4/14/2008 11:31:00 AM
Carphone expects broadband profits
New figures have revealed just 8,000 of Carphone Warehouse’s one million plus free broadband customers are on a lossmaking footing.
The mobile phone retailer turned telecoms company has spent the past 18 months moving hundreds of thousands of its TalkTalk broadband customers on to its fixed-line network.
Carphone’s fourth quarter trading update tomorrow is expected to show that the company has hit its guidance that the TalkTalk free broadband business generates an operating profit of £15m-£30m in 2007-08.
Before the customers joined Carphone’s network, the company was running up losses on these customers because they had to be supplied with broadband through wholesale arrangements with BT.
But problems emerged with some customers finding they went from having functioning phone and broadband services to no services at all.
Chief executive Charles Dunstone said: ‘I can’t sit here and say it’s a great achievement because we did make a hell of a mess of it on the way, and that is a scar that will live with me and the business, I think, forever.’
But in October 2006 Carphone clinched a deal to buy Time Warner’s AOL internet access business in the UK, which transformed Carphone into the third-largest broadband provider.
However, BT is lobbying to increase the fees it charges Carphone and others for taking control of its landlines. A large rise could hurt Carphone.
Dunstone says he is strongly opposed to a price rise, partly because BT’s past performance in handing over control of landlines to Carphone had been 'an absolute shambles'.
Dunstone also confirmed Carphone is looking at buying Tiscali’s UK arm, the fourth-largest broadband supplier. If Carphone bought the unit, it would become the largest.