British Telecom has avoided potentially crippling strike action with the Communication Workers Union today by agreeing an 'unprecedented' pay deal that provides some much needed stability at the company.

The two sides were able to agree a pay deal worth 9 pct over three years, a rise of 1 pct on the current offer.

The CWU, ballotting members on their first strike in 23 years, said this was a 'fair' rise, which recognises the current contribution of staff over the last year.

Deputy general secretary, Andy Kerr added: "This is a fantastic deal for our members providing a fair rise in their basic pay this year and for the following two years."

"This agreement is good for BT, its employees, shareholders and customers." said BT's chief executive Ian Livingston.

The deal also saw the pay rise cover their pensionable part of pay.

"Clearly the announcement gives greater clarity and is one of the many positives surrounding this company over the next five years." said Morten Singleton, analyst at Collins Stewart. "The market has reacted accordingly."

Shares in the telecoms group rose 2.9 pence, 2.13 pct on the news.

MOVE TOWARDS ENTERTAINMENT

British Telecom, who are in the midst of a pay dispute, now solved, also face a pensions deficit of £9.3 billion and a fierce competition with BSkyB - starting this year, BT's entertainment division - BT Vision - is to offer the premium sports channel Sky Sports 1 for just £6.99 a move towards entertainment that has brought it into conflict with Rupert Murdoch's News Corp.

"We are delighted to have reached this milestone, which means that we can be certain of offering Sky Sports 1 and Sky Sports 2 to our customers before the football season kicks off. We know our customers will be keen to sign up for the two channels, " said BT's Gavin Patterson in a statement earlier this year.

The resulting deal is thought to attract over two million customers by undercutting BSkyB by £3-4.

FTSE