Changes to existing LTIP scheme

24 February 2010

Alternative Networks plc ("Alternative Networks" or the "Company")

Award of share-based incentives

Changes to existing LTIP scheme

The Remuneration Committee of the Board of Alternative Networks recently carried out a review of share-based incentive schemes in order to ensure that appropriate incentives are in place to encourage shareholder value creation in the medium and long term. After seeking professional advice and consulting major shareholders the Board has today adopted the Alternative Networks plc 2010 Value Creation Plan ("VCP"). Awards under the VCP have no value at grant but give the participants the opportunity to be awarded Company shares proportionate to a percentage of the value created for shareholders over and above a threshold value over a three year period.

The following directors of the Group are potential beneficiaries of the VCP:-

James Murray - Chief Executive Officer

Edward Spurrier - Chief Financial Officer

Ben Marnham - Chief Operating Officer

Jim Sewell - Group Sales and Marketing Director

At the inception of the VCP the participants will be granted units from a total pot. These units have no value on grant but share in a proportion of the total value created for shareholders depending on the achievement of two hurdles at a series of measurement points (the "Measurement Dates"). The Measurement Dates will be 31 December 2010, 31 December 2011 and 31 December 2012. At each Measurement Date participants will bank value (in the form of nil-cost options over shares) equivalent to a proportion of the excess value created above the hurdles using a prevailing share price at the relevant Measurement Date. Any banked share options will not become exercisable until the end of year three and therefore ultimately value obtained by participants will be subject to the share price at that time.

The level of value created for shareholders will be determined by reference to the appreciation in the Company's share price from a base level of 125 pence per share, being the weighted average price of the Company's shares in the period since the beginning of the current financial year to the Board meeting approving the VCP in principle on 28 January 2010. The calculation will include the amount of dividends paid to shareholders and other returns of funds to shareholders, such as share repurchases (absolute total shareholder return).. The shareholder value at each Measurement Date will be calculated using the average share price over the 30 day period prior to the relevant Measurement Date.

The table below sets out the proportion of the total value created for shareholders allocated to the participants of the VCP depending on the achievement of the two Threshold Prices:

A parallel long term incentive award under the VCP has been set up so that it is only relevant and provides value to the participants when the core VCP has delivered a total value of less than £250,000. Under this parallel plan, there is a maximum of £250,000 payable when the Company's share price has after three years performed to be in the upper quartile of a peer comparator group comprising at least 12 relevant quoted peers, being quoted telecom and technology stocks. The participants will share the value gains of this parallel scheme in the same proportion as the core VCP and the performance period and leaver provisions are the same as for the core VCP as set out above. The purpose of this scheme is to provide a continuing incentive in the event that the generality of share prices fall, due to economic or other global conditions, but the Company itself has performed very well in relative terms. The Committee retains discretion over its payment, by consideration of other Group key performance indicators.

The maximum number of shares to be issued pursuant to the VCP will be such that, in aggregate, the participants will be issued no more that 10 per cent. of the issued share capital of the Company as enlarged by the issue of shares pursuant to the VCP.

Should, in the opinion of the Takeover Panel ("Panel"), at the time when interests in shares are first allocated to the participants of the VCP (under either scheme above), there be a concert party ("Concert Party") which:

i) has interests in Alternative Network's shares which in aggregate carry more than 30 per cent. of the voting rights but does not hold shares carrying more than 50 per cent. of such voting rights or;

ii) holds interests in Alternative Network's shares which, in aggregate, carry less than 30 per cent. of the voting rights but any allotment of interests in shares pursuant to the VCP would increase that aggregate interest to more than 30 per cent. of the voting rights in the Company

then the VCP will be unable to allocate any interest in shares to any Concert Party member unless the Panel has agreed to waive the obligation of the Concert Party to make a general offer under Rule 9 of the Code and that waiver has been approved on a poll by shareholders independent of the Concert Party.

The parallel incentive is made in the form of nil cost options, the grant of which will be contingent on Panel agreeing to waive the obligation of the Concert Party to make a general offer under Rule 9 of the code and that waiver being approved on a poll by shareholders independent of the Concert Party.

Changes to existing LTIP scheme

Details of the Company's existing LTIP can be found at note 29 of the Company's annual report and accounts for the year ended 30 September 2009. The 1,388,919 LTIP options can be exercised in April 2010 if the option holder is still an employee of the Company and certain performance criteria have been met. 45% of the LTIP options are subject to a 4% increase in total shareholder return, with the remaining 55% of the options subject to a 20% increase in shareholder return. The threshold share price required to give a total shareholder return ('TSR') of 20% is estimated to be approximately 175 pence, and the threshold for 4% TSR is estimated at 135 pence. The Remuneration Committee determined on 28 January 2010 to amend the scheme so as to allow a pro rata award of 55% LTIP options for total shareholder returns between 4% and 20% before 25 April 2010, on the basis that it would be in the shareholders' best interests that management were provided with an ongoing incentive, and bearing in mind the cost of the scheme has been fully provided in the accounts of the Company.

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