SERVICE REVENUE at Telefónica O2 Ireland fell to €234 million for the three months to the end of September, a drop of 3.4 per cent compared with the same period last year.

Monthly blended average revenue per user (arpu) for the quarter showed a decline to €43.70 compared with €47 for the same three-month period in 2007.

The mobile phone operator said 26,000 new customers subscribed during the third quarter to bring overall customer numbers to 1.73 million, a record high. Customer numbers were up 5 per cent year-on-year, the company said.

A total of 609 million text messages were sent during the three-month period, representing a 55 per cent rise in text usage year-on-year, up from 393 million in the third-quarter of 2007.

Monthly average arpu for post-pay customers for the quarter was €72.20, down from €84.90 on the comparable 2007 period.

Paul Whelan, chief financial officer, Telefónica O2 Ireland, said arpu had fallen due to "extra value" being offered to customers.

He said just over a third, or 37 per cent, of customers were on billed accounts, and said this side of the business was growing strongly.

Mr Whelan said the telecoms sector faced the same economic pressures as other sectors, and predicted this Christmas would be "a lot tougher than previous years".

The "phenomenal growth" in mobile phone penetration was coming to an end, he said, having reached 120 per cent.