The second largest player in the mobile market, O2 Ireland, saw pretax profits rise 7.5 per cent to €214 million last year.

Accounts just lodged in the companies office show turnover rising to €858 million, up 12.5 per cent on the same period in 2004.

The accounts show the significant profits mobile companies can make from the Irish market. O2 Ireland, which is a subsidiary of O2 plc, made a gross profit in the period of €483 million, up from €470 million in the previous period.

A further indication of the scale of the Irish mobile market is the accumulated profits on the balance sheet of €426 million.

The rising profits at the company meant O2 was able to absorb higher staff costs - up to €81 million during the 12 months to the end of March last year from €74 million during previous 12 months. The average number of employees at the firm during the period under review was 1,614, up from 1,482. This represented an increase of almost 9 per cent.

The increased staff numbers came at a time when the company was adding significant customer numbers, from 1.3 million to 1.5 million.

The company owns two active subsidiaries - Cellular World Ltd and O2 Retail Ireland - both of which sell and distribute mobile handsets. The financial performance of these companies is not disclosed in the accounts.

A full profit and loss account is not included in the accounts as the company availed of the Companies (Amendment) Act 1986.

The accounts do refer to bonds lodged by the company in relation to a 3G licence. Under the terms of the licence, the company was obliged to meet "certain voluntary performance targets" by specified dates. A spokeswoman for the company said yesterday O2 had met all its commitments in this area and the bonds were secure. The company had four directors during the period under review, including managing director Danuta Gray. This group claimed €711,000 in remuneration, up from €360,000 the year before.

Minutes of usage per customer on the O2 Ireland network increased for the full year to 209 minutes per month, up from 197 minutes per month to end March 2004.

O2 UK customers spend 137 minutes per month on their mobile phones, while O2 Germany customers spend 118 minutes per month on their mobiles.

In the accounts the company said it would continue to expand its services and was concentrating heavily on its new i-mode phone. "In an increasingly competitive and highly penetrated market, the company has traded satisfactorily in the period," the company stated in the accounts.

O2 was recently acquired by the Spanish telecoms company Telefónica for €26 billion. This purchase is expected to herald a wave of consolidation in the telecoms industry.

The return of Eircom to the mobile market via its purchase of Meteor has increased competition, putting downward pressure on prices. However, the average revenue per user (ARPU) figures for the Republic remain high by international standards.