The British mobile phone company MMO2 has disappointed investors with its first set of results since demerging from British Telecom last year.

The firm made a pre-tax loss of �873m, against a loss of �3.5bn last year.

It also reported earnings of �433m before interest, tax and depreciation, which was in line with analyst expectations.

But during London trade on Wednesday, MMO2 shares slumped to a new low of 39.75p after it reported sluggish growth in its main UK business.

It also said that the mobile sector still faced a "challenging" environment.

When the market closed, MMO2's shares had recovered slightly, but were still more than 12% lower at 42.5p.

Tricky outlook

The operator's figures come a day after rival Vodafone announced a pre-tax loss of �13.5bn - the largest in UK corporate history.

We continue to improve the value of the assets so that whatever we do with it, it's worth more

Peter Erskine MMO2

"MMO2 has delivered results in line with expectations at the time of the demerger," said chairman David Varney.

But he warned: "Our market environment remains challenging, with subscriber growth slowing and the market for mobile data services still in its early stage of development."

The company's revenue in the UK rose by only �50m to �2.756bn over the year.

But Mr Varney said he was "particularly encouraged by the progress made in Germany and the Netherlands".

MMO2's customer base in Germany has now passed four million, and its market share has increased from 6% to 7% over the past year.

The company has said in the past that would consider selling the German business if it failed to meet growth targets.

"We continue to improve the value of the assets so that whatever we do with it, it's worth more," chief executive Peter Erskine said.