Once buoyant mobile phone sales are predicted to stagnate at around the 300 million mark in Western Europe, according to figures released yesterday in an Analysys report.

The report, entitled Western European Mobile Forecasts and Analysis 2002-2007, shows that subscriber growth is down to just six percent from 17 percent last year and 53 percent the year before. Indeed in some countries, including Germany, there has been no growth at all.

It warns that mobile phone operators would do well to shift the emphasis of their business away from wooing new customers. "Most people in Western Europe who want a mobile phone already have one," states Katrina Bond, lead author of the report.

Orange UK spokesperson Stuart Jackson backs up this finding: "In the UK [mobile phone] penetration is around 70 percent."

This has lead to a shift in the business model traditionally pedalled by operators as they move away from wooing new customers towards maximising the revenue they can make from existing users. "We shifted away [from targeting new customers] about six or seven months ago. Instead we need to get more value out of existing customers," explains Jackson.

Bond also believes that finding new ways to make money from current users could allow operators to weather the downturn. "Operators are starting to see some success in improving the amount of revenue they get from each customer," she says.

Orange UK and rivals T-Mobile and O2 have all showed signs of reversing the long-term decline in revenue by using these strategies according to the report.

Orange sees the future of its business in pushing services like picture messaging by backing them with advertising and deals on new devices that support them. Jackson believes we will see picture messaging take off in the same way as texting early next year when there are more, cheaper handsets with integrated cameras on the market and both phones and networks are interoperable.