Tesco growing threat to Carphone Warehouse

Tesco growing threat to Carphone Warehouse

Tesco will pose an increasing threat to Carphone Warehouse as the year advances, a leading analyst warned this week.

As the retail giant reported a good third quarter for both its retail and telecoms divisions, Robert Davis, telecoms equity analyst at Bryan Garnier Broking, said Carphone Warehouse must not get complacent.

He commented: ‘My concern in the longer term is Tesco’s ambitions. They had a very strong quarter in the telecoms business and I wonder how Tesco will meet its ambitious targets in this market without taking share from Carphone Warehouse.’

He added: ‘There is no evidence of Tesco’s impact on the business yet. However Tesco has yet to step up the big roll out of its plans in this sector. But within six months Carphone Warehouse could be feeling the pressure.’

Davis said Carphone Warehouse had a good management team that was very aware of Tesco and watching it carefully. ‘Nevertheless Tesco is so good at what it does they must worry.’

Phil Kendall, telecoms analyst at Strategy Analytics, echoed Davis’ views. ‘Carphone Warehouse will be monitoring the competition closely and Tesco is a cause for concern. Although there isn’t too much overlap at present - with Tesco bigger in the prepaid market and Carphone Warehouse making more money on the contract side - supermarkets in Europe are generally starting to move into the contracts market and I don’t think Tesco will be much different in its approach.’

However John Strand, chief executive of Strand Consult, said Carphone Warehouse will continue to hold a strong position in the UK market.

He commented: ‘Operators are very dependent on Carphone Warehouse in the UK and they know it, especially after Vodafone tried to break away and failed. If they want to increase market share, operators must go to Carphone Warehouse. It has what all the UK operators want – the ability to deliver customers and in big quantities.’
Written by Mobile Today
Mobile Today

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