Carphone has been moving into the fixed line market

The group says it expects to report pre-tax profit for the year ending in March to be at the top of forecasts.

Chief executive Charles Dunstone said: "The mobile market has continued to be buoyant and we have strengthened our competitive position within it."

Subscription connections in the three months had grown 32.4% to 0.66m.

Growing base

It said the pre-pay market had also revived, with connections increased by 45.5%.

Carphone added 146,000 new customers to TalkTalk, the company's fixed line business, taking the base to 385,000 in the three month period.

For the 12 months to March 2005, Carphone expects to achieve further "strong" growth, it said.

Last week the company said it would buy Spanish fixed-line operator Xtra Telecom. in a deal worth an initial 11.5m euros (�7.6m).

The UK group currently sells mobile phones and other services from more than 1,100 outlets across Europe.