Customer numbers are growing

MMO2 reported profits of �95m compared with a loss of �10.2bn in 2003 which was caused mainly by writing down the value of its third-generation licences.

The company said its customer base across the UK, Ireland and Germany grew by 14% to reach 20.7 million, while revenues were up 22% at �5.65bn.

MMO2 added it was considering ways of returning cash to shareholders.

Chairman David Varney said the firm would give more details on how shareholders might be rewarded when it releases its interim results in November.

The firm could choose to begin paying shareholders a dividend or could opt for a share buyback instead.

Takeover talk

MMO2 UK's customer base grew by 10% to 13.3 million, helped, the company said, by its sponsorship of the England rugby team and Arsenal football club.

UK revenues grew 16% to �3.2bn and UK sales growth of up to 8% is forecast for the coming year.

Earlier this year MMO2 was the focus of bid speculation after it said it had rebuffed an approach from Dutch mobile phone firm KPN.

Analysts have not ruled out the possibility of another suitor coming forward; some see MMO2 as being too small to survive by itself.