Mobile phone group mmO2 pledged today to review its cautious stance on dividends after posting maiden full-year profits of £95 million.

The group revealed it was looking at ways to enhance value for investors after its "future financial profile" became clearer in the 12 months to March 31.

Options include a share buyback programme or a maiden dividend payment, which was ruled out temporarily in the wake of its split from BT at the end of 2001.

Details of the review - expected to be completed by November - came as the group announced a 22% hike in total revenues to £5.65 billion, with growth in its two largest markets of Germany and the UK.

More than 2.5 million customers were added during the year, just over half of which were more lucrative contract users.

The profits performance is in sharp contrast to a year ago when mmO2 reported losses of £10.2 billion after writing down the value of third generation licences bought at the height of the telecoms boom.

Chief executive Peter Erskine said: "Our mobile markets remain highly competitive, but all our businesses are well positioned with real positive momentum."

In the UK, mmO2 said sponsorship of the England rugby team and Premiership champions Arsenal had built awareness of its brand and helped to grow its customer base by 10% to 13.3 million.

Revenues increased by 16% to £3.2 billion during the year and the company predicted growth of up to 8% in its UK operations over the next 12 months.

But mmO2 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.

Tuesday May 18, 2004