PARIS--France's Iliad SA, which is trying to buy U.S. operator T-Mobile, reported a fall in first-half net profit as strong revenue growth was weighed by a one-off tax charge and the amortization of costs related to deploying a 4G network in France.

Net profit fell 1.3% to EUR139 million while revenue jumped 10.4% to EUR2.02 billion as the low cost operator continued to win over new clients in a highly competitive market French mobile market.

Iliad surprised the telecoms industry last month when it made a surprise $15 billion takeover proposal for T-Mobile. The French group founded by internet entrepreneur Xavier Niel only launched mobile services in early 2012 but has quickly eaten into rival's profits by kicking off a brutal price war with ultra-cheap offers.

But Iliad's initial bid has run into roadblocks. T-Mobile US Inc.'s chief financial officer earlier this month called the $15 billion takeover proposal "inadequate" although he hinted it may be open to a higher offer. All eyes are now on Iliad to see if it will improve its offer.

In its first half earnings report, Iliad did not comment further on the offer.

The company sparked a tough price war when it entered the French mobile market two years ago. Rivals Orange SA (ORA.FR), Vivendi SA's (VIV.FR) SFR and Bouygues SA's (EN.FR) Bouygues Telecom have seen profit tumble since, prompting operators to engage in efforts to consolidate, which haven't materialized thus far.

Iliad--majority-owned by Mr. Niel--said its share of the French mobile market stood at 13% at the end of June.

Mobile revenue rose 24% in the first half of the year EUR745.7 million.

-Write to Ruth Bender and William Horobin at ruth.bender@wsj.com; william.horobin@wsj.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires