O2 is cutting back the number of staff it employees in Germany.

In a press release the company said that it needs to cut 700 jobs, or around 15 per cent of its workforce, by mid-2008.

Most of the cuts are in areas of back-office functions and will be run without forced redundancies, O2 Germany said.

The company is Germany's smallest wireless-network operator by sales and has seen the gap with nearest rival E-Plus, the German unit of Royal KPN, grow in recent quarters.