But Mercury expects subscribers who numbered 62,500 in March to pass 100,000 within weeks.
One-2-One's losses emerged as C&W announced a 19 per cent increase in pre-tax profits from pounds 918m to pounds 1.09bn. With a final of 5.65p, the total dividend is 8.25p, an increase of 11 per cent.
Turnover rose by 23 per cent from pounds 3.8bn to pounds 4.69bn. Lord Young said the results reflected strong underlying growth in telephone call volumes and pounds 95m of currency transaction gains.
Hong Kong Telecom, in which C&W has a 57.5 per cent stake, lifted operating profit by 34 per cent to pounds 739m. Traffic between Hong Kong and China grew by 31 per cent and accounts for about half of HKT's international business. Last year HKT and C&W formed Great Eastern Telecommunications to invest in China and other areas of Asia.
Lord Young said there were signs that the Chinese government was relaxing its rules on investment in telecommunications and that GET was well placed to take advantage of the opportunities there. The Chinese plan to have 114 million telephone lines installed by the end of the decade compared with 40 million at present.
Operating profits in the Caribbean rose by 45 per cent to pounds 154m.
Lord Young, C&W's chairman, said One-2-One was performing ahead of forecasts but refused to say how much each subscriber spent on average.
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