Shares in BT were down on the FTSE 100 in morning trading after the telecoms company reported a rise in pre-tax profit despite a fall in revenue in the year ended 31 March.

Group revenue fell four per cent in the period to £20.1 billion, while pre-tax profit increased 20 per cent to £2.1 billion. However the group also reported a net debt of £8.8 billion, down only £467 million from the previous year.

The group said it would be raising its full year dividend seven per cent to 7.4 pence per share.

Ian Livingston, Chief Executive, commenting on the results, said, "We have delivered profits and free cash flow ahead of expectations for the year, while making significant investment in the business for the future. Free cash flow has nearly trebled compared with two years ago.

"We have consolidated our position as the leading provider of broadband in the UK with our highest quarterly share of DSL broadband net additions for eight years. BT Global Services order intake was up 10% at £7.3bn and it has turned cash flow positive a year ahead of plan. Openreach saw growth in its copper line base in the year, reversing historic trends. Our roll out of super-fast broadband is one of the most rapid in the world, passing an average of 80,000 additional premises each week and we have plans to roughly double the speed of our fibre-to-the-cabinet based service in 2012.

"We expect to continue to grow our profits and free cash flow whilst investing to return BT to growth. These results show we are making progress, but we are well aware there remains a lot more to do."

Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers, commented, "The turnaround story at BT continues. The group's Global Services IT division has cut unprofitable contracts whilst pushing into Asia, while broadband customer numbers continue to be expanded, possibly aided by troubles at rivals such as Talk, Talk. Costs continue to be cut, while uncertainties surrounding the company's staff pension scheme have eased.

"On the downside, overall revenues remain in decline, a position which at some point will need to be reversed, whilst the appropriate business model across the broader telecoms, media and technology arenas remains fluid and uncertain.

"Nonetheless, the relatively new and home grown Chief Executive deserves credit for today's results. Cash flow, the core attraction for any telecoms company, has been boosted, a fact now underpinning the progressive dividend policy. As such, market consensus opinion has slowly moved from a strong hold to a buy."

By 09:50 shares in BT were down 0.45 per cent on the FTSE 100 to 201.00 pence per share.