TELECOMS company BT still plans to slash £10bn off its £30bn debt mountain by the end of its financial year.

The group showed pre-tax profits in the three months to the end of December lifting to £760m, against £651m at the same point last year.

But in the nine months to the same date, profits fell sharply to £1.79bn, compared with £2.31bn.

BT partly blamed the decline on a combination of interest charges following its expensive acquisitions of licences for the next generation of mobile phones.

Stiff competition leading to a decline in higher margin local, national and international calls was also a factor, although mobile and Internet-related calls saw strong growth.

Third quarter group turnover rose 10.8 per cent to £5.25bn, with European acquisitions and the interconnection charges paid by other UK operators boosting the figures.

The transfer of parts of the business to BT's Concert joint venture with US giant AT&T also had the effect of reducing turnover by about three per cent, or £140m in the third quarter.

But the increasingly competitive fixed network market meant UK turnover declined by £49m, to £1.42bn in the third quarter.

Price reductions imposed on BT also reduced turnover by about £50m, BT said.

Operating costs at the group rose by 19.8 per cent in the third quarter.

A number of factors were behind this increase, including BT spending more on boosting the number of subscribers to its BT Cellnet mobile phones division.

It spent about £80m increasing its customer base in this area in the third quarter.

In the nine-month period, turnover rose by 7.4 per cent to £15bn.

Redundancy costs in the nine months of £95m - up £76m on last time - also impacted, as about 5,000 people left the business in the period.

BT has been implementing a wholesale shake-up of its business, beginning last April when it created four separate divisions.

These were Yell, the Yellow Pages commercial directories business, BTopenworld, covering Internet and interactive services, BT Wireless, the mobiles division including BT Cellnet in the UK, and BT Ignite, which provides data communications services to the corporate business market.

BT chief executive Sir Peter Bonfield was upbeat about the prospects for flotations.

No firm decision had been made on which option to go for with Yell, and would not be made until a long-awaited Office of Fair Trading review of the telephone directories market was published.

However, BT had received the necessary clearance from the Inland Revenue to go ahead with a full demerger.

Either way, Yell would be likely to be spun off in the quarter to the end of June.

BT hoped to raise about £1bn from a Yell flotation, he said.