February 2010

TalkTalk Group Investor Presentation

Listing •  TalkTalkTelecom Group Plc (TalkTalk) : LSE Primary listing •  Carphone Warehouse Group Plc (CPW) : LSE Secondary listing

Structure

•  100% demerger •  No capital raising by either TalkTalk or CPW •  For every 2 existing CPW shares:

−  2 shares in TalkTalk −  1 share in new CPW

Time Table

•  Fri. 29 January 2010 : Prospectus published •  Wed. 24 February 2010 : Shareholder meeting •  Tue. 23 March 2010 : Last day of dealing in CPW shares •  Mon. 29 March 2010 : Admission of TalkTalk and new CPW shares

Joint sponsors •  Credit Suisse Securities Europe •  UBS Investment Bank

Overview of demerger

TalkTalk board & management

Chairman: Charles Dunstone Founded CPW in 1989 Took CPW into Telecoms in 2002

CEO: Dido Harding Joining March 2010 (from J Sainsbury)

CFO: Amy Stirling Joined CPW in 2000

Commercial: David Goldie Joined CPW with Opal in 2002

Non-Execs: Roger Taylor, Deputy Chairman John Gildersleeve John Allwood Brent Hoberman Jessica Burley

TalkTalk business overview

Leading UK broadband & voice provider:

•  Leading Internet Service Provider

•  High-profile TalkTalk brand

•  Simple, flexible broadband & voice product offerings, value-for-money tariffs

•  Largest Next Generation Network “NGN”

•  Significant presence in the business market

•  “One company” integration benefits

•  Delivered strong EBITDA and cash flow growth

Key numbers: Broadband •  4.15 million customers •  23% market share •  72% on own network

Non-broadband •  1.1 million customers

Business-to-business •  160,000 SME sites served

2009/10 H1 Financials: Revenue £789 million Incl. Business £158 million EBITDA £107 million Op. FCF £ 75 million

TalkTalk investment summary

Execu&ng strategy to con&nue strong cash‐flow delivery: 

 Maintain & grow broadband market share 

 Drive customer ARPU 

 Grow data services in the business market 

 Exploit scale & capabili@es of own network 

 Deliver Tiscali acquisi@on synergies  

 Strong capex control 

Progressive dividend policy 

Business Strengths

Leading UK ISP

4.155 million TalkTalk

customers

High profile TalkTalk brand

Broadband customer propositions

Builds

Peak International Mobile

Security Off-Peak

Largest “Next Generation Network”

4155

3009

0

500

1000

1500

2000

2500

3000

3500

4000

4500

Q307 Q308 Q309 Q310

Customers on NGN

Broadband customer base

Core Network 800Gb 400Gb 10Gb

Collector Nodes Exchanges

Largest “Next Generation Network”

Core

2000 exchanges fully unbundled : • MPF : voice & data • SMPF : data • Ethernet : B2B

Access network (open - regulated)

Backhaul

1Gb – 10Gb circuits

UK’s largest all-IP enabled network

  85% pop. Coverage   Services capability   Scalable backhaul

Street Cabinet

PSTN

WEB

Business market presence

•  Provider of fixed and mobile, voice and data services for the SME market

•  Generated £158 million revenue in 1H 2009/10

•  Services mainly branded “Opal” - estimated 10% share of fragmented market

•  Recognised for excellent customer service

Opal “Connect” •  Direct-to-market - broadband/voice access and services •  160,000 SME sites served

Opal “Consult” •  Direct-to-market - diverse, bespoke voice/data solutions •  Direct sales teams and product support, targeting mid-market

Opal “Partner” •  White-label, wholesale products to 500+ business resellers •  Recent launch of wholesale Ethernet services on NGN

Integration – “one company”

“ONE” Synergy opportunity End of FY2010

Exchange infrastructure •  Optimise equipment within each exchange •  Accelerate customer migration onto LLU network On plan

Backhaul infrastructure •  Establish extensive & efficient infrastructure •  Targeting March 2011 completion On plan

Billing and CRM platforms •  Migrate residential customers onto “Trio” billing platform and single CRM platform On plan

Back office •  One London head office for TalkTalk, AOL & Tiscali Completed

Brand •  Marketing focus on TalkTalk brand only •  (AOL loyalty brand retained)

Completed

•  On track to deliver £40‐£50 million annual synergy benefits by end FY 2011 

•  Crea@ng efficient opera@ng plaSorm: 

Strong EBITDA and cash-flow growth

* Pro-Forma TalkTalk Group ** Guidance for FY 2010

Driving growth

Broadband market

Source : Ofcom Telecommunications Market Data (2006-2009), thereafter Ovum forecasts 2009 and Office of National Statistics

•  More than 1.0 million new connections forecast in 2 years

Increasing ARPU

“Boosts” drive ARPU growth

21.20

23.80

15.00

16.00

17.00

18.00

19.00

20.00

21.00

22.00

23.00

24.00

25.00

Q1 08 FY07/08 Q3 09 Q1 10 Q3 10

Broadband ARPU £/month

Pipeline of new services

Security & Support 

Performance & control 

Corporate opportunity

•  Exploit SME market’s migra@on to IP‐based services and growth in data traffic  

•  Drive sales of products/services built on Group’s NGN •  Business‐grade ADSL, wide‐area Ethernet •  Leverage own network to grow share of SME market/expand margins 

Large HQ Data Centre

Large office

Mid-sized office

Small office

Volume of connections Volume of connections

Ethernet

Leased

ADSL

Ethernet

Leased

ADSL

Market evolving :

Scalable network

43 64

96

144

0

20

40

60

80

100

120

140

160

09/10 10/11 11/12 12/13

Ave.

peak b

an

dw

idth

per

cust

om

er

Network delivers sustainable compe@@ve advantage 

•    Customer bandwidth consump@on     expected to grow substan@ally by 2013 

LLU £1.50

IPSC £14.00 •  Off‐net BTW IP Stream (IPSC) charged on 

basis of bandwidth 

•  TalkTalk unbundled network (LLU) scaled to manage expected growth  

50% CAGR

Future products & services

IP-TV •  Member of proposed “Project Canvas”:

•  Partners :

•  Establishing common standards

•  Building open, internet-connected TV platform

•  Acquired Tiscali IP-TV service

•  re-branded TalkTalk

•  insight into technology & business models

MVNO •  Simple, value-for-money voice and data propositions

Fibre opportunity

Market developments

•  Competition Commission appeal - 2009 LLU/MPF price rises

•  Digital Britain

•  Illegal file-sharing – obligations on ISP’s

•  50p phone tax

•  Next Generation Access - fibre

Current market environment

•  Range of possible wholesale providers

Virgin Media • Fibre/cable passes 50% of UK homes • Serves 3.77 million broadband customers

BT Openreach • Fibre build-out started •  FTTC planned to 30% cabinets by 2012 •  FTTH planned to 10% homes by 2012

Local developments • Significant local fibre projects under way

BT Fibre network impact

Copper street

cabinet

Fibre street

cabinet “FTTC”

“FTTH”

Core Backhaul

TalkTalk NGN

Initial Openreach product poor

• No current plans to roll out • Limited customer access and demand 

Flexibility for ISP LLU IPStream (2009)

GEA IPStream (2002)

Provide own modem / own CPE in one box Commercially viable third-party/self- install Decide on access technology Full control of line speed / features / DLM Ability of e.g. offer multicast, FMC,

Ability to fault diagnose electronics in own domain

Price not dependent on speed delivered /

Financial overview

P&L – FY 2009/10

£m FY 2010 (1)

Guidance FY 2009 (2)

Revenue Flat y-o-y plus £300m Tiscali 1,385

Broadband and non-broadband 1,089

Business Plus 3-5% 296

EBITDA pre SAC and marketing 307

EBITDA pre SAC and marketing % 21-22.5% 22.1%

SAC and marketing (126)

EBITDA 181

EBITDA % 13-14% 13.1%

Depreciation and amortisation (57)

EBIT 124

EBIT % 8-9% 9.0%

(1)  Including Tiscali (2)  Restated for change in SAC accounting policy

Operating cash flow - FY 2009/10

£m FY2010 Guidance FY2009

EBITDA 171

Working capital (29)

Capex Approx. 6% total revenue (107)

Operating free cash flow (1) 120 35 (1)  Excluding exceptionals

Financial overview

•  Opening net debt in range £480 - £500 million

•  Dividend 3.2 pence/share (£29 million) to be paid March 2010

•  Cash Corporation Tax expected to be minimal until FY2013

•  Strong EBITDA and Operating Cash flow growth

TalkTalk investment summary

Execu&ng strategy to deliver strong cash‐flow growth: 

 Maintain & grow broadband market share 

 Drive customer ARPU 

 Grow data services in the business market 

 Exploit efficiency & capabili@es of own network 

 Deliver Tiscali acquisi@on synergies  

 Strong capex control 

Progressive dividend policy 

APPENDIX

CPW dividend history

2.50

3.25

4.25 4.35 4.65

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

FY2006 FY2007 FY2008 FY2009 FY2010

(p)

Net debt & borrowing facilities

TALKTALK GROUP PLC

TALKTALK GROUP LTD

& other subsidiaries

100% shareholding

CPW GROUP PLC (Loan facilities:

minimum £650m)

100% shareholding

£550m Revolving Credit Agreement 2013

c£100m New Bilateral

Facility

TalkTalk Telecom Group PLC

Best Buy Europe Virgin Mobile France Freehold property

48.5% 100%

TalkTalk Group

100%

Carphone Warehouse Group PLC

50%

* Not eligible for FTSE Index inclusion

Demerger structure

New CPW Plc

CPW Plc

Best Buy Europe

Virgin Mobile France

TalkTalk Group

Freehold property

A Shares B Shares

Step1: Scheme of arrangement

New CPW Plc

CPW Plc

Best Buy Europe

Virgin Mobile France

TalkTalk Group

Freehold property

A Shares B Shares

Step2: Reorganisation

Mechanics of demerger

Best Buy Europe

Virgin Mobile France

TalkTalk Group

Freehold property

Step3: Demerger

New CPW Plc

Old CPW Plc

TalkTalk Group Plc

Existing shareholders Existing shareholders

•  Tax clearance obtained

•  Scheme document and 2 prospectus

•  Demerger complete by end of March 2010

Mechanics of demerger (continued)

Executive Board biographies •  Charles Dunstone is currently chief executive officer of Carphone Warehouse and is chairman of TalkTalk. As

the founder of Carphone Warehouse he was instrumental in creating the TalkTalk Business following the acquisition of Opal in 2002. Since then he has directed the continued development of the TalkTalk Business to become one of the leading fixed line voice and broadband telecommunications businesses in the UK. Following the Demerger, he will also be chairman of New Carphone Warehouse. He is also chairman of the Prince’s Trust and a non-executive director of The Daily Mail and General Trust Plc and Independent Media Distribution Plc. Charles has been a TalkTalk Director since 20 January 2010.

•  Dido Harding is the proposed chief executive officer of TalkTalk. Prior to her appointment Dido was Sainsbury’s convenience director, having been appointed to Sainsbury’s operating board in March 2008. Dido joined Sainsbury’s from Tesco PLC where she held a variety of senior roles both in the UK and international businesses. Prior to this, she worked at Kingfisher plc and Thomas Cook Limited where she gained considerable retail experience. She was appointed as a non-executive director of The British Land Company PLC in January 2010. Dido is expected to take up her role as chief executive officer of TalkTalk before TalkTalk Admission.

•  Amy Stirling is currently chief financial officer of the TalkTalk Business and is chief financial officer of TalkTalk. Amy joined Carphone Warehouse in 2000 and became chief financial officer of the TalkTalk Business in 2006. Amy has over 10 years’ experience in the telecommunications industry and has played a key role in the management and integration of those significant businesses acquired by the TalkTalk Business prior to taking up her current position. Amy has been a TalkTalk Director since 20 January 2010.

•  David Goldie is group commercial director of TalkTalk. David has over 25 years’ experience in the telecommunications industry and has carried out a number of senior roles within the TalkTalk Group since he joined Carphone Warehouse in November 2002 following the acquisition of Opal. He has considerable knowledge of the TalkTalk Business having been its chief executive officer between 2005 and June 2008 during which time he also served on the Carphone Warehouse Board. Since then, he has focused on major commercial projects, corporate development and the TalkTalk Group’s regulatory affairs. He has been a TalkTalk Director since 20 January 2010.

Non-Executive Board Biographies

•  Roger Taylor is currently chief financial officer of Carphone Warehouse and is deputy chairman of TalkTalk. Roger has been in his current role since January 2000. He has played a key role in the creation and growth of the TalkTalk Business both organically and through taking the lead role in a number of strategic acquisitions. He therefore has an invaluable understanding of how the TalkTalk Business operates. Following the Demerger, he will also be chief executive officer of New Carphone Warehouse. Roger has been a TalkTalk Director since 20 January 2010.

•  John Gildersleeve is a non-executive director of TalkTalk. John joined the Carphone Warehouse Board in June 2000 and became non-executive chairman in July 2005. He was appointed a non-executive director of The British Land Company PLC in September 2008. Previously, he was an executive director of Tesco PLC until he retired in February 2004. He was chairman of Gallaher Group PLC until April 2007 and chairman of EMI Group PLC until September 2007. Prior to this he was a non-executive director of Vodafone Group PLC from 1998 to 2000. He will also become non-executive deputy chairman of New Carphone Warehouse. John has been a TalkTalk Director since 20 January 2010.

•  John Allwood is a non-executive director of TalkTalk. John was previously chief operating officer and latterly group finance director of Mecom Group plc. Prior to this, he was managing director of Telegraph Media Group Limited. Formerly, he was chief executive of Orange UK and also chief executive of Mirror Group plc. John is currently a member of Exeter University Council and chairman of Market Evolution Limited, a specialist media consultancy. He is also a non-executive director of New Carphone Warehouse. John has been a TalkTalk Director since 20 January 2010.

•  Jessica Burley is a non-executive director of TalkTalk. Jessica has over 20 years’ experience in the advertising and publishing industry and is currently a non-executive director of Jacques Vert Plc. She is currently a non-executive director of the Audit Bureau of Circulation, although she will have left this role by the time of TalkTalk Admission and until recently, she was managing director of The National Magazine Company. Prior to this, Jessica was chief operating officer for ACP-NatMag. She previously held senior positions at Financial Times Business, a subsidiary of FT Group, and Future Publishing Limited. Jessica has been a TalkTalk Director since 20 January 2010.

•  Brent Hoberman is a non-executive director of TalkTalk. Brent co-founded lastminute.com in April 1998 with Martha Lane Fox. He was lastminute.com’s chief executive officer until it was sold in 2005 during which period he had overseen the company’s flotation on the London Stock Exchange in March 2000. Brent has subsequently founded mydeco the innovative online service for home design and furniture. He is also a Governor of University of the Arts, London, a non-executive director of Guardian Media Group, non- executive chairman of Where Are You Now? Limited, a member of the Business Council for Britain and a Young Global Leader for the World Economic Forum. Brent also continues to be an angel investor in several other internet companies. Brent has been a TalkTalk Director since 20 January 2010.

Non-Executive Board biographies