Peter Erskine, the head of Britain’s biggest mobile operator, is in unfamiliar territory. After a string of successes at O2 – the group that he steered from underdog to the country’s top player and then on to a £17.7 billion sale – suddenly there are problems.

The one-time powerhouse of the British mobile phone industry conceded last week that it had added an unimpressive 34,000 customers in its second quarter. Vodafone, its rival, added more than 200,000. Moreover, O2 has been forced to cut its forecasts for its key German division and has had to ditch i-mode, its much-trumpeted “mobile internet” service, after it flopped with customers.

So, unusually, the 55-year-old former Mars marketeer who defied City scepticism to work his magic on the former BT Cellnet mobile unit, has been forced on to the defensive. “We are the largest in terms of customer numbers in the UK and by the end of the year our margins and revenues will be stellar,” Mr Erskine responds, firmly.

Those numbers will have to sparkle in an environment hugely different from the mobile heyday of the 1990s. Then, calls cost up to 50p a minute and operators merrily splurged a combined £22.5 billion on the licences for “next-generation” 3G technology – a technology that has yet to reap the hoped-for rewards.

Today pretty much everyone who wants a mobile phone has one (or two, or three, since there are now more mobile devices than people in this country) and, instead of targeting new customers, the likes of Vodafone, O2 and Orange are working frantically to lock-in their existing ones while wooing over rivals’ subscribers. It is, as they say, a dog-eat-dog world out there.

Mr Erskine does have a few unique weapons at his disposal, however, not least a sponsorship deal of the former Millennium Dome, now The O2 music arena. The association of his group with the 20,000-capacity entertainment venue, which has already played host to a string of big-name acts, including Bon Jovi and Justin Timberlake, will, he confidently believes, give a powerful boost to the“ O2 brand. Whereas other blue-chip companies approached about a tie-up could not move quickly enough to steer clear of the white elephant beside the Thames in Greenwich, Mr Erskine, who spent years in marketing with companies such as Polycell and Colgate before joining BT, saw the potential immediately. O2 ’s link with the venue is, he says, a “strong driver for retaining existing, and attracting new, customers”.

Mr Erskine’s next move to keep O2, with its 18 million subscribers, in pole position is to start to offer broadband. Once customers are signed up to two products with his group (which is now owned by Telefónica, of Spain), they will be more inclined to stay, he hopes, rather than jump to a rival.

Critics might argue that this is easier said than done. With 100 providers, including giants such as BSkyB, Carphone Warehouse, BT and Virgin Media, already firmly cemented in the sector, is it not a touch late to be just starting out?

Mr Erskine, who has already delayed the launch of the service twice, disagrees. He nods to the debacle at Carphone Warehouse, where an inability to cope with demand for a service that was marketed as “free” triggered a stream of customer complaints. “You might come early and muck it up,” he says, bluntly.

Like his former parent company, BT, Mr Erskine says, he is looking to opt out of the vicious price war and instead seek to attract customers who have suffered poor experiences elsewhere to a reliable product backed up by strong customer service. “People are very wary about ‘free’,” he argues. “Broadband is now as important in the home as electricity. People need a reliable service and high speed and people will pay for it.”

Fear of spoiling the O2 name was also, Mr Erskine says, the key reason for ditching a planned deal with Disney to sell a “family orientated” mobile service in the UK. “One has to be awfully careful when marketing to children,” he says. “It is a real hot potato.”

Speculation is rife that the next goodie that Mr Erskine will pull out is a deal with Apple, the Californian consumer electronics giant, to run its iPhone exclusively on its network. O2 is in pole position to secure the deal, although industry insiders reckon that Apple’s notoriously opaque negotiating techniques could yet see it switch tack at the eleventh hour.

Already, rival players that appear to have missed out on the deal are busy talking down its potential impact. Arun Sarin, the head of Vodafone, recently expressed “concerns” that the phone was not a 3G phone.

“Those who don’t win it will trot out reasons as to why they would not want it,” is Mr Erskine’s response, “but it is a good one to have on your side.” The iPhone, he reckons, will be a huge catalyst in encouraging consumers to spend on more lucrative “data” services, such as the downloading of videos and music and surfing the internet.

Mr Erskine adds, however, that the ideas and tie-ups are not enough to steer a business of O2 ’s standing. A certain kind of management style is also critical. “The major thing is an attitude of mind – not being encumbered,” he says. “You need to be willing to learn and listen and steal ideas.” The biggest killer for a manager, he believes, is ego. “The day when you believe your own hype is when you are in trouble,” he says.

If Mr Erskine is clear about his route to sustained success, he is also unambiguous about where some of his rivals are going wrong. He argues, for example, that BT is at a “colossal” disadvantage by not having a full-blown mobile division in an age of “converged” services and bundled packages of phone, broadband and television. Recent research from Analysys, the consultancy concluded that half of all European calls will be mobile by next year. “Mobile,” he says, “is what people want to use.”

Curriculum vitae

Born November 10, 1951, Essex

Education Bancroft School, Woodford Green, Essex; graduated with a degree in psychology from Liverpool University

Career 1973-80 Marketing roles at Polycell and Colgate-Palmolive

1980 Joined Mars. Became European vice-president of sales and customer service

1990 Sales and marketing vice-president of Unitel, the mobile phone operator

1993 Appointed head of BT Mobile

1995 President and chief executive of Concert, BT’s joint venture with MCI

2000 Head of BT Wireless, a new single unit of BT’s mobile interests

2001 Helps to steer demerger of BT Wireless to form mmO2, which was sold in 2005 to Telefónica, of Spain

Family Married with four children. Lives Henley-on-Thames, Oxfordshire

Hobbies Golf, supporter of Tottenham Hotspur FC

The leader questioned

If you could change one thing in the financial and commercial environment, what would it be?
I’m a firm believer in free competition and would like to see less bureaucratic intervention in our industry. Competition has delivered enormous benefits for telecommunications customers, and we want those to continue.

What does leadership mean to you?
True leaders listen, understand and then act on the needs of those who rely on them. As a company, we firmly believe in allowing consumers and markets to decide what solutions and services best suit them.

Which businessman or woman do you most admire?
It is hard to single out an individual. So many people from many different businesses and walks of life have profoundly influenced me over the years.

Who is or was your mentor?
I learnt a great deal from the founding chairman of O2 , Sir David Varney, who proved to be an inspirational giant at the time we were demerging from BT. I’ve also received sage advice from too many people to name here – from my schooldays to my time as VP of sales for Mars.

Which is more important: what you know or who you know?
I’m not sure if one is more important than the other – perhaps a combination of both. And being in the right place at the right time can help, too!

Does money motivate you?
No. Overcoming challenges to achieve your goals should be a far more important motivation.

What is the most important business event, good or bad, to happen in your working life?
My proudest career moment was becoming chief executive of O2 Telefónica Europe. The successes that we as a company have achieved since then are the icing on the cake.

What gadget must you have?
I guess it would have to be a toss-up between my sat-nav and my BlackBerry. I can’t choose one outright, but I know I’d be really lost without one of them.

How do you relax?
Playing golf badly and relaxing with my family. I would like to say my football team, Tottenham Hotspur, but it would be easier to unwind if they finished higher in the table than Arsenal this season.

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