TELECOMS group BT today hailed improving prospects as it lined up a better payday for its army of long-suffering small shareholders.

The group has reached a milestone for annual earnings a year ahead of plan and said dividends should grow by between 10% and 15% a year for the next three years.

That is good news for around one million shareholders who until a couple of years ago endured a record low share price while the company grappled with a massive pension deficit and problems at its IT services arm.

With both issues now largely resolved, chief executive Ian Livingston announced a 14% rise in today’s full-year dividend.

He said: “We have made progress again this year delivering for all our stakeholders, but we know there is more to do.”

Underlying revenues declined 1.9% to �19.3billion as it suffered falling income from calls but underlying earnings rose 3% to �6.1bn after it reduced its operating costs by �933million, or 6%.

It has now made �2.9bn of savings over the past three years and hit its target of �6bn earnings a year ahead of schedule.

The telecoms giant benefited from the strength of broadband demand after it added more than a million homes and businesses to its network in the year to the end of March, of which 589,000 were added through its own retail division.

More than half a million customers are now signed up to its BT Infinity service, while its Vision internet TV service saw a 23% rise in customer numbers to 700,000.

The expansion of its online services was helped by the rapid roll-out of fibre-optic cable, which provides download speeds of up to 80 megabits per second, compared to current UK averages of 7.6 mbps. It is now available to 10 million homes, more than half a year ahead of schedule.

Its prospects have been helped by a recent announcement to tackle a black hole in its pension scheme.

Britain’s largest private sector retirement plan had a �4.1bn deficit last summer but under an agreement with its pension trustees BT has made a �2 billion upfront payment, followed by nine annual deficit payments of �325m up to 2021.