Virgin Mobile stuck by forecasts for annual profits today in spite of the prospect of weaker margins and revenues growth over Christmas.

The group said it was "comfortable" with City expectations after reporting a 14% rise in pre-tax profits to £47.3 million in the six months to September 30.

The improvement was due to lower operating costs and the addition of 647,500 new users more to build a total customer base of 4.6 million.

However, Virgin said it was yet to feel the full impact on revenue growth of a cut in termination rates - the price firms charge each other and landline operators for putting callers through to customers.

Service revenues grew 25% to £230.7 million in the first six months of its financial year, but are expected to slow to the low to mid-twenties in the second half.

Virgin said margins would also weaken as the company competes for customers over Christmas, but would still be higher than a year ago.

Customer additions are expected to continue to underpin the growth in revenues in the second half, with the group pitching new products to the market.

Pre-pay deal Bundles was launched last month, which enables higher-spending customers to cut costs by signalling how much they will spend on text messaging or voice calls each month.

In a statement, Virgin said: "Strong revenue growth coupled with the company's low acquisition costs and operating leverage, leads us to be comfortable with current consensus forecasts."

This would keep the company on course to pay an annual dividend and fulfil a pledge at the time of its stock market listing in July.

Chief executive Tom Alexander said Virgin was continuing to capture market share through better brand distribution.

Specialist stores have opened in 85 Virgin Megastores and trials are now taking place at eight outlets of stationers W H Smith as it develops its brands.

Virgin employs 1,400 staff and its products are sold from more than 5,000 retailers nationwide.

It differs from rivals such as Vodafone and mmO2 as a "virtual operator" which uses the network of T-Mobile.

Around 95% of its business is derived from customers buying pre-pay vouchers to top up the credit on their mobile phones.