BT has raised its full-year core earnings outlook after posting better-than-expected second quarter results boosted by demand for broadband and its Global Services unit.
It now expects to post full-year adjusted core earnings of around £5.8bn, compared with a previous pledge to perform in line with the year before which achieved earnings of £5.6bn.
Britain's biggest fixed-line telecoms provider said it also now expected to hit its target of generating free cash flow of £2bn this year, two years ahead of target.
Sentiment around BT has improved strongly in recent months after it recovered from two major profit warnings due to problems at its key Global Services division, which provides IT services to multinational companies.
It said the order intake for Global Services was up 50 per cent.
Overall, BT posted second quarter revenues down three per cent to £5bn.
"We have made significant progress in improving profitability and cash flow, enabling us to invest in building the foundations for revenue growth in 2012/13," chief executive Ian Livingston said in a statement.
"We have increased our EBITDA outlook for the year and now expect to hit our 2 billion free cash flow target two years early."
BT said its strong performance was helped by improvements across the board, but it enjoyed particularly strong demand for broadband, adding 114,000 customers, which represented a 45 per cent market share of new additions on the network, one of its highest shares ever.
It had 24,000 net additions to its BT Vision TV service, which it launched to increase customer loyalty, giving it a total of 520,000 compared with BSkyB's 10 million.
It has also started showing the Sky Sports TV channels for the first time and said over 50,000 customers took the Sky Sports service.