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* Q2 adjusted core earnings up 1 pct
* Added 76,000 net broadband customers
* Says consumer and mobile demand offset weak public sector
* Shares down 3 percent (Adds comments by CEO; share price reaction)
By Paul Sandle
LONDON, Oct 27 (Reuters) - BT, Britain's biggestbroadband provider, reported a 1 percent rise in second-quarterearnings on Thursday, in line with market expectations andhelped by price rises and strong demand for fibre connections tokeep it on track to hit its full-year targets.
Chief Executive Gavin Patterson said the group's consumerand mobile businesses were stand-outs, boosted by the appeal ofPremier League soccer, although "in the enterprise space, UKpublic sector continues to be a challenging market".
The company increased the interim dividend by 10 percent to4.85 pence a share but also said its pension deficit had jumpedto 9.5 billion pounds from 6.2 billion at the end of June, "dueto both falling corporate bond yields and higher expectedinflation".
Shares in the group reversed early gains to trade down 3.3percent at 375 pence at 1000 GMT.
The company, which is in talks with regulators about the future control of its Openreach network arm, reported adjustedcore earnings of 1.89 billion pounds ($2.3 billion)on revenue up1.1 percent on an underlying basis at 6 billion pounds.
BT added 76,000 net broadband customers in the quarter, some65 percent of retail connections, although less than the 79percent market share it achieved in the previous quarter.
Patterson said the market was "very dynamic", with "no signof any slowing down in competition", pointing to an advertisingpush from Vodafone in home broadband and the forthcominglaunch of mobile from pay-TV rival Sky.
Some 440,000 customers signed up to fibre connections on theOpenreach network in the quarter, with more choosing to do sothrough rivals like Sky and TalkTalk than BT for thefirst time.
Patterson said there was clear demand from consumers for itsfibre products. "The consumption of data is going up at 50percent a year, and we need to make sure the network is fit forthat," he said.
"I'm confident we can do it," he added, in a riposte torivals who complain that BT is not incentivised to invest in thefaster network their customers want.
Mobile pay monthly net additions for EE, Britain's biggestmobile network operator which BT bought for 12.5 billion pounds ($15 billion) in January, were 280,000, beating BT's nearestrival, Telefonica's O2, which reported 199,000 contractadditions for the same period on Thursday.
Prepay customers fell by 325,000, however, resulting in atotal net loss of 20,000, while O2's prepay mobile base grew by32,000.
Nevertheless BT said it "remained on track" to hit itsfull-year target, which is to achieve growth in underlyingrevenue and adjusted core earnings of about 7.9 billion pounds. ($1 = 0.8181 pounds) (Editing by Kate Holton, Grreg Mahlich)
