BT's figures were in line with market expectations.

'Transformation'

"This quarter's results are a terrific set of numbers," said BT chief executive Ben Verwaayen.

"They show BT firing on all cylinders, with underlying earnings, revenues and earnings per share all growing.

"BT has changed very significantly from four years ago, and the transformation is accelerating."

BT's fixed-line operations have faced increasing competition in recent year's, most notably from the Carphone Warehouse's Talk Talk service.

Shares in BT were up 3.7% in early trading in London.