The world's first advertising-funded mobile telecoms operator, Blyk, will enter the German, Spanish and Belgian markets next year, the company said.
Blyk offers some free calls and text messages to 16 to 24 year olds in return for them accepting advertisements.
The company is a pioneer among mobile carriers, which are only slowly entering the mobile ad market, helped by new technologies and the spread of more advanced phones.
Strategy Analytics analyst Nitesh Patel said Blyk's continued growth depended on demonstrating value to advertisers through superior ad response rates, growing its highly targeted subscriber base, and learning more about its customers.
'The reality is that advertisers are still testing the waters of the nascent mobile ad market,' he was quoted as saying.
Closely-held Blyk opened the service last year in Britain and a launch in Netherlands is scheduled for later this year.
Germany and Spain are among Europe's biggest ad markets and Belgium's ad spending per capita is among the region's highest, Blyk's co-founder and chairman, Pekka Ala-Pietila, told Reuters.
The top German mobile operators, Deutsche Telekom's T-Mobile, Vodafone Group, KPN's E-Plus and Telefonica's are competing hard on price, driven by E-Plus, which owns a host of budget brands.
The situation is similar in Spain, where Telefonica, Vodafone and France Telecom's Orange, along with a dozen virtual operators, battle each month for 350,000 people hopping from one operator to another.