O2 rings up customer numbers rise

O2 quit the UK stock market in March after its Spanish takeover

Customer numbers have increased at mobile phone firm O2, despite "intense competition" in the UK market.

Promotions helped O2 sign up 359,000 new users in the UK, lifting its customer base in the country to 16.3 million - 13.6% up on last year.

Overall user numbers rose by 669,000, or 16%, in the first quarter of the year compared to the same time in 2006.

News of the rise came in results from new owner Telefonica, which took over the O2 in a £17.7bn ($31.6bn) deal.

In an effort to tackle tough competition in the UK - particularly the contract market - O2 launched a number of promotions such as O2 Treats which offered free bundles of free texts, voice minutes and other services.

Subscriptions at the group remained steady, making up 34.8% of its total customer base compared with 34.1% last year. Average revenues per user rose £2 to £269.

New focus?

Looking ahead, O2 chief executive Peter Erskine hinted that the group could be about to take on former parent BT in the fixed line market.

O2 already runs fixed line operations in Germany and the Czech Republic, and Spanish owner Telefonica could soon allow the O2 unit to run similar operations across all of its territories, he added.

"It is very possible that we will be learning from what we have done in Germany and the Czech Republic and doing similarly in the rest of our business," Mr Erskine said.

The news came a day after O2 announced it was scrapping charges for customers receiving calls in Europe as well as cutting the cost of making calls on the Continent.

The decision had been triggered by a European Commission announcement that it planned to crack down on "unjustified" high charges for using mobile phones abroad.

Rival firms Vodafone, T-Mobile and Orange have already announced plans to cut the average cost of their "roaming" calls in Europe.

Meanwhile, overall net profit at Spanish owner Telefonica rose a forecast-beating 39.6% to 1.27bn euros ($1.62bn) underpinned by strong demand for its broadband services.