Mobile data firm ITouch has launched a strategic review of its business that could lead to the inclusion of an impairment charge in future accounts.

ITouch, which is 38 per cent-owned by Independent News and Media, said yesterday that it was looking into its existing operations with a view to positioning itself for "a strong financial performance in 2004".

It said the review could lead to "some impairment of goodwill", but did not expand on when this might be expected.

Investor relations manager Ms Lucy Campbell said the process was still at an early stage, adding that the firm's finance director, Mr Michel Le Houx, had been looking at all aspects of the company since his appointment two months ago.

News of the review came as ITouch posted an 81 per cent reduction in operating losses for the third quarter and said sales had jumped 57 per cent to £16.3 million (€23.2 million).

Operating losses fell from £3.6 million to £700,000, while the company registered a profit for the first time on the earnings before interest, depreciation and amortisation (EBITDA) measure.

Analysts said the EBITDA profit of £800,000 was in line with market expectations.

ITouch chief executive officer Mr Wayne Pitout said the profitable position was now sustainable and predicted that the firm would break even on the EBITDA measure for the whole year.

He said the third-quarter performance had been driven mainly by Movilisto, the Spanish competitor that ITouch acquired over the first half.

Mr Pitout confirmed that ITouch continues to seek expansion in key European countries as well as developing less mature premium SMS markets.

Shares in ITouch dropped 6.5 per cent to close at 28.75p sterling in London last night.