Carphone Warehouse figures fail to connect

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Carphone Warehouse, the mobile phone and broadband retailer reported an 11 per cent rise in mobile phone connections in the 13 weeks to 29 December, yet still failed to meet City expectations on Christmas trading.

Analysts had been looking for a 15 per cent rise, an ambitious figure considering the massive saturation of phone ownership among both adults and children in the UK. Shares in Carphone today belly-flopped by as much as 5.8 per cent in early trading as investors reacted badly at first to the otherwise strong set of results. The shares recovered and were up 1.7 per cent to 310p per share before lunchtime.

Of the 3.6 million total mobile phones it sold in the period, 1.3 million were on contracts, while the rest were prepaid or SIM-free phones.

The company reported broadband growth of 118,000 customers, giving it a total of 2.6 million users, in line with expectations. The company also made progress in migrating customers off BT wholesale lines and onto its own unbundled connections, reducing operating costs per broadband customer considerably and giving Carphone more flexibility over network and service management.

"We have enjoyed a good third quarter across the group," Carphone's chief executive Charles Dunstone said. "Overall our expectations for the full year are unchanged. We believe we are well positioned as a group, despite the more uncertain consumer environment."

Carphone's finance director Roger Taylor added that customers appeared inclined to shop around more for the best mobile deal.

Group revenues were up 14 per cent to £1.23 billion. Like-for-like gross profit was up 3.1 per cent and an impressive 8 per cent in the key December period, which analysts linked to its deal to sell the Apple iPhone. The company did not give any figures for iPhone sales.

Carphone moved into the US in 2007, through its joint venture with consumer electronics retailer Best Buy, which has also seen the pair bring Best Buy's Geek Squad home visit IT support service to the UK.

(Additional reporting by Reuters)

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