Europe’s largest mobile handset retailer, The Carphone Warehouse Plc, which is turning itself into one of the UK’s leading alternative telecoms providers after its acquisition of the Onetel group and Tele2 UK and Ireland, has posted a 13% rise in retail gross profit on sales up 7.1% thanks to a very strong Christmas performance.
For the three months ending December 31, the Carphone Warehouse reported a 30% increase in the number of customers it connected to mobile networks, almost double expectations. Total connections meanwhile rose 32.7% to 2.73 million in the quarter, way ahead of the 15% growth most analysts were expecting.
Looking forward, the company said pre-tax profits this year would be towards the top end of expectations. This is likely to be around 135m pounds ($239m). The company also opened 126 new shops in the quarter, taking the total to 1,712 across Europe.
On the telecoms (TalkTalk) side, its UK residential base increased to 2.4 million customers, with a 40.9% growth in fixed-line revenue to 140.5m pounds ($248.5m).
Just before Christmas, Carphone Warehouse signaled its intent with the 154.2m pounds ($271.8m) acquisition of UK telecoms provider Onetel from utilities company Centrica Plc. This alone added 1.1 million customers to its TalkTalk service. It also paid 8.5m pounds ($14.9m) for Tele2 UK Communications Ltd and Tele2 Telecommunications Services Ltd (Ireland) from Pan-European telecoms company Tele2 AB. These acquisitions give it roughly 10% of the UK fixed-line market.
These figures represent a very strong performance across the Group, reflecting excellent market conditions, exclusive products and continued focus on investment in service and value for our customers, said CEO Charles Dunstone. The acquisitions of Onetel and Tele2’s UK operations have cemented TalkTalk’s position as the number one challenger in the UK residential telecoms market, and we have a substantial, profitable platform from which to launch our drive into broadband this year.
The company is looking to spend 45m pounds ($79m) over a three-year period on local loop unbundling.
The only cloud on the horizon came when Dunstone warned that the Fresh mobile virtual network operator unit would incur a loss of 5m pounds ($8.8m) in the 12 months to the end of March as it battles to tempt customers away from established mobile giants such as Vodafone Group Plc and O2 Plc.