Carphone warns broadband growth could falter

12 Jun 2008

In today’s announcement of its year-end results, Carphone Warehouse has warned that it expects to see lower growth from its broadband business, as the slowdown in the housing market, combined with strong sales of rival mobile broadband services start to take effect. Carphone said that net customer additions in the broadband sector were lower than expected in the year ended 29 March 2008; the company, which is the UK’s third largest broadband provider behind BT and Virgin Media, claimed 2.7 million broadband customers at the end of the financial year.

The group reported a 75% increase in full-year pre-tax profits to GBP216 million (USD422 million), on revenue up 12% at GBP4.47 billion. Carphone said it remained cautious in its outlook for the coming year, given the poor economic climate and inflationary pressures. It added however, that it would not change its full-year financial guidance because of the slowdown in broadband customer additions because the effect has been offset by falling churn. ‘If these trends continue, we expect lower revenue growth this year than previously expected, compensated by improved margins,’ CEO Charles Dunstone said in the statement. Carphone’s earnings were also helped by moving customers onto its own broadband infrastructure through local loop unbundling. Less than a third of Carphone’s customers were on its own network in April last year, but this has risen to 67%. The group expects to have almost 80% of its customers on its own network by March 2009.

United Kingdom, TalkTalk