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Wednesday, May 9, 2012

Carphone Warehouse admits revenue and connections are down

Carphone Warehouse Group plc has published a trading update for the fourth quarter of its financial year. Revenue at CPW Europe - the company’s 50% joint venture with Best Buy - were down 5.5%, while total connections were down 19%. Postpay connections were up in the UK, although the company estimates that the overall prepay market in Q4 was down 30-40% in the UK.

Almost 400 stores have adopted the ‘Wireless World’ format, which provides a wider range of devices than traditional Carphone Warehouse stores. Most new UK stores are now expected to follow this model. In addition, the company notes that expansion into the non-cellular product categories of tablets, accessories, applications and content offers significant potential.

Roger Taylor, CEO of Carphone Warehouse, said “We expect to deliver full year profits for CPW Europe in line with guidance, despite the market shift from 18 to 24 month contracts, a material decline in the prepay market and a tough consumer environment. Pressure on network ARPUs as a result of regulation and the challenging consumer environment will continue. Against this, however, as the shift from 18 to 24 month contracts completes, we are starting to enjoy material benefits from our new contract terms with the network operators. We are also seeing continued payback from our investment in the roll-out of our Wireless World store format, as well as continued momentum in non-cellular product categories where we see real opportunity. Although the prepay market remains weak, we have some reason to be more optimistic about the increasing presence of smartphones in this segment in the year ahead.”

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Author: The Fonecast
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