Carphone revenues up 42.1%, as UK goes mad for ‘free’ broadband

27 Jul 2006

European telecoms service provider and mobile retailer Carphone Warehouse said group revenues in its fiscal first quarter rose 42.1% as UK customers scrambled to take advantage of its much hyped ‘free’ broadband offer. Total sales for the 13 weeks ended 1 July 2006 were GBP857.6 million (USD1.59 billion), including growth of 28.1% in its core mobile phone retail business, up to GBP441.6 million, while its fixed line telephone revenues more than doubled to GBP257.3 million. Carphone said like-for-like gross profit in the period was up 6.8%, but has yet to provide details or release its full financial figures.

In April Carphone’s UK fixed line business TalkTalk announced the launch of so-called ‘free’ broadband to all new customers taking a phone service over newly unbundled lines. For GBP20.99 (USD36.53) per month users can receive unlimited local and national landline calls, unlimited international landline calls to 28 countries and broadband access at up to 8Mbps. The company says initial take-up of the new service has exceeded predictions with 476,000 customers applying for the product so far, 247,000 of which have been connected; those figures are in addition to the 128,000 broadband users Carphone reported prior to launching the new service. Migration to unbundled lines started in July, but the company has been criticised for delays in connecting new broadband customers. It says it has now reduced connection time from ‘about nine or ten weeks’ to ‘six or seven weeks’. The launch of free broadband will result in an operating loss of around GBP50 million in the year to March 2007, but Carphone expects the service to contribute between GBP30 million and GBP40 million incremental profit the following fiscal year.

United Kingdom, TalkTalk