Everything Everywhere, the merged UK operations of Orange and T-Mobile, increased its earnings last year despite a fall in both customer numbers and revenues.
It came as the mobile provider switched more customers from less-profitable, pre-paid phones to far more lucrative contracts.
Everything Everywhere saw earnings rise 2.1 per cent to £1.4bn. Revenues fell 4 per cent to £6.8bn. While the customer base fell 1.5 per cent to 27.5 million over the year, the final quarter was the strongest with 313,000 new contract customers.
Everything Everywhere's chief executive, Olaf Swantee, said the merger had brought rewards.
"As a result of network sharing and customer experience improvements, we are seeing good commercial momentum and are capitalising on the smartphone and data opportunity to drive underlying growth," he said.