The high demand for Carphone Warehouse’s “free” broadband service has increased the losses it expects to make for the year to £70 million.
The strong demand has added approximately £20 million in additional costs, although no impact is anticipated in March 2008 financial year.
In its second quarter results, Carphone Warehouse said that total connections grew by 34.0% to 2.38 million year-on-year in the 13 weeks to 30 September 2006.
Subscription connections were up 16.3% to 0.96 million, with the company saying that network promotions and the attractive handset pipeline continued to stimulate the market. Pre-pay connections were also up, 59.0% to 1.29 million.
The company added that as of 30 September it had received 625,000 applications for free broadband and of these, 516,000 are now live for calls and line rental, with 421,000 live on broadband as well.
Charles Dunstone, chief executive officer, said: “We have had a very strong first half’s trading. The distribution business has performed very well and we have had an exceptional customer response to our free broadband launch. I am also pleased to say that our average call centre answering times are now among the lowest in the industry, as measured by independently-conducted market research.
“The unprecedented take-up of our free broadband offer means we have accelerated our customer service recruitment plans and incurred additional wholesale broadband costs. We now expect to incur start-up broadband losses of around £70 million in the current year, compared to our original guidance of £50 million.
“However, our underlying performance in the first half has been ahead of our expectations, and we expect interim headline pre-tax profits, before the impact of our broadband and Virgin Mobile France operations, to be up 50% year-on-year.”
Related Links
