Social Study The Economic Impact of BT in the United Kingdom. A report prepared for BT Regions by DTZ

Social Study 2009 The Economic Impact of BT in the United Kingdom A report prepared for BT Regions by DTZ

Foreword As Wales' largest communications services provider to the residential and business market BT plays a key role in the economic, business and community life of the nation. In BT we work closely with Government, public bodies, business and community organisations to develop solid strategic partnerships. Through this partnership approach we are uniquely positioned to share our knowledge, resources and capabilities and ensure that BT's activities match Wales' aspirations as effectively as possible, bringing solutions and investment that stimulate success and growthin local economies. Against a recent background of economic turmoil and contracting markets this report demonstrates the vital role that BT plays in the life and economic success of Wales. It highlights the financial impact of the purchasing power of the company and its employees, the detailed ongoing effects and economic impacts on the national, regional and sub regional economies as well as giving an insight into the wider social contribution of BT's programmes and activities. We all have a part to play in the success and sustainability of Wales plc and this report reinforces our vital role and ongoing commitment in helping our customers, stakeholders and employees alike thrive in this ever changing and challenging environment. Ann Beynon BT Director Wales October 2009 About DTZ DTZ is a leading global real estate advisor and consultancy firm. More than 10,000 staff advise and act for leading multi-national companies, major financial institutions, governments, developers and investors in 43 countries around the world. With offices in 148 cities, DTZ provides integrated services in corporate consulting, agency, brokerage, valuation, corporate finance, property management and research. DTZ Holdings plc is a publicly quoted company, listed on the London Stock Exchange since 1987. Website: http://www.dtz.com page 2

Contents 1. Introduction 4 2. An Overview of BT 5 2.1 Structural Changes 6 3. Study Approach 8 3.1 Economic Approach 8 3.2 National and Regional Impact 9 3.3 Sub-Regional (County-level) Impacts 10 4. The Economic Impact of BT in the United Kingdom 11 4.1 Economic Impacts 12 4.2 Wider Social Impacts 15 5.10 Wales 79 page 3

1 Introduction This study demonstrates the economic contribution of BT to the UK national and regional economies in terms of jobs, output and Gross Value Added (GVA) 1 supported. This covers BT s operations and the knock-on impacts as BT spends with suppliers and employees spend their incomes. Wider social contributions to communities are also demonstrated through BT s Corporate and Social Responsibility agenda. The economic impact study has been prepared by DTZ Consulting, working in partnership with BT to identify appropriate data, and with BT people to understand key local trends and projects. The aims of this study are to provide: A quantitative assessment to demonstrate the output, employment, income and value added through BT s operations in the UK; Demonstrated impacts at UK level and across the 9 English regions together with Scotland, Northern Ireland and Wales; Key statistics and impact at sub-regional level within each of these geographies as appropriate; and Qualitative analysis of the contribution that BT makes through local initiatives, investments and its corporate and social responsibility agenda. All calculations have been prepared with figures provided by BT. The procurement information presented is based on the financial year ending March 2009. Employee and income data are correct as at same date. All data are referenced to financial year 2008/09 unless otherwise stated. All impact calculations have been conducted in accordance with Government guidelines and the HM-Treasury s Green Book Guidance for appraisal and evaluation, and consistent with the ONS (Office for National Statistics) national accounts. The remainder of the report is laid out as follows: Section 2 provides a brief overview of BT s operations. Section 3 outlines the approach for impact modelling. Section 4 presents in the total impact of BT across the UK. Section 5 provides the economic results for the 9 English regions, Scotland, Wales and Northern Ireland, plus sub-regional summaries as appropriate. 1 Gross Value Added (GVA) measures the value of all goods and services produced in an economy and forms a common performance indicator used by the Government to measure economic performance. page 4

2 An Overview of BT This section provides a brief overview of BT and description of the key structural changes to have taken place over the past year 2. BT is structured around four customer-facing lines of business, with two additional internal support functional units. BT Retail, BT Wholesale and Openreach operate mainly in the UK, and are the largest communications services provider to the residential and business markets. BT Global Services operates in the UK and globally. BT Innovate & Design and BT Operate manage the BT network, IT and testing facilities, deploying and managing platforms, systems and processes that support BT products and services. Combined, these units have a total labour resource (TLR) of 147,000 people (includes 20,000 employees outside of the UK and 42,000 agency and contractors) and revenue of over 21 billion per annum. Internal Functions Customer Facing Teams BT Global Services BT Innovate & Design BT Retail BT Wholesale BT Operate Openreach 2 Further details available within the BT Group Plc Annual report 2009 http://www.btplc.com/sharesandperformance/annualreportandreview/ annualreportandreview.htm page 5

2.1 Structural Changes 2.1.1 People and Restructuring In order to transform the company during the current global financial downturn, BT has driven significant cost saving. In the past year BT has reduced the number of full-time employees by around 5,000. In addition to this the number of indirect employees working through agencies or third party contractors was reduced by around 10,000 giving a reduction of the total labour resources of some 15,000 employees. Further reductions of a similar level are anticipated in 2010. 2.1.2 Investment BT has continued to invest significantly during the economic downturn, continuing with core strategic programmes and new initiatives. Key investments include: Building future networks: In July 2008, BT announced plans to make the UK s biggest ever investment in a fibre-based super-fast broadband network. A total spend of 1.5bn was announced making fibre based services available to around 40 percent of homes and businesses by 2012. Super-fast broadband will run on BT s 21CN (21st Century Network) infrastructure. 21CN is a next generation global platform and has been at the heart of BT s transformation for some years. The new 21CN core network, a 5-year and multi billion pound investment programme, was completed in 2009. The network provides the basis for the most powerful, competitive and productive communications network in the world. In 2009 BT invested 1.1bn in R&D to support innovation. This covers everything from scientific research to the development of new products and services and comprised capitalised software development costs of 529m and R&D operating costs of 590m. BT also works with more than 30 universities around the world to support innovation. BT commits a minimum of 1 percent of pre-tax profits to activities that support society. In the financial year 2008/9 this amounted to a total of 25m, comprising time, cash and in-kind contributions, in the community. Of this amount, 2.3m was in the form of charitable donations. page 6

2.1.3 Implications for Impact Calculation These restructuring activities and high-value investments have a significant impact on BT s overall impact in the UK, and across all UK geographies. This can occur through a number of channels: Changing the value and location of procurement restructuring has changed the value of expenditure with suppliers, and in some cases switching contracts to alternative suppliers. The same level of investment in different regions will support a varying number of jobs depending on regional economic circumstances. Changing the composition of procurement BT s total spend in the regions and nations will vary according to the type of investment. In turn, this will affect the knock-on level of employment supported along the supply chain. The same level of investment in different sectors will support a varying number of jobs depending on regional economic circumstances. One-off capital investments will also contain a degree of temporary impacts recorded in the financial year, which will not continue to future years. Further detail on the methodology applied for calculating impact is provided in the following section. page 7

3 3.1 Study Approach Economic Approach The economic impact of BT s activities on national income and employment can be estimated by combining the following effects: Direct impact: persons employed directly by BT (including contractor employees) who receive wages and salaries; Indirect impact: income and employment created in businesses which supply the goods and services used by BT in its day to day activities; and Induced impact: further income and employment generated as wages created directly and indirectly are spent within the economy. BT Activities LEAKAGE Direct Impact BT Employees and their wages and salaries Output Impact Payments to suppliers for goods and services generates employment and incomes. Spending of direct and indirectly generated incomes generates further employment. LEAKAGE Total Impact These indirect and induced impacts are based on non-wage and salary expenditure of BT in the United Kingdom in support of its day-to-day operations. Some of the expenditure will be on the UK sourced goods and services and some will represent leakages from the economy i.e. payment of taxes and goods purchased from outside the United Kingdom. Indirect impacts are not restricted to the first round effect of purchases by BT. Suppliers to BT will purchase some of their inputs from other suppliers in the United Kingdom and so on, with leakages of expenditure at each stage in the process. People employed directly and indirectly will spend part of their incomes within the economy e.g. purchasing food, clothing, entertainment etc. which represents an additional source of employment. As with indirect income and employment creation, there are further leakages of expenditure from the local economy in the form of non-local purchases, savings and national taxes. page 8

3.2 National and Regional Impact The process by which BT s expenditure creates income for its suppliers and its suppliers suppliers can be estimated using Input-Output tables. Input-Output tables show the flows of expenditure which take place between sectors of the economy and allow the impact of a given level of expenditure on income and employment to be calculated. These are published by the Office for National Statistics at UK level, and the public sector in Scotland, Wales and Northern Ireland. For English regions, tables are published on an ad hoc basis by regional observatories, and thus may not be consistently up-to-date. DTZ have therefore adjusted the UK tables for the regions to account for local industrial structure, capacity and the higher level of leakages that result. The national (UK-level) impact has been calculated by aggregating the impacts across the 9 English regions, Northern Ireland, Scotland and Wales. The regional impacts have been calculated from BT s regional data on: Procurement expenditure this gives the Indirect impact of BT expenditure in each region. Wages and Salaries this gives the Induced impact as employees spend their incomes in the local economy. Modelling this data gives the total output impact of BT in each region i.e. the value of turnover that is captured in GDP statistics. The regional Input-Output tables can then be used to convert this impact into further jobs, income and GVA generated in supplier and consumer industries. Definition: Gross Value Added (GVA) measures the value of all goods and services produced in an economy and forms a common performance indicator used by the Government to measure economic performance. GVA combines wages and operating profits from companies and other organisations. Growing GVA can reflect improvements in workforce skills, productivity, R&D and innovation. The regional figures for BT show the value added directly through BT s services and additional value generated through BT s suppliers across the UK regions and nations. page 9

3.3 Sub-Regional Impacts The more local the impact assessment, and more specific the geography investigated, the less robust the model. This is because data sets are not available at a sufficiently local level to definitively map expenditure patterns. The balance of imports and leakages will differ significantly between areas, depending on the tendencies of locals. Sub regional, County and Local Authority level impacts have therefore been calculated by distributing the total regional impact according to the level of direct employment and procurement in each area. The nature of the raw procurement and employment data sets results in redistribution effects at the regional and sub-regional level. This is common to impact studies and is due to two main effects: The Headquarters (HQ) effect: national procurement contracts are often allocated to regions according to the suppliers HQ address. However, it may be that these services are actually provided from a series of regional depots. In this case, the impact of procurement expenditure is allocated to the HQ region, rather than the regional depot where activity is taking place. Thus, one region may be overestimated and another correspondingly under-estimated. Procurement expenditure with worker agencies and contractors was manually adjusted to account for this redistribution effect. Employee residence vs. workplace expenditure: employees will spend a proportion of their income at their place of work and place of residence. For commuters, the national average expenditure pattern has been applied according to their place of work. The overall national level results are not affected by these redistribution effects, as they balance across regions. All modelled figures presented in this report have been rounded to avoid spurious precision. Totals presented in tables therefore may not sum due to rounding. Benchmark information is based on comprehensive national sources where presented: Regional average income benchmarks are based on the ONS Annual Survey of Hours and Earnings for 2008. Employment benchmarks are taken from the ONS Annual Business Inquiry. GVA benchmarks are taken from the ONS regional accounts, Dec. 2008. page 10

4 The Economic Impact of BT in the United Kingdom This section presents the economic impact of BT across the UK. The results presented in this section are the national impact, built up from the impacts across each of the 9 England regions, Northern Ireland, Scotland and Wales. BT employs 86,308 employees in the UK directly equating to an FTE (full time equivalent) of 85,000, with a further 5,600 contractors. This gives total direct employment of 91,908. BT employees are split across the geographies as illustrated: Scotland BT UK Regions and Nations BT employees Work in Live in Region Region East of England 11,238 11,594 East Midlands 4,206 4,880 Northern Ireland North West North East Yorkshire and the Humber London 14,267 12,688 North East 3,837 3,821 North West 8,520 8,504 Northern Ireland 2,507 2,517 Wales West Midlands East Midlands East of England Scotland 7,220 7,338 South East 11,293 12,236 South West 6,736 6,459 Wales 3,238 3,900 South West London South East West Midlands 7,361 6,842 Yorkshire & the Humber 5,885 5,539 TOTAL 86,308 86,318 3 3 The difference between work-based and resident based employees comprises those who commute from outside the UK (predominantly Republic of Ireland) and those who may have a recorded main residence outside the UK. page 11

UK key points BT directly employs just over 86,300 people living and working in the UK and a further 5,700 contractors. The total wage and salary bill of these employees is more than 3 billion. BT spent a total of 9.6 billion with suppliers based in the UK in 2008/09. Including direct and knock-on effects, BT is estimated to support some 360,000 FTE jobs in the UK with a total value of 45 billion in 2008/09 which will be recognised in official GDP figures. GVA associated with these total BT impacts is 22 billion in 2008/09. This accounts for 1.8% of the UK s total GVA. BT s direct GVA alone (excluding knock-on impacts) accounts for 0.6% of the UK s total. 4.1 Economic Impacts 4.1.1 Direct Impact Figure 4.1 illustrates the profile of directly employed BT people according to core line of business. Openreach is the largest single line of business, accounting for over a third of all employees (over 32,000), followed by BT Retail. over 5,500 7% over 12,500 15% BT Innovate & Design over 32,000 37% over 2,000 3% over 18,500 21% over 11,000 13% BT Global Services BT Operate BT Retail BT Wholesale Group Operations Openreach over 3,500 4% Figure 4.1: Count and Share of BT People by Line of Business, 2008/09 page 12

Around 80% of BT employees in the UK work flexibly in some way. This includes 10,254 registered BT Homeworkers (12% of the direct regional workforce). BT believe that allowing people more time to work in their local areas enlivens local communities by keeping people active in supporting local businesses and in volunteer work in, for example, local schools and hospitals. 4.1.2 Procurement Impact (Indirect) BT spent a total of 9.6 billion ( 9,631 million) with UK-based suppliers in 2008/09. In turn, this will support employment and income in BT s immediate supplier industries, and their subsequent suppliers in turn to meet this derived demand. In total, this procurement expenditure supports over 200,000 jobs along the BT supply chain, with a total output value of 23 billion in 2008/09. Within this total, c. 12 billion is GVA, a common Government measure of value and productivity. Figure 4.2 summarises the annual indirect impacts generated by BT procurement expenditure in the UK. Indirect (supply chain) impacts Employment supported amongst suppliers Output generated amongst suppliers GVA (Gross Value Added) generated Income of supply chain employees Value 213,600 FTEs 23 billion 12 billion 6.9 billion Figure 4.2 Summary of Indirect Impacts in the UK 4.1.3 Impact of Employee Expenditure (Induced) BT employees and contractors based in the UK earned more than 3 billion in 2008/09. In turn, their expenditure supports further employment and output in consumer industries. Through this wage expenditure channel, BT supports a further 56,000 FTE jobs in the UK economy, with associated turnover of 5.5 billion in 2008/09. Figure 4.3 illustrates the wider induced employment and output supported through this employee expenditure. Induced (wage expenditure) impacts Employment supported in consumer industries Output generated amongst consumer industries GVA (Gross Value Added) generated Income of supported employees Value 56,200 FTEs 5.5 billion 2.9 billion 1.5 billion Figure 4.3 Summary of Induced Impacts in the UK page 13

4.1.4 Total Impact in the UK Combining BT s direct impact and employment with the indirect supply chain impact and induced wage expenditure impact gives the total impact of BT operations in the UK. In total, BT is supporting over 360,000 FTE positions in the UK economy through direct and knockon effects, with a value of 45 billion in 2008/09 (which will be captured in official GDP statistics). This is summarised in Figure 4.4: Indicator Impact type Employment Output GVA Income million million million Direct 91,966 16,700 7,100 3,000 Indirect 213,600 23,000 12,000 6,900 Induced 56,200 5,500 2,900 1,500 Total 362,000 45,200 22,000 11,400 Note: totals may not sum due to rounding of modelling indirect and induced impacts. Figure 4.4 Summary of Total Operating Impacts in the UK page 14

4.2 Wider Social Impacts The economic impact is one aspect of BT s total contribution in the UK. BT also provides significant support in the areas of business, local communities and non-profit organisations through direct funding and/or the provision of in-kind contributions. BT commits a minimum of 1 percent of pre-tax profits to activities that support society. In the financial year 2008/2009 this amounted to a total of 25m, comprising time, cash and in-kind contributions, in the community. Of this amount, 2.3m was in the form of charitable donations. Environmental responsibility / sustainability: BT s UK carbon footprint has fallen by 58% since 1997. The current carbon strategy is estimated to have prevented over 27,000 tonnes of CO 2 emissions in 2008/09. The target for 2020 is to reduce global carbon intensity by 80%. In 2009 BT was ranked top of the telecoms sector in the Dow Jones Sustainability Index for an 8th successive year. Education programme: Continued investment in the BT Apprentice Scheme is designed to help staff acquire new skills and meet the changing needs of customers during the current financial downturn. BT has been accredited by the Investors in People training standard and maintained this since 1998. Some 6000 schools have applied to BT for School Awards, with a value of 85,000 in 2008/09. Community schemes: Over 3000 employees volunteered to support schemes in 2008/9 across schools, charities and community organisations. Charity partners (receiving 2.3 million in 2008/09) included Childline, Comic Relief, the Gaza Appeal and the British Red Cross. BT and the Football Foundation invested 500k in the Communicating for Success Scheme, reducing digital exclusion in the UK. BT is the official communications services partner for the London 2012 Olympics and Paralympic games. This involves the provision and management of communications infrastructure and services required to deliver the 2012 Games. Largely through BT investment the UK has some of the highest broadband availability and take-up in the world. According to the National Statistics Omnibus Survey, it is estimated that 18.31 million UK households had Internet access in 2009 which represents 70% of households. This is an increase of 1.85 million households since 2008. page 15

BT has the most comprehensive fixed-line communications network with more than 128 million kilometres of copper wire and more than 11 million kilometres of optical fibre. Earlier this year BT announced plans to build a fibre based, super-fast broadband network, which will be available to around 40% of the UK s homes and businesses by 2012. BT has been at the forefront of flexible working for many years. Today, utilising the latest convergent technologies and a rich portfolio of products and services, BT has increased the efficiency and flexibility of their workforce, with over 80% of UK employees working flexibly in some way. This includes 10,254 homeworkers. BT s home working policies have resulted in a 31% increase in productivity, with savings of 69 million each year from reduced accommodation and overhead costs 4. Employee s commuting costs have been reduced by an estimated 1,800 years saving 12m litres of fuel and reducing CO 2 emissions by 97,000 tonnes 5. Supporting local businesses BT Local Business is a network of 50 independent local businesses spread across England, Wales and Scotland that are licensed to sell BT products and services. Each BT Local Business (BTLB) is itself a small business, so they understand the specific needs and issues faced by other small businesses in the area. In total the BT Local Businesses employ around 1100 people Driving connectivity: BT s high speed wireless broadband (Wi-Fi) estate is growing daily. Access has now been provided at half a million hotspots including coverage across 12 major UK city centres, residential hotspots provided by BT FON and independent commercial hotspots provided by BT Openzone via the Business Hub. High street brand offering BT Openzone include Caffe Nero, Starbucks, Hilton and Ramada Jarvis hotel chains, railways stations, marinas and airport lounges. 4 Internal BT Survey 5 June 2008 study, Bradford University page 16

5 BT in the UK Nations, Regions and Counties This section presents the total impacts and core statistics across the 9 English regions, Northern Ireland, Scotland and Wales, with additional breakdowns as appropriate in each area. These geographies are presented in alphabetical order as follows: 1. East of England 2. East Midlands 3. London 4. North East 5. North West 6. Northern Ireland 7. Scotland 8. South East 9. South West 10. Wales 11. West Midlands 12. Yorkshire & The Humber page 17

5.10 Wales Wales key points 3,900 BT employees live in Wales and 3,238 work in Wales. The total income of BT employees working in Wales is 94m. BT spent a total of 74 million with suppliers based in Wales last year. Including direct and knock-on effects, BT supports nearly 7,400 FTE jobs in Wales with a total value of 980 million in 2008/09 which will be recognised in official GDP figures. In employment terms, BT s impact is equivalent to, for example, Wales entire Meat Processing or Insurance Industry. GVA associated with these total BT impacts is 450 million in 2008/09. This accounts for 0.9% of total Welsh GVA. Wales page 79

5.10.1 Welsh Impact 5.10.1.1 Direct Impact BT directly employs a total of 3,238 people in Wales, with a further 182 employed as contractors. This gives a direct total of 3,420 employees. The total wages and salaries across these direct employees is 99 million per annum. Around 80% of BT employees in Wales work flexibly in some way. This includes 340 registered BT Homeworkers (9% of the direct Welsh workforce). BT believe that allowing people more time to work in their local areas enlivens local communities by keeping people active in supporting local businesses and in volunteer work in, for example, local schools and hospitals. 5.10.1.2 Procurement Impact BT spent a total of 74 million with suppliers based in Wales in 2008/09. In turn, this will support employment and income in BT s immediate supplier industries, and their subsequent suppliers in turn to meet this derived demand. Within this total, the majority was spent with providers of telecoms equipment and services, accounting for over a third of total procurement spend. The public sector, computing and IT services and motor vehicles were other key suppliers. Figure 5.10.1 summarises the top suppliers in Wales by value. Construction 2.5m Telecomms 1.2m Electronics 0.3m Business services 19m Public sector 18.4m Computing services 14.7m Figure 5.10.1 Top Supplier Sectors by Value of Expenditure page 80

Figure 5.10.2 summarises the annual indirect impacts generated by BT procurement expenditure with immediate suppliers and their subsequent suppliers based in Wales. Indirect (supply chain) impacts Employment supported amongst suppliers Output generated amongst suppliers GVA (Gross Value Added) generated Income of supply chain employees Value 2,200 FTEs 180 million 94 million 59 million Figure 5.10.2 Summary of Indirect Impacts in Wales 5.10.1.3 Impact of Employee Expenditure BT employees and contractors based in Wales earned 99 million in 2008/09. In turn, their expenditure supports further employment and output in consumer industries in Wales. Figure 5.10.3 illustrates the wider induced employment and output supported through this employee expenditure. Induced (wage expenditure) impacts Employment supported in consumer industries Output generated amongst consumer industries GVA (Gross Value Added) generated Income of supported employees Value 1,800 FTEs 170 million 90 million 50 million Figure 5.10.3 Summary of Induced Impacts in Wales 5.10.1.4 Total Impact in Wales Combining BT s direct impact and employment with the indirect supply chain impact and induced wage expenditure impact gives the total impact of BT operations in Wales. This is summarised in Figure 5.10.4: Indicator Impact type Employment Output GVA Income million million million Direct 3,420 620 260 99 Indirect 2,200 180 90 60 Induced 1,800 170 90 50 Total 7,500 980 450 210 Note: totals may not sum due to rounding of modelling indirect and induced impacts. Figure 5.10.4 Summary of Total Operating Impacts in Wales page 81

5.10.2 Sub-national impact Key statistics for the local authority areas within Wales are presented in Figure 5.10.5, based on a weighted distribution of the national level impact: Direct employment* Total impacts County/ Work in Resident Employment Output GVA Local Authority area in area million million Blaenau Gwent 4 39 20 2 1 Bridgend 53 153 790 70 35 Caerphilly 23 215 50 6 3 Cardiff 1,373 677 3,040 405 184 Carmarthenshire 90 187 170 23 10 Ceredigion 43 54 70 10 4 Conwy 137 129 260 37 16 Denbighshire 29 82 50 7 3 Flintshire 37 136 100 12 5 Gwynedd 204 171 350 51 23 Isle of Anglesey 6 86 20 2 1 Merthyr Tydfil 28 84 50 6 3 Monmouthshire 42 94 180 19 9 Neath Port Talbot 32 99 50 7 3 Newport 378 317 610 93 41 Pembrokeshire 48 90 80 11 5 Powys 102 200 170 25 11 Rhondda Cynon Taf 69 244 120 17 7 Swansea 459 410 1,010 134 61 Torfaen 19 110 50 6 3 Vale of Glamorgan 27 182 40 6 3 Wrexham 35 141 170 18 8 * direct employment excludes contractors Note: financial impacts are rounded to the nearest million and employment to the nearest 50, thus may not sum to regional total. Figure 5.10.5 Summary of sub national Impacts in Wales page 82

Case Study: North Wales For the purpose of this report North Wales is defined as including the counties of Isle of Anglesey, Conwy, Denbighshire, Flintshire, Gwynedd and Wrexham. BT s impact in North Wales is estimated to sustain: Nearly 1,000 jobs 130 million of annual output 58 million of additional GVA 5.10.3 Wider Impacts The earlier analysis highlighted the importance of BT to the Welsh economy in terms of employment. Although this is the most important impact, BT provides significant support in the areas of business, local communities, non-profit organisations through direct funding and/or the provision of in-kind contributions. BT commits a minimum of 1 percent of pre-tax profits to activities that support society. In the financial year 2008/2009 this amounted to a total of 1,225,000 in Wales comprising time, cash and in-kind contributions, in the community. BT s social programmes are focused to maximise its positive impact on society by working with key external stakeholders, such as central and local government and not-for-profit organisations. The Betterworld Campaign gives young people in the UK and around the world the skills they need to succeed in life, to improve their world and also to increase their communication and ICT skills. In Wales BT s community investment includes its own bespoke programme, as well as a share of BT s UK wide initiatives. BT Wales delivers programmes designed specifically for Welsh communities that take into account the education, political and cultural differences in the country. Much of this activity is focussed on education, skills and social & digital inclusion as well as climate change. Examples of this in action include BT working together with the Welsh Assembly Government supporting an initiative which will provide a number of apprenticeship placements with BT Openreach for Welsh children in care. The Seen & Heard Awards in Wales produced one national winner and one regional example of excellence winner The Welsh BT Primary School Teacher of the Year for 2009 was won by a teacher based in the Ysgol Y Lawnt School in Rhymney, Caerphilly. page 83

BT s contribution to charitable causes includes provision of a wide range of communication tools for telethons such as Comic Relief and Children in Need. BT's support helped the Telethon raise 100 million in the 2008/9 financial year, Children In Need raised 20.9million on the night and Red Nose Day raised more than 57.8million. As part of the BT Community Connections project local communities in Wales were awarded 109 multi media internet-ready PCs with a value of 127,700 in the last round (4) of the scheme. BT s digital inclusion campaign demonstrates how communications can help improve society. Initiatives such as Community broadband hubs a pilot project involving the Welsh Assembly Government, BT and Post Office Limited, aims to increase access to Broadband in rural and deprived areas of Wales. The first of these hubs have been installed at Newbridge-on-Wye Post Office and Llanddarog Post Office in Carmarthenshire. BT is committed to the reduction of carbon emissions and minimising the impact on the environment of its operations globally. In particular, BT contributes to initiatives that seek to address climate change. BT is a key supporter of the Business in the Community May Day annual Welsh summits. BT s ongoing strategy is to enable more BT people to get involved in helping the communities in which they live and work and during 2008-9 46 employees in the Wales who do voluntary work in their own time received BT Community champions Awards with a value of over 10,500. There are 13 volunteer clubs in Wales with 186 employees registered as BT volunteers and 45 employees registered as School Governors. BT s approach has been widely recognised through a number of national and global awards. In May 2009 BT received platinum plus recognition from Business In the Community (BiTC) for its impact on society. In the UK we have the most competitive communication market in the world. Largely through BT investment the UK now has some of the highest broadband availability and take-up in the world. Speeds are improving and BT continues to invest in fibre-based super-fast broadband. The use of broadband to access the internet has expanded considerably with 99% of homes and businesses in Wales now having access to broadband. The Office of National Statistics report 2009 shows households with internet access in Wales increasing from 57 to 68 percent of households from 2007 to 2009. page 84

By March 2011 it is estimated that up to 110 exchanges in Wales will have been enabled for ADSL2+, up to 750,000 potential end user lines enabled and up to 60% coverage in the region. From early 2010, substantial numbers of customers will have access to fibre-based, super-fast broadband via BT's network. Openreach will deploy fibre to the cabinet (FTTC) technology at exchanges across the UK. This will bring speeds of up to 40 Mb/s - and potentially 60 Mb/s - within reach of 1.5 million homes and businesses. A number of exchanges within Wales will be amongst the first locations to benefit from this initial deployment. BT provides high speed wireless broadband access at half a million hotspots including coverage across 12 major UK city centres. In Wales this includes a total of around 25,000 residential hotspots provided by BT FON and independent commercial hotspots provided by BT Openzone via the Business Hub. BT Local Business is a network of 50 independent local businesses spread across England, Wales and Scotland that are licensed to sell BT products and services. The four Welsh based BT Local Businesses provide communications advice and solutions to more than 41,000 local businesses and employ around 60 people. Research and Development As an innovative company and industry leader BT invested 1.1 billion in Research and Development, much of it with external companies in the communications development market. Whilst the bulk of this expenditure was focused on BT s advanced research and technology division at Adastral Park, Martlesham. BT has also sponsored research with Welsh based universities and companies. Culture and Heritage To reinforce its commitment to the Welsh language BT operates a bilingual policy and offers a wide range of Welsh Language services. To support this BT employees based in Wales have the opportunity to take work based learning opportunities - learning to speak Welsh through a scheme supported by the Communications Workers Union (CWU) and the Welsh Assembly Government. Further information about BT in Wales can be found at www.bt.com/btregions. page 85

Offices Worldwide The services described in this publication are subject to availability and may be modified from time to time. Services and equipment are provided subject to British Telecommunications plc s respective standard conditions of contract. Nothing in this publication forms any part of any contract. British Telecommunications plc 2009. Registered office: 81 Newgate Street, London EC1A 7AJ. Registered in England No: 1800000. Designed by Strata. page 99