By Simon Zekaria 

LONDON-- BT Group PLC plans to inject GBP1.5 billion ($2.3 billion) into its pension plan by the end of April as part of a new 16-year program at the British telecom operator to shrink its GBP7 billion pension-fund deficit.

The group detailed the multiyear plan to pay down the growing deficit on Friday amid signs that robust domestic demand for high-speed Internet access is boosting its operating performance.

BT turned in a better-than-expected 13% rise in third-quarter net profit, helped by a 15% rise in broadband and television revenue from the same period the previous year.

The 168-year-old former monopoly, which has one of the largest pension plans in the U.K., said its deficit had grown to GBP7 billion as of June 30 from GBP3.9 billion in 2011. BT said it would pay GBP2 billion into the plan over the next three years, including the initial GBP1.5 billion plug.

Net profit rose to GBP558 million in the three months ended Dec. 31 from GBP493 million in the same period a year earlier, compared with market expectations of GBP514 million.

Revenue fell 3% to GBP4.47 billion, versus market forecasts of GBP4.49 billion. Still, revenue at BT's consumer division, which includes its broadband business, rose 7%.

Chief Executive Gavin Patterson said operators are responding to the strong market demand for fiber broadband. A little more than a third of BT's retail broadband customers, in more than 2.7 million premises, now are using fiber.

BT is betting on its growing its TV-sports-channels business to win broadband Internet subscribers from rivals such as Sky PLC and Liberty Global PLC's Virgin Media. It said viewing of its English Premier League soccer matches was up 17% in the quarter. BT and Sky are squaring off in the next three-year auction for live Premier League matches from 2016-19, which is due to complete next month.

"We are very clear on our strategy," Mr. Patterson said. "Clearly there are risks [and] we are very conscious of those risks. But we are also very clear on how sport and the Premier League can add value.

"We won't overpay for it," Mr. Patterson said of BT's strategy in the bidding process.

Free cash flow jumped 64% to GBP904 million.

The company said it still expects its fiscal-year earnings before interest, tax, depreciation and amortization, adjusted for exceptional items, to be between GBP6.2 billion and GBP6.3 billion.

BT shares were down 2.2% at 420 pence in late-morning London trading. Hargreaves Lansdown analyst Richard Hunter said tackling the funding deficit would boost investor confidence in the stock, but he noted Premier League rights could be costly.

Mr. Patterson added the company is making "good progress" on its potential acquisition of mobile operator EE for nearly $20 billion. The period of exclusivity, in which BT is talking terms with the operator, still has a "number of weeks to run," Mr. Patterson said.

Mr. Patterson also said there would be "no justification" in any possible request for the company to spin off its infrastructure division due to competition concerns.

In a busy U.K. telecom market, Sky said on Thursday it has reached agreement to partner up with the U.K. business of Spanish mobile-phone operator Telefónica SA, with the British pay-television company launching a mobile service for the first time next year.

"I am not hugely surprised about it," said Mr. Patterson, calling it a "vanilla" so-called mobile-virtual-network-operator deal, in which operators rent capacity from another network.

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