KCom Group, which also reported a 3 percent rise in full-year profit, raised its total dividend to 4.4 pence for the year ended March 2013 from 4 pence a year earlier.

"The company has underlined its confidence in future cash generation capability by increasing the dividend by 10 percent per year for the next 3 years," Barclays Capital analyst Maurice Patrick said in a note.

KCom Group, which provides communications services for enterprise and public sector organisations in the UK, had in 2010 committed to raise its annual dividend by at least 10 percent for three years.

Shares in the company were up 11 percent at 85.21 pence at 0942 GMT on Friday on the London Stock Exchange, making them the top percentage gainer on the FTSE-250 midcap index.

KCom Group said underlying pretax profit rose to 52.7 million pounds from 51.1 million pounds a year earlier. Revenue fell 3.7 percent to 372.9 million pounds.

(Reporting by Abhirup Roy in Bangalore; Editing by Supriya Kurane)