A mobile communications system having improved spectral efficiency, and methods and apparatus to achieve this improved spectral efficiency. In the mobile communications system communication with a plurality of mobile terminals is provided by a base station. Within the system terminals are adapted to communicate with one or more adjacent similar terminals to establish groups of terminals, called micro-cells. Each terminal within a micro-cell receives signals from the base station and then performs a first processing step on these signals. These processed signals are shared with all the other terminals within the micro-cell. Each terminal then performs a second processing step on the information it has received from all the other terminals within the micro-cell which enables it to derive a signal intended for reception by that terminal. The technique is applicable to both the uplink and the down link and also to peer to peer communication.