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Last Updated: Monday, 14 November 2005, 14:32 GMT
O2 buoyed by surging user numbers
O2 share graph
Mobile phone group O2 has unveiled a rise in profits, driven by a strong climb in customer numbers.

The firm reported pre-tax profits for the six months to 30 September of 357m ($625m), up from 339m during the same period last year.

Customer numbers rose 17% to 25.7 million across the group, led by growth of 34% in its German customer base.

The results come two weeks after the firm agreed to a 17.7bn ($31.2bn) takeover offer from Spain's Telefonica.

Chief executive Peter Erskine welcomed the group's strong performance given "intense competition in all our markets".

"All our mobile businesses delivered strong, high quality customer growth in the first half," he added.

However, despite signing up more new customers, average revenue per user (ARPU) was flat in the UK at 271 during the three months to September, while it slipped by 7 euros in Germany as a result of customer promotions.

New contracts

Meanwhile the group's Airwave unit - which offers communications services to UK emergency services - secured new contracts with ambulance services in England and the National Fallback Service, as well as recently being named preferred bidder for the nationwide Fire and Rescue service.

O2 store
UK - active users 15 million, 702,000 new users, ARPU 271
Germany - 8.95 million customers, 970,000 new users, ARPU 349 euros
Ireland - 1.57 million users, up 10.2%. ARPU 572 euros

The new deals boosted revenues at the unit to 103m from 79m last time, while operating profits jumped to 9m from 2m.

Overall, the strong showing helped the company beat analyst forecasts for revenues and earnings per share.

Revenues surged 12% to 3.62bn compared with forecasts of 3.26bn to 3.61bn, while earnings per share came in at a better-than-expected 5.4 pence for the six month period.

Mr Erskine added that the group had received no further approaches since agreeing to Telefonica's offer.

"Obviously until the offer closes that possibility is there but we've had none so far. Nobody has reached me or my chairman or my board," he said.

Through the deal the Spanish firm will gain entry into two of Europe's biggest markets of the UK and Germany, adding to its operations in Spain and Latin America.

See how O2 has outperformed initial expectations

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