BT shares have risen by more than 10% in response to better-than-expected quarterly financial results.
At £1.25, BT shares are at their highest level since January, according to the Financial Times.
Group revenue for the three months ending 30 June rose 1% to £5.2bn compared with the same period a year ago.
But pre-tax profits fell 45% to £272m and earnings per share fell 43% from 4.9p to 2.8p.
Ian Livingston, chief executive at BT, said the results showed a solid start to the fiscal year against a background of challenging conditions.
"We are on track to deliver reductions in operating costs and capital expenditure of well over £1bn and generate group free cash flow of over £1bn this year," he said.
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Livingston earlier this year forecast the group would see revenues fall by up to 5% in 2009/10 due to expected falls in revenues for BT's Global Services division due to delayed IT project in the recession.
Turnover of the division, which provides IT and telecommunications services, rose 4% to £2.08bn due to positive foreign exchange movements.
"BT Global Services is making progress, although there is still much to do," said Livingston.
Excluding the foreign exchange benefits, BT Global Services' turnover fell 4% and it made an operating loss of £124m, from a £1m profit a year ago.