Despite falling revenue, BT saw its profits climb to £375m for the first three months to 30 June, up 38 % compared to the same period last year.
The telecoms giant recorded revenue of £5bn, down from £5.2bn. But earnings per share rose to 3.7p from 2,8p. All major divisions - OpenReach, Wholesale, Retail and Global Services - performed less well compared to the first quarter of 2009. However, the company has slashed operations costs.
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Chief executive Ian Livingston said the company had made an acceptable start to the year. "Despite the challenging environment, these financial results underpin our outlook for the full year," he said.
Total group operating costs were reduced by 6 % to £4.4m, primarily due to reductions in total labour costs, said BT.
BT recently averted industrial action with its union by negotiating a pay rise for workers of 9.3 % over the next 39 months.