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Carphone Warehouse First-Quarter Phone Connections Jump 20%

British-based Carphone Warehouse on Thursday posted a 19.9% rise in first-quarter mobile phone connections, helping drive up distribution revenues by 11.7%.

Europe's largest independent mobile phone retailer said distribution revenues rose to 706 million pounds ($1.45 billion), broadly in line with analysts' expectations, while total mobile phone connections surged to 2.3 million. Total revenues jumped 21.7% to 1.044 billion pounds. Carphone Warehouse, which had been expected to deliver a strong quarter, said it added 126,000 net new broadband customers, taking its customer base to 2.4 million. Revenues at its fixed-line business rose 49.5% to 345 million pounds.

"We have started the year well," said Chief Executive Charles Dunstone in the statement. "The retail business is enjoying good growth, and we continue to take market share."

Analysts had on average expected mobile phone connections and revenues to rise by around 12% in the quarter. Carphone Warehouse's shares had consequently rallied sharply ahead of results.

However, some experts warn that the company could see increasingly fierce competition for broadband customers, with rivals such as Tiscali cutting prices while Orange offers free laptops for some customers.

Meanwhile, Carphone's own new lower-end product, Talk2 international and broadband, which includes line rental, free weekend and evening calls to 36 international destinations for 16.39 pounds per month, could eat into margins.