Siemens Mobile took a 12.7% share of the UK market in December - according to industry figures published yesterday - compared with 8.5% in November. This puts it in second place behind Nokia but well ahead of third-placed Samsung, on 6.6%.

The figures, by GFK Marketing Services, also paint a dire picture for Sony Ericsson, which saw its share of the market slip to 6.2% from 7.7% in November. Analysts believe the venture will have to start showing a return or be broken up this year.

Separately, Ericsson yesterday announced worse than expected fourth-quarter losses as its network division unexpectedly failed to move back into the black. The company made a loss of £160m for the last three months of 2002 - £50m more than expected.

The Swedish communications group, which has been loss making for more than two years, warned that sales in the first three months of the current year are likely to be 30% lower than the seasonally strong previous three months.

It also warned that mobile phone operators are still holding back investment, meaning that sales of network equipment could be down as much as 10% for 2003 as a whole.

In the three months to December the company's Sony Ericsson mobile phone joint venture saw shipments increase 42% to 7.1m - buoyed up by sales of its T68i model, one of the first mass market phones with a camera.

But the venture, formed over a year ago, is still racking up significant losses, prompting analysts to suggest that if it does not make major inroads into Nokia's lead in the industry it could be wound up.

In contrast, Siemens believes its mobile phone division is well on the way to biting into Nokia's commanding lead.

In December Nokia saw its share of the UK market reduced to 55.3% from 59.4%. Siemens Mobile's chief executive, Rudi Lamprecht, believes the Finnish company is not invincible. "In a competitive marketplace you can lose very fast what you gained yesterday because there is no particular loyalty out there - if someone has a better price or product, customers will come."

Siemens is Europe's second largest mobile phone manufacturer, with almost 20% of the market. Its position in the UK, however, has suffered from a lack of focus.

Ian Moyes, head of Siemens Mobile in the UK, believes the company can capture at least 20% of the market by concentrating on selling its phones through mobile phone operators themselves, rather than direct to consumers.

"One of Nokia's strengths is the fact that a lot of people in the marketplace have grown up with years and years and years of Nokia dominance so they have grown up using their phones. There is going to be more inertia in their minds than there will be with the operators," he said.

Siemens scored a hit at Christmas with its A50 model and is hoping for even better sales for its S55, with its clip-on camera. The group launched a marketing campaign for the model at the weekend.