Telefonica’s latest set of quarterly results showed that O2 UK suffered a drop in revenue, despite a growth in customer numbers.

In the UK, total revenue fell by 4.8% to £1.37bn (€1.74bn) year-on-year, while Telefonica’s group net profit fell by 20% in the second quarter, accentuated by last year’s sale of Airwave. 

Despite the dip in profits, the results exceeded analysts expectations.

Telefonica’s quarterly report said the iPhone and improved churn helped to drive contract additions for O2 in the UK, which stood at 137,596 during the second quarter of 2008.

O2 made a total of 274,571 net additions during the second quarter of the year, eight times the amount during the same period last year.

Contract churn fell slightly, from 1.5% in the first quarter of the year to 1.4%, driven by what Telefonica described as retention activity and handset upgrades. However, blended churn for the first half of the year was flat, year-on-year at 2.7%.

Contract ARPU fell from £44.1 (€56.0) during Q1 to £42.2 (€53.6) during Q2. 

The additions to its customer base takes its total number of customers across prepay and contract to 18.7 million, excluding Tesco Mobile.