Broadband costs to dent Carphone earnings

11 Oct 2006

European telecoms service provider and mobile retailer Carphone Warehouse says costs at its broadband business will be GBP20 million (USD37 million) higher than expected this fiscal year due to greater-than-expected demand for its so-called ‘free’ ADSL service launched in April. The company had said that the launch of free broadband would result in an operating loss of around GBP50 million in the year to March 2007, but this has now been revised to GBP70 million. Carphone expects the service to contribute between GBP30 million and GBP40 million incremental profit the following fiscal year.

In its second quarter trading update, Carphone said take-up of the new broadband service continues to exceed predictions, with 625,000 customers applying for the product so far, 421,000 of which have been connected; those figures are in addition to the 128,000 broadband users Carphone reported prior to launching the new initiative. Migration to unbundled lines started in July, and it says 370 exchanges have been unbundled so far, with a further 476 exchanges handed over by Openreach, the wholesale unit of fixed line incumbent BT Group. 20,000 broadband customers were on unbundled lines at the end of September. It remains on course to have a presence in 1,000 unbundled exchanges by May 2007. Carphone will release its full interim results on 2 November.

United Kingdom, TalkTalk