MOBILE phone group mmO2 announced pre-tax profits yesterday for the first time since it demerged from parent company BT two years ago.

It made £26m for the six months to September 30, compares with losses of £259m a year earlier, and follows a 13 per cent year-on-year rise in the company's customer base to 19.2 million.

However, O2 also said it would cut 200 UK jobs as part of a previously announced restructuring of its central operations.

The move, which is expected to generate annual cost savings of up to £45m, will affect staff at Hammersmith, west London, and O2's headquarters in Slough.

In the results, O2 said total revenues rose 21 per cent to £2.68bn, with the figure for the UK up to £1.65bn from £1.47bn a year earlier, after its customer base grew by ten per cent to 12.6 million.

Chief executive Peter Erskine said: "We are pleased to report our first pre-tax profits, almost exactly two years after the demerger.

"This reflects the single-minded focus on profitable growth, operational improvement, and financial discipline that we committed to at the time of the demerger."

Mr Erskine said he was confident of meeting full-year targets, although he warned that revenue growth in the UK was likely to slow in the second half as the mobile phone market becomes more competitive.

O2 has already warned of an impact from a cut in termination rates - the price that mobile phone firms charge each other and landline operators for putting callers through to their customers.

The former BT Cellnet business is also facing increased competition from Hutchison's 3, a relative newcomer to the UK mobile phone market.

O2's other main market, Germany, also faces a tough second half, although turnover in the first six months lifted sharply to £719m with operating losses down to £35m from £121m a year earlier.

The company's customer base in the country grew by 22 per cent to 5.25 million.