BT continues to witness a decline in its fixed line business

The UK telecoms company said underlying earnings fell to �1.38bn ($2.4bn) in the third-quarter, down from �1.4bn in the same period in 2004.

But the figure was better than analysts' forecasts of �1.36bn.

Growth was driven by a 42% rise in revenues from "new wave" services, now accounting for a third of its business.

BT said demand for its broadband services remained strong with the number of wholesale connections now at seven million.

This was pushing the UK to "the front of Europe in broadband take-up," said chief executive Ben Verwaayen.

"The general rundown of fixed line incomes and increasing competition are not hampering growth," said Richard Hunter, at Hargreaves Lansdown stockbrokers.

However, this sentiment was not enough to prevent lingering concerns about its traditional business model.