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Combination of STBC with OFDM has gained considerable interest and has become a promising technique for future wireless communications. However, such systems require the knowledge of the Channel State Information (CSI) at the receiver. In this paper, a new channel estimation approach is proposed using dedicated pilot subcarriers defined at fixed intervals to estimate the channel parameters. Once channel parameters at the pilot subcarriers have been estimated using known pilot symbols at the receiver, the iterative channel estimation process is initiated, and data symbols positioned at adjacent data subcarriers are recovered. Subsequently, the recovered data symbols become the new set of pilots which are then used to re-estimate the channel parameters and recover the next adjacent STBC block. Another major novel contribution of the paper is the proposal of a new group decoding method that reduces the processing time significantly via the use of subcarrier grouping for transmitted data recovery. The OFDM symbols are divided into groups to which a set of pilot subcarriers are assigned and used to initiate the channel estimation process. Designated data symbols contained within each group of the OFDM symbols are decoded simultaneously in order to improve the decoding time duration.