Broadband strategy boosts Carphone Warehouse profits

09 November 2007
Carphone Warehouse has recorded a significant boost in its fiscal first-half year profits thanks to increasing success in the broadband sector, despite a turbulent start to the year.

Pre-tax profits rose to £9.6 million for the six months to September 30, compared with a loss of £4.7 million in the same period last year while revenue was £2.1 billion, up 18 percent. According to the official interim report, the group is confident that, after amortisation and restructuring charges, it will hit its 2007-08 pre-tax profit target of £220 million - £225 million.

The mobile phone retailer and telecoms group has said the increase is down to its flourishing retail business as Europe’s largest mobile phone retailer as well as its internet access business which has finally started to fire profitability following its purchase of a share in AOL’s broadband business last year.

However, initial profit growth was sluggish as the broadband business failed to make a profit while customers were still using BT to connect to the web rather than using Carphone’s own network. Despite the teething problems, the firm now has 2.5 million broadband customers and around a 17 percent share of the market, placing it in third place behind Virgin Media (24%) and BT (27%).

Charles Dunstone, CEO, comments: “We have made good progress across the Group in the first half. The Retail business continues to prosper across Europe, and we are announcing today a major roll-out of our US venture. In our UK Fixed Line operations, the majority of our broadband customers are now on our own network, with profitability and quality of service improving all the time.”

The company currently sells an estimated 1,000 Blackberries a week has a number of new product launches in the pipeline and has indicated that rising consumer demand and interest in mobile data services will be an area of future product development.

In addition, the profits are expected to be bolstered by sales of Apple’s iPhone which will go on sale at 6.02pm today. Carphone Warehouse and O2 have won the exclusive rights to sell the much hyped iPhone which will be available from 1,300 Apple, O2 and Carphone Warehouse stores across the UK and via the firms' websites.

Find out more about Talk Talk broadband or compare broadband deals

© Fair Investment Company Ltd