Carphone Warehouse defies recession with first quarter results

A greater contribution from businesses compensated for lower sales to consumers and helped Carphone...

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A greater contribution from businesses compensated for lower sales to consumers and helped Carphone Warehouse Group grow total revenues 5% in its first quarter of 2009.

Carphone Warehouse Group CEO Charles Dunstone said both TalkTalk, its UK network operator, and Best Buy Europe, its retailing operation, had defied the recession to post growth. He expected to meet annual targets and to demerge the two businesses.

Dunstone said the average customer spend on TalkTalk was up 5%. The firm added 47,000 new broadband customers and migrated 59,000 to its own network infrastructure. Bringing more customers to its own network (currently 79%) improved its operating margins as did lowering customer "churn" (acquisitions less losses), he said.

Total sales at TalkTalk were down 2% to £340m. Residential revenues were flat quarter-on-quarter and down 3% year-on-year at £264m. This reflected a year-on-year drop in voice-only and dial-up customers, compensated by continued good growth in broadband customers. Revenues from businesses were up 1% year-on-year to £76m, as Opal's new product offerings to SME customers, which include broadband, proved attractive, he said.

Best Buy Europe, the retail and distribution business that Carphone Warehouse Group half-owns, boosted connections 3% year-on-year to grow share in a subdued market and boost sales 6% to £773m.

"High-end and prepay phones continue to drive connections growth, but we expect today's high-end phone features increasingly to cascade into the mid-tier range as technology becomes cheaper and touch-screen phones continue to gain popularity," Dunstone said.

Dunstone said the integration of Tiscali's UK business from 3 July 2009 was going well. He promised an update on progress in October, but was confident of achieving the benefits he first identified in the deal.



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