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BT underlined its improving performance on Thursday by revealing it had halted a four-year decline in the number of customers taking its fixed-line phone services.

Ben Verwaayen, BT’s chief executive, hailed the better fortunes of the traditional phone business as he gave an upbeat forecast that the leading UK telecoms group would increase its revenue and core profit in 2007-08 as well as 2006-07.

BT’s third-quarter results were also boosted by a settlement with the tax authorities that will result in HM Revenue & Customs paying the group £1.1bn because of tax overpayments between 1994-95 and 2004-05. BT’s shares closed 3¼p, or 1 per cent, higher at 319.75p.

The number of BT customers taking fixed-line phone services had declined since 2003 because of increasing competition. However, the group’s results for the three months to December 31 showed the number of customers buying such services in the period rose by 37,000 to 13.3m.

The turnround is due to BT cutting some tariffs in August after regulators lifted price controls.

BT reported its fourth consecutive quarter of year-on-year growth in earnings before interest, tax, depreciation and amortisation. Ebitda was £1.4bn in the third quarter, up 2 per cent, while revenues were 5 per cent higher at £5.1bn. BT’s profit before tax was £639m.

The improving performance has been founded on BT’s move into “new wave” services such as broadband and supplying voice and data networks to multinational companies.

Mr Verwaayen said: “The revenue growth of 5 per cent reflects continued strong growth in new wave services and a robust defence of our traditional business, underpinned by growth in active consumer customers for the first time in four years.”

BT’s share of new customers taking their broadband over copper landlines increased to 34 per cent in the third quarter, compared with 25 per cent in the previous three months.

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