BT cut its full-year revenue outlook today after European corporate customers slashed spending and adverse changes in regulation resulted in the group posting a consecutive miss on sales in the second quarter.

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

"We have delivered another solid quarter of growth in profit before tax despite the economic conditions and regulatory impacts," chief executive Ian Livingston said.

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.

However, 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 their launch in the Republic of Ireland.

The company abandoned its hope that underlying revenue excluding transit would show an improving trend on the minus 1.9 per cent seen last year for the full year but said the second half would still see an improvement.

BT's revenues were hit by a triple whammy of recession, regulation and rain.

Half of the group's turnover is dependent on corporate spending, across both its global services division, which serves multinationals, and its business with small and medium sized companies.

It said its corporate business was continuing to be hit by tough trading conditions in Europe and in the financial services sector.

A judgment on charges for terminating some mobile phone premium calls also went against the company, which impacted revenue by £40 million year-on-year in the quarter.

And rain increased the number of repair on phone networks, resulting in a backlog of new installations.

The group was able to grow profit, however, by cutting its underlying costs by 10 per cent, the best performance in terms of efficiency in recent quarters.