For the full year, O2 now expects UK net service revenue growth of 6% to 9%, compared with previous guidance of growth in the mid-single digits. O2’s half-year results are expected to be released on November 16.

It expects a full-year EBITDA margin of about 30.2% in the UK. O2 also raised full-year capital expenditure forecasts by about 100m pounds ($176m) to 1.4bn pounds ($2.47bn) to 1.5bn pounds ($2.65bn), after increasing spending on its Airwave unit. Airwave provides secure telecoms networks for emergency and public safety services.

Slough, UK-based O2 is the third-placed UK mobile operator and is the former wireless arm of BT Group Plc. It operates in the UK, Ireland, and Germany, and is Europe’s sixth largest mobile phone company overall, with a total user base of roughly 24.6 million customers (15 million in the UK). During the first quarter it added 232,000 new subscribers in the UK, and is expected to have gained an additional 400,000 in the second quarter.

There is some concern however that due to O2’s limited market reach, it lacks the scale to compete against some of the more global players such as Vodafone Group Plc and France Telecom’s Orange SA. These concerns have meant that the UK operator has been constantly at the center of takeover speculation, especially after it rebuffed a takeover offer from KPN in February 2004. KPN has long been viewed as offering a good fit with O2, especially if it were to combine O2’s strong presence in Germany with KPN’s German division E-Plus.

Last month, both KPN and Deutsche Telekom AG both issued statements confirming market speculation that they had been in discussions regarding a partnership to take over O2. However, the talks ended without agreement on an offer. Under UK merger rules, these declarations mean that Deutsche Telekom and KPN are prevented from making fresh approaches to O2 for a period of six months unless a third party comes in with a formal offer of its own.

Meanwhile, O2 has finally given details of the i-mode service it will offer in the UK. An internet service for mobile phones, i-mode was created by NTT DoCoMo in Japan six years ago. More than 43 million people in Japan subscribe to DoCoMo’s i-mode, but European success has been more limited. It was first launched in Europe in 2002 by E-Plus Mobilfunk in Germany, and only 5 million people in Europe have an i-mode phone. The service is currently available in seven countries, not including the UK.

O2 said it will launch four new phones and a hundred content sites with the new service. The service is being launched under the slogan, the Internet at the touch of a button, and the four new phones, from Samsung and NEC, all have an i-mode button and Blackberry-style push email. In addition, O2 has booked 4,000 hoardings across Britain as part of a 10m pounds ($17.6m) advertising blitz to promote the service.

At the moment O2 does have its own content portal, but it describes i-mode as a service that allows customers to do many of the same functions they do on the internet today, such as banking, shopping, and buying tickets. This is a departure from O2’s existing portal, which is mainly used to offer entertainment and information services.

The two services will charge the same 3 pounds ($5.29) per megabyte price, but the i-mode service will be free until the end of the year (for contract customers), and for a month for pre-pay users. Email will be free until April next year, but will then be charged at the same rate as text messages.

O2 will start offering i-mode in Ireland next week and in Germany during the first half of next year.

O2’s shares, which have risen more than 60% over the last year mainly on takeover reports, jumped 1.8% to 155.75p ($2.75) on the London Stock Exchange at 4pm BST Tuesday.