany revenues and direct costs Greater UK: 2005/06 financial performance Note: % represents percentage of total revenue Note: excludes Bulldog Revenue Outpayments and network costs Staff costs Other costs Total operating costs EBITDA 1,779 (1,245) (263) (157) (1,665) 114 Carrier Services (Retail) 969 810 100% 70% 15% 9% 94% 6% 266 (193) (27) (11) (231) 35 111 155 100% 73% 10% 4% 87% 13% 2,028 (1,421) (290) (168) (1,879) 149 1,063 965 100% 70% 14% 8% 93% 7% Candamp;W UK 1 Energis 2 Total 3 £m % £m % £m %

Year on year performance: churn, erosion and bid costs: 

1 Candamp;W Services includes UK, Europe, US and Asia 2 Management estimate – ratio of in year growth revenue to sales FTE Year on year performance: churn, erosion and bid costs Churn and erosion Candamp;W Services (Retail) 1 Energis Services (Retail) 2005/06 810 385 2004/05 935 318 Change (125) 67 £m £m £m 0.43 0.59 0.28 0.38 % 21% (13%) Bid productivity 2 Candamp;W Services (Retail) 1 Energis Services (Retail)

Greater UK: 2005/06 cashflow: 

Greater UK: 2005/06 cashflow Note: Excludes Bulldog 2005/06 EBITDA 2005/06 Operational releases Exceptionals, movement in provisions and other movements Capital expenditure Pension top-up 2005/06 Cash outflow before financing, acquisitions and disposals Customer £59m Infrastructure £41m NGN £59m Sustain £39m Transformation £23m (76) (59) (221) £m (97) (304) 149

Greater UK – the short term: 

Greater UK – the short term Note: excludes Bulldog 2005/06 EBITDA Assumed churn and erosion In year growth Subtotal 2006/07 expected EBITDA Margin impact of change of business scope Indicative variance in operational releases Actual churn and erosion Additional impact of full year Energis Net incremental cost savings 58 85 (98) (80) 86 (20) (35) - (45) £m 135 - 145 149 200

Future UK – the medium term: 

Future UK – the medium term Exceptional cost of execution over the next 3 years Headcount reduction £ 60m Property £ 87m Total £147m Of which 2005/06 incurred cost is £ 21m Annualised reduction in operating cost versus Nov 05 (opex only) Target at time of acquisition by year 2 £ 55m per annum Expected by end of year 3 c. £150m per annum

Measuring execution: success to date: 

Measuring execution: success to date Nov 05 Mar 06 Mar 06 Actual Target Actual Customers 30k 8k Termination letters sent 21k Opex saving annualised andgt;£40m £53m andgt;£3.3m £4.4m Headcount 6,441 6,091 5,614 (350) (827) Service Reduction in monthly run rate from Nov 05 Net headcount reduction from Nov 05 Actual headcount number 1 Orders provisioned on time 1 Headcount relates to the total UK business headcount (excluding Bulldog) and includes contractors working full-time on capital projects 2 Relates to January 06. This is the earliest reliable management information available 78% NA 93% 2

Measuring execution: H1 targets: 

Measuring execution: H1 targets 2005/06 2006/07 Mar 06 Sep 06 Actual H1 Target Customer Strategy 21k 18k Operating model £4.4m £5m 5,614 5,200 LLU capability 411 800 number of customers monthly opex run-rate reduction from Nov 05 actual headcount number (1) number of exchanges unbundled 1 Headcount relates to the total UK business headcount (excluding Bulldog) and includes contractors working full-time on capital projects

Future UK – the long term : 

Future UK – the long term Execution is on track Greater visibility of longer-term value opportunities £150m target opex saving represents 7% margin pts for £2bn business Fixed to mobile convergence – licence for 1.7GHz spectrum at the right price Appreciate the support

Tony Rice: 

Tony Rice Group Managing Director, Central and Finance Director

In conclusion: 

In conclusion 2005/06 performance is broadly in line with expectations We now have to look to the future We have a new Group structure, designed to drive performance We have the necessary building blocks It’s all down to execution

Full Year Results25 May 2006: 

Full Year Results 25 May 2006

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