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Carphone Warehouse Profit Down on Broadband Losses

AFX
Tuesday, 5 Jun 2007 | 9:25 AM ET

Carphone Warehouse posted a near 10% in its fiscal full-year profits after losing some 70 million pounds ($140 million) in the U.K.'s ultra-competitive broadband market.

Europe's largest mobile phone retailer said pretax profits for the 12 months to the end of March dropped 9.5% to 123.1 million pounds after racking up start-up losses of 80.5 million pounds at its broadband and Virgin Mobile France ventures.

Still, the earnings were slightly higher than the 120 million pounds Carphone Warehouse had previously forecact, as turnover jumped 31% to 3.99 billion pounds on the back of strong mobile phone sales.

Carphone Warehouse Results
U.K. mobile-phone retailer Carphone Warehouse reported pre-tax profit of 123.1 million pounds, above the average market forecast of around 116 million pounds but down 9.5% on a year earlier. Arindam Nag, Skeptic Columnist at Dow Jones Newswires, has analysis on the numbers with CNBC's Geoff Cutmore.

Since launching its TalkTalk broadband service in April last year, Carphone Warehouse has incurred losses of some 70 million pounds on top of the 370 million pounds it paid for AOL's internet access business in the autumn.

This morning the group said it had "substantially addressed" the service issues that have dogged the broadband division, including delays in providing internet access to customers and the slower-than-expected migration of users onto its own 'unbundled' network.

It said it still expects to spend as much as 15 million pounds on additional customer support over the current financial year -- potentially halving the anticipated profits from the fledgling business.

Carphone Warehouse hopes to have signed up 3.5 million pounds users to its high-speed internet access service by March 2010, compared to around 2.3 million pounds at the end of March.

At its mainstay retail business, the number of customers the company signed up to mobile phone services jumped 22.3% to 10.0 million over the fiscal year, including a 17.3% rise in more profitable contract subscriptions. Carphone Warehouse said it was targeting connection growth of some 15% during the current year.

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