BT, the UK telecoms provider, has acknowledged that tough market conditions mean it is unlikely to meet its three-year revenue targets.

BT chief executive Ben Verwaayen said on Thursday the firm was "unlikely" to achieve its three-year revenue growth target of 6-8%.

But he said market expectations for the second half of the year would be met.

The news came as BT reported turnover of �4.66bn ($6.9bn) for the three months to 30 September, up 2% on the same period last year.

Pre-tax profits rose 55% to �496m.

Payback

The company also revealed that it had continued chipping away at its debt pile, reducing total borrowings by �285m during the quarter to �13.1bn.

BT said it would pay off more debt once it completed the �2.5bn sale of its stake in French mobile operator Cegetel to Vodafone.

The company has won plaudits from investors for reducing its debt pile from nearly �30bn two years ago.

The firm borrowed heavily to fund an ambitious overseas acquisition spree during the late 1990s, and to buy licenses needed to operate new generation mobile services.

It has since retrenched in the face of the global telecoms downturn, selling off many of its overseas assets.

Markets smile

The company is currently focusing on 'new wave' telecommunications services such as broadband internet.

Mr Verwaayen said these activities would help to fuel future revenue growth.

Investors welcomed the company's latest figures, marking BT shares up 7% to 202p.