mmO2 reports strong subscriber growth

Mobile phone company mmO2 has reported another quarter of strong subscriber growth, and beat analysts' expectations by adding 504,000 new subscribers in its first quarter to end-June.

The firm also delivered growth in average revenue in its two largest markets, Germany and Britain.

Chief Executive Peter Erskine said in a statement: "The strong performance of all our businesses in the first quarter puts us on track to deliver our full-year targets".

Average revenue per user over the 12 months to end-June rose to £254m (€358.36m) in Britain from £247m (€348.49m) three months before, while in Germany the same figure rose to €348m from €340m in the previous quarter.

MmO2 is Europe's fifth-largest mobile phone group has 18.7 million subscribers, a drop of 0.7 million subscribers reported at the end of March, which reflects the sale of its Dutch unit in April.

Shares slipped on fears the firm may be a little complacent in the face of competition from third generation newcomer 3, that slashed its costs to undercut rival voice prices by up to 50%.

But Chief Executive Peter Erskine told reporters in a conference call the firm had no intention of trying to match price cuts.

Erskine said 3's price cuts had not eaten into mmO2's customer base since the end of June.

Income from data, such as text messaging, as a proportion of total revenue fell by 1.2% to 18.2% last quarter which was lower than analysts' estimates of a break through the 20% level.

Erskine said this was due to the strong growth of voice revenues.