Britain's biggest mobile operator Everything Everywhere posted solid revenue growth in 2011, driven by customers upgrading to smartphones with data packages on long-term contracts over cheaper pay-as-you-go offerings.

The company, which runs the T-Mobile and Orange brands in Britain, also said it was making good progress in cutting costs, enabling it to make the business more efficient.

In total, service revenue growth for the provision of ongoing services was up 2.1 percent when excluding the impact of regulatory changes. Including the impact of regulation, it was down 2.1 percent.

The margin on adjusted core earnings grew by 1.3 percentage points to 20.9 while it made 278 million pounds of annual gross operational savings, putting it on track for its planned synergy savings by 2014.

The unlisted joint venture, created by a tie-up between France Telecom and Deutsche Telekom, said much of the growth came from the move to more expensive smartphones with data packages which enable customers to access the internet while on the go.

Underlying service revenue growth was driven by a 7.5 percent year-on-year increase in the contract customer base, and it had its strongest quarter of new contract customers ever in the fourth quarter, with a record 313,000 net additions.

As a result of network sharing and customer experience improvements, we are seeing good commercial momentum and are capitalising on the smartphone and data opportunity to drive underlying growth, Chief Executive Olaf Swantee said.

(Reporting by Kate Holton)