The firm reported a pre-tax profit of �26m for the six months to 30 September compared with a �259m loss in the same period last year.

The result was helped by a 13% jump in customer numbers to 19.2 million.

But MMO2 warned it faced fierce competition in the second half of the year which could slow revenue growth.

Growing income

"In the second half we expect intense competition in our two main markets, but we are aiming to build on what we achieved in the first half, and deliver our full-year growth and margin targets," said chief executive Peter Erskine.

The company has previously warned that its UK revenues will be hit by cheaper call charges which were imposed by the telecoms regulator Oftel.

And competitors such as Hutchison's 3 UK have been launching aggressive pricing strategies in an attempt to increase market share.

"Frankly, I think you'd think we were naive if we didn't recognise that," Mr Erskine said.

"But I don't want any sense that there's anything bleak out there."

Earnings before interest, tax, depreciation and amortisation (EBITDA) rose to �621m compared with �387m last year, which was in line with analysts' expectations. Revenue rose 21% to �2.68bn.

In the UK, the total customer base grew by 10% to 12.6 million while revenue increased 15% to �1.5bn.

The key average revenue per user figure - arpu - rose to �259 for the year to September, up from �254 in the previous quarter.

In Germany, the customer base rose 22% to 5.25 million, and arpu increased to 354 euros from 348 euros.