LONDON —  BT Group PLC, Britain's biggest telecommunications company, reported a 6.2 percent decline Thursday in its fourth quarter profit, as costs rose and it lost some wholesale customers to broadband services.

Net profit fell to 426 million pounds ($828.5 million) in the three months ending March 31, compared with 454 million pounds for the quarter a year ago.

Revenue rose 2.5 percent to 5.42 billion pounds ($10.5 billion) from 5.29 billion pounds a year ago

The company said it incurred costs of 110 million pounds ($213.9 million) in the quarter to cut jobs and reorganize the company.

Wholesale revenue has fallen as demand for broadband has increased in Britain, leading Carphone Warehouse Group PLC and British Sky Broadcasting Group PLC to "unbundle" lines, rolling out their own infrastructure and ending rental agreements with BT's wholesale unit.

Full year profit dropped to 1.74 billion pounds ($3.38 billion) from 2.85 billion pounds in the previous year. Annual revenue rose 2.4 percent to 20.7 billion pounds ($40.3 billion) from 20.22 billion pounds

Despite the decline in net profit, the company's shares rose 2.6 percent to 229 pence ($4.45) amid the strong revenue and relief the results had not fallen short of analysts' expectations, as they did in the third quarter.

Nomura analyst Martin Mabbutt said that the outlook was "mildly positive," with no great surprises.

Revenue for the global services unit rose 10 percent to 2.23 billion pounds ($4.3 billion), above the 2.15 billion pounds ($4.2 billion) expected by analysts. Adjusted margins for earnings before interest, tax, depreciation and amortization in the unit rose to 13.7 percent.

Free cash flow for the company came in at 1.71 billion pounds ($3.3 billion), 9 percent up on 1.59 billion pounds and strongly above analyst forecasts of 1.57 billion pounds ($3.1 billion).

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.