Deep cuts to costs enabled BT to maintain its full-year forecasts for earnings and free cash flow and lift its interim dividend by 15 per cent.

Britain’s biggest fixed-line telecoms company posted a 9 per cent drop in headline revenue of £4.47 billion, missing market forecasts of £4.57 billion for the second quarter.

Pretax profit rose 7 per cent to £608 million, beating average expectations of £595 million.

The company said quarterly revenue in the BT Ireland division increased by 1 per cent.

BT said it had agreed a wholesale deal to provide Sky with managed voice and broadband services to support its launch in the Republic of Ireland.