US Edition O2, which is owned by Spanish telecoms giant Telefónica, has sold more than one million iPhones in Britain since it signed an exclusive agreement with Apple in November 2007.
Matthew Key, chairman and chief executive of Telefónica Europe, said O2 added 1.1m mobile customers in 2008 to take its subscriber base to 19.5m.
The operator's annual sales were up 10.6pc on constant currencies to €7.05bn (£6.25m). Sales were up 10.4pc in the last three months of last year - compared to the same period in 2007 - despite a sustained drop in the overall mobile phone market.
Mr Key said the network is attracting customers from all its rival and its "churn rate" – the number of customers leaving the network – is the lowest in the market.
"We have significantly outperformed Vodafone across 2008," he added.
But, like other mobile operators, it has noticed a significant number of customers are trading-down from 18-month fixed term contracts to "no commitment" rolling monthly tariffs or pay-as-you-go deals.
Telefonica's like-for-like operating profits before depreciation and amortisation rose 4.7pc to €4.18bn, but were profits down 16pc on those reported last year when they were boosted by the proceeds from the disposal of Airwave to Endemol.
Full-year sales were up 2.7pc to €57.95m, largely due to huge growth in Latin America.