BT confirmed its full-year growth targets as strength in broadband and Global Services enabled it to post better than expected core profits and sales in the second quarter.
The firm said it had grown cash flow, profits and underlying revenue after cutting yet more costs.
BT, which competes with Virgin Media and TalkTalk and sells wholesale to rivals, has been steadily recovering after it issued profit warnings in 2008 and 2009 over the poor running of its Global Services division.
The country's biggest fixed-line telecoms supplier has cut costs heavily to grow profits, and the shares have risen over 100 percent since it started to show signs of recovery in April 2009, but they fell recently on concerns about the market volatility and the impact it would have on its pension deficit.
The net pension deficit at the end of September calculated on an IAS 19 basis was £2.5bn net of tax compared with a deficit of £1.4bn at the end of March.
BT posted second quarter revenue down two per cent to £4.89bn, compared with an analyst forecast of £4.78bn, and core earnings up three per cent to £1.5bn.
When excluding transit revenues which pass through the business and do not affect profits, revenues were up 0.4 per cent in the quarter, meaning it is in line for its full-year target of revenues to be between flat or down two per cent on that basis.
"We expect to continue to offset the economic headwinds through improved customer service and processes, better efficiency, and investment in the future of the business," chief executive Ian Livingston said.
"Our performance in the quarter reinforces but does not change our outlook for the year."