An exclusive deal to sell Apple's iPhone in the UK helped O2, the mobile operator, to another strong quarter. The UK division became the group's star performer, enjoying a 10.6 per cent rise in annual sales, as O2's parent company, Telefónica Europe, reported a 5.9 per cent rise in full-year sales to €4.3 billion (£3.8 billion).

Telefónica Europe said that, even in the past three months, when the recession was starting to bite in Britain, O2's UK sales were still up by 10.4 per cent on the same quarter the previous year.

Matthew Key, chairman and chief executive of Telefónica Europe, said that the UK business had turned in another outstanding performance, thanks partly to the iPhone, whose UK sales have topped one million.

He said that O2's UK arm added 499,000 fixed and mobile customers during the last three months of the year and, including Tesco Mobile, ended 2008 with a total number of customers approaching 22 million.

He added: “This great performance in the UK was fuelled by four key areas, including the fact that we were No1 in customer satisfaction and the success of our products at the top end of the market, including BlackBerry and iPhone.”

Overall, Telefónica Europe's operating profits before depreciation and amortisation rose by 4.7 per cent to €4.18 billion, although profits on a reported basis fell by 16 per cent because of one-off gains last time from the sale of the group's Airwave unit.

Mr Key warned that while Telefónica Europe's results appeared to be bucking economic trends, the group remains concerned about the trading environment. He reiterated the importance of offering customers services and propositions that they value.

He added: “The telecoms sector can help fuel economic recovery, provided the right regulatory framework is given. We call upon politicians, regulators and the industry to work together to ensure the regulatory clarity that will favour investments in R&D and new infrastructure.”

Telefónica, the parent company, reported a 2.7 per cent rise in full-year sales, to €57.95 billion, with strong growth in Latin America making up for sluggish growth at home.

Carphone cutbacks

Carphone Warehouse, one of the main retailers of Apple's iPhone in Britain, said that it may shed 10 per cent of its head office and support service staff in the UK after a review (Jenny Booth writes).

About 450 jobs are at risk, although the retail chain and TalkTalk broadband operator said that it hoped to redeploy many of those affected.

Europe's biggest independent mobile phone retailer said that no jobs would go from its stores and that none of its 2,400 stores in nine countries would close.

About 12,500 of the company's 21,400 staff work in the UK, including 4,500 administrative staff.

A company spokesman said: “We announced in January that we would be undertaking a review of the business and that we were aiming to make savings across the business. As part of that, 450 roles will be placed at risk.”

Carphone Warehouse said that it had begun consultation with staff at its North Acton headquarters in West London and call centres in Preston, Warrington, and Wednesbury in the West Midlands.

The shares closed up 0.25p at 106.5p

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