O2 makes first profit from national police network

O2, the mobile phone operator, has made its first profit from the national police communications network which it built at a cost of £800m.

O2, the mobile phone operator, has made its first profit from the national police communications network which it built at a cost of £800m.

The company has seen an operating loss of £30m converted into a £19m profit from Airwave, the division responsible for the secure communications network constructed using the controversial Tetra communication masts. Campaigners have complained about adverse health effects on residents near the masts.

All 51 police forces use Airwave, which saw revenues rise to £169m in the 12 months to 31 March, up from £89m the year before. Earnings before interest, tax, depreciation and amortisation for Airwave increased from £1m to £72m. UK police forces pay O ₂ monthly fees which are reviewed annually.

Peter Erskine, O ₂'s chief executive, revealed Airwave's maiden profit with the group's annual results, which included O ₂'s first dividend payment - a 2.25p-a-share payout worth £196m. Sales rose from £5.6bn to £6.7bn with pre-tax profits up from £95m to £309m.

Mr Erskine predicted at least one mobile operator would be forced out of the UK market this year, highlighting the threat to Hutchison Whampoa's "3" operation from price controls that Ofcom could impose.

Hutchison is fighting the threat by taking Ofcom to the Competition Appeals Tribunal in a case starting on Monday. It is objecting to Ofcom's decision last summer to designate it as having "significant market power" over fees that mobile operators receive from rivals for carrying incoming calls on their networks.

If Ofcom's decision is upheld the regulator could force "3" to lower its termination rates, cutting the price the operator can charge for calls.