(Bloomberg) -- BT Group Plc, the U.K.’s largest Internet service provider, said third-quarter operating profit climbed 3 percent as it gained more broadband subscribers.

Earnings before interest, taxes, depreciation, amortization and costs from job cuts climbed to 1.52 billion pounds ($2.41 billion), the London-based company said in a statement. Analysts had estimated profit of 1.49 billion pounds, according to a Bloomberg survey. BT added 146,000 broadband subscribers.

“We have delivered another quarter of growth in profits and cash flow despite the economic headwinds,” Chief Executive Officer Ian Livingston said in the statement. “We expect to achieve our 2013 Ebitda target of above 6 billion pounds a year early and to deliver free cash flow of around 2.4 billion pounds this year.”

BT has stepped up competition with operators including Virgin Media Inc. as it accelerates its 2.5 billion-pound rollout of fiber broadband by one year. Virgin Media said last month it will double most of its customers’ speeds. BT is the U.K.’s largest fixed-line phone company and is counting on its high-speed broadband services to offset declining sales from traditional landline offerings.

Sales fell 5 percent to 4.77 billion pounds in the quarter. Analysts surveyed by Bloomberg have estimated 2012 adjusted Ebitda of 5.97 billion pounds.

Pension Deficit

British Sky Broadcasting Group Plc announced this week it will offer a fiber product for the first time even after saying it had seen little demand for the service.

BT also faces potential competition from Fujitsu Ltd., Japan’s biggest computer-services provider, which said last year it wants to tap BT’s infrastructure to build a rival fiber network to 5 million homes and businesses for as much as 2 billion pounds.

BT, which has started its triennial assessment of its pension program, may pay down part of the program early, Livingston said in November. The company said today its pension deficit increased to 4.1 billion pounds through December, compared with a deficit of 2.5 billion pounds at the end of September. Under the prior agreement the company agreed to make annual payments of 525 million pounds through December 2011.

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