O2 will build 1,500 network sites across the UK next year, with 200 sites planned for London alone.
The company also plans to upgrade its radio network. Of the 200 London sites, 40 are expected to be live by Christmas this year.
O2's 3G network covers 84% of the population, but it says it expects demand for mobile services to grow.
Chief technology officer Derek McManus said, "In the past 12 months the mobile industry has seen an unprecedented change in demand. The introduction of world-class devices, in combination with a wide variety of data applications, has brought about a dramatic change in customer behaviour and created an exponential demand on mobile data networks. To put this in context, watching a YouTube video on a smartphone can use the same capacity on the network as sending 500,000 text messages simultaneously.
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"We are now aggressively accelerating our network growth programme to ensure we have significant headroom for the future and retain our focus on being number one for customer satisfaction," Derek McManus added.