LONDON (AP) — Telecommunications company BT Group PLC, yesterday, reported that net profit fell 29 percent in the second quarter but upgraded its full-year guidance and said it was making good progress in reducing costs.

For the three months ending September 30, BT reported a net profit of £287 million ($475 million) compared to £406 million a year earlier. Revenue fell from £5.3 billion to £5.1 billion.

BT said earnings before interest, taxes, depreciation and amortisation in its struggling Global Services unit — which generates about two-fifths of company revenue — rose 53 percent from the first quarter to £95 million, though that figure was still 10 percent below a year earlier.

The company said it expected to raise its full-year dividend by five percent.

BT also said it forecast full-year revenue to be down by three-four percent, better than its previous estimate of a four-five percent drop, and raised its expectations for cost cuts and free cash flow.

BT shares rose four percent to 147.7 pence in early trading on the London Stock Exchange. "With total cost reductions of over £900 million in the first half, we have made significant headway towards our previous target of well over £1 billion for the full year," said chief executive Ian Livingston.

"We now expect to generate at least £1.6 billion of free cash flow this year, compared with our previous target of over £1 billion."

Global Services, a provider of communication services for companies and government agencies, posted a pretax loss of £2 billion in the previous full year, £1.5 billion of that total in the fourth quarter.

BT said the unit's second quarter performance reflected the impact of recession, lower wholesale call volumes in continental Europe, falling equipment sales and a continuing decline in call and line revenue in the UK.

About 1,600 jobs were cut in Global Services in the third quarter. Global Services now employs around 37,000 people in 53 countries, 7,600 less than a year ago, BT said.

"Despite an improved performance at the group's troubled Global Services division, strategic questions remain: does the company have the stomach to invest long term in this international business, a move clearly out of its comfort zone?" said Keith Bowman, analyst at Hargreaves Lansdown Stockbrokers.