O2, Britain’s biggest mobile telephones operator, is to delay its entry into the broadband market after a weak first quarter marked by a sharp sales slump in its German division. It will not launch a broadband service until September, nine months later than planned.

The first-quarter figures showed a 4.6 per cent year-on-year drop in German service revenues. Average revenue per user in the market, where it is struggling with fierce competition and aggressive pricing from Vodafone, T-Mobile and E-Plus, dropped 11 per cent on the same period last year to €34.20.

Customer numbers in the UK were also lower than some analysts had expected. The group added just 118,000 net new customers in the quarter, to the end of March, compared with 359,000 at the same time last year. Guidance for the 2007 year did not change.

Like its industry peers, O2 believes that broadband could prove to be a key factor in keeping its customers. The company acquired Be, a niche internet business, last year.

However, Peter Erskine, chief executive of O2 , conceded that launching a service was not as easy as he had expected.

“There is one thing that we will not do – launch stuff that is not ready for the customer,” he said.

The group is keen to avoid suffering any damage to its reputation, such as that suffered by Carphone Warehouse, by struggling with broadband provision.

Dresdner Kleinwort said in a note that it was “shocked” at the slump in German service revenue growth.

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