Carphone Warehouse has surpassed analysts' expectations with a 16% rise in UK revenues as shoppers rushed to buy low-priced tablet computers.

Europe's biggest independent mobile phone retailer reported high demand for the £99 Amazon Kindle Fire and deals bundling Samsung Galaxy phones and tablets.

Carphone's sales of the devices peaked at 40,000 a week during the December quarter, compared to an average of 5,000 a week over the same period last year.

"We have become an authority in the tablet market for the first time ever," said chief executive Roger Taylor. "Having done that at a time when we've also managed to maintain our profitability is something we can be very proud of."

The low-price tablet trend has already benefited Dixons and Argos, whose Christmas takings were lifted by strong demand for cheaper tablets.

The money invested in offering cut price deals to customers will eat into profits, as Taylor warned margins would slide 2% for the full year at Carphone Warehouse Europe, which includes shops in the UK but not the Virgin Mobile mobile network in France.

Like-for-like revenue on the continent was flat during the three months to 31 December, with trading in France "particularly tough" as the impact of a price war started by the country's newest network, Free, took its toll.

Virgin Mobile France lost 17,000 contract customers in the quarter as consumers chased low-priced deals, leaving it with 18 million subscribers overall. Revenues nonetheless grew by 9.9%, to €120m, thanks to a more profitable mix of contracts.

Overall, retail revenues increased 14.5% in the quarter to just under £1.2bn, sending shares up 5% to 230p on Thursday .