Interim Management Statement for the Quarter ended 30 June 2012

• Group service revenue increased 0.6%*; excluding mobile termination rate (‘MTR’) cuts growth was 2.3%*

• Continued strong service revenue growth in emerging markets: Vodacom 5.7%*, India 16.2%* and Turkey 18.7%*

• Mixed trends in Europe: service revenue growth strong in Germany at 4.2%*; UK -0.8%* due to increased competition and a weaker economy; conditions in Italy (-7.7%*) and Spain (-10.0%*) remain challenging

• Verizon Wireless (‘VZW’) service revenue grew 8.2%* driven by data

• Group data revenue grew 17.1%* reflecting an increase in Europe smartphone penetration to 28.7%

• £0.9 billion of free cash flow after capital investment of £1.1 billion

• Good progress in strengthening our business: proposed acquisitions of Cable & Wireless Worldwide and TelstraClear; network sharing agreements in five markets

• Net debt reduced to £22.7 billion after receipt of final SoftBank proceeds (£1.5 billion) and £0.8 billion of share buybacks (£6.8 billion share buyback programmes almost complete)

• Full year outlook confirmed

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