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Smartphone sales offset prepay slide at Carphone

Mobile News
January 18, 2011

Smartphone sales on contract bump up Carphone Warehouse revenue as falling prepay numbers see connections slip 7.1 per cent in its third quarter

Carphone Warehouse posted improved revenues but fewer connections in the quarter to January 1, with turnover boosted by demand for high-value smartphones on £30-£40 contracts.

It said connections were down 7.1 per cent in the period, but revenues improved 0.7 per cent on account of smartphone demand.

It added the migration of smartphones to prepay was slow, as it had anticipated, and combined with lower prepay sales, contributed to its 7.1 per cent drop in connection numbers.

UK revenues were up 2.3 per cent in the quarter to January 1 2011, compared with the year-ago period.

It said its Best Buy Europe business, its joint venture with US retailer Best Buy, saw like-for-like revenues up 0.7 per cent to £1.033 billion, from £996 million.

In the financial year to date, revenues were £2.701 billion, up 1.8 per cent from £2.67 billion.

Best Buy Europe includes its Carphone shops in the UK, its Phone House shops on the continent, its big-box Best Buy centres in the UK and its profit-sharing interest in Best Buy Mobile US.

Total connections reached 3.486 million in the quarter across its European retail operations, down 7.1 per cent from 3.751 million a year ago. They reached 9.235 million in the year to date, down 4.1 per cent from 9.635 million.

Best Buy Mobile US put through 2.236 million connections in the period, up 33.6 per cent from 1.674 million, and 5.254 million in the year to date, up 28.9 per cent from 4.075 million.

It now has 73 newly-designed Wireless World high street outlets, on track for his target of 100 by March, as well as six Best Buy UK retail sites.

Store numbers were down 13, to 2440 in Europe at January 1.

In the US, Best Buy Mobile US store numbers reached 1,257, up from 1,139, of which 58 are standalone outlets and the remainder are in-store concessions.

It said it is increasing guidance for full-year profit share by £5 million to between £90 million and £100 million for its US operation.

Carphone Warehouse chief executive Roger Taylor (pictured) said: “We’ve delivered another good quarter, we’re again raising our guidance for our profit share from Best Buy Mobile US and we now expect full year earnings per share to be at the top end of the range we gave in November.

“CPW Europe has continued to perform well in a Christmas quarter where sales are traditionally much more weighted towards prepay handsets, the segment where smartphone penetration is still low, and where there have been high levels of price deflation in basic handsets. Best Buy Mobile US continues its strong momentum, demonstrating its winning formula.

“The online launch at Best Buy UK has gone well, adding to the strong customer satisfaction with our ‘Big Box’ stores, where our planned roll-out continues. Our other joint venture, Virgin Mobile France, is well on track to deliver growth and results in line with guidance.”

Revenue at Virgin Mobile France, in which it has a 47.1 per cent stake, is in-line with expectations at ‚¬94 million for the quarter, it said.

Following integration of Tele2 in the first half of 2010/11, Virgin Mobile France put through 74,000 net additions in the quarter. Its customer base reached 1.76 million.

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