Carphone to unveil TalkTalk chief

Profit upgrade as retailer reveals it has found CEO for broadband operation

Carphone Warehouse is close to unveiling the chief executive who will oversee the TalkTalk broadband division, which is on track to demerge in March.

The group chief executive Charles Dunstone said yesterday: "We've found a chief executive, and we have signed the contracts." He declined to name the appointment yet as discussions are ongoing with the incoming executive's current employer over the timing of the announcement. The mystery will be revealed "early next year".

The demerger of Carphone – which will include the assets from its 50:50 joint venture with the US retail giant Best Buy, its stake in Virgin Mobile France and Carphone property – from TalkTalk is on course for the spring. The structure has been finalised with two separately listed businesses.

Yesterday's news came off the back of strong results for the six months to the end of September, as pre-tax profits soared 88 per cent to £75m. Europe's largest mobile phone retailer beat analysts' profit forecasts of £70m in the first half of its financial year, following better than expected sales from both sides of the business. It prompted the company to raise its earnings guidance for its full year from 14p per share to 15p.

The finance director Roger Taylor, who will become chief executive of Carphone Warehouse Plc after the split, with Mr Dunstone becoming chairman of both companies, said he was "quietly confident" for Christmas sales. The iPhone is expected to see further strong sales, especially after it became available on Orange as well as O2. But Mr Taylor said it would be a "pre-pay Christmas". He expects Carphone to shift more smartphones, as the price on pre-pay has come down. "There are a lot of touch screen devices that have come down to pre-pay prices."

The group is bulking up over Christmas and into the new year, and is expected to add a further 500 staff to its 8,000-strong workforce. Mr Taylor said: "We aim to get up to around 10,000 in the next few years."

The joint venture with Best Buy is set to hit the UK in earnest with the launch of four "Big Box" electrical stores by spring, and a further four in the autumn. The group expects to hit 100 stores by 2014.

Carphone has also made progress in broadband. It bought the UK assets of the Italian telecom operator Tiscali for £235m in July, bringing its customers to 4.1 million from 2.7 million a year earlier. Mr Dunstone said the deal had "significantly increased our residential broadband base and enhanced our earnings per share". He added that the group had made a good start on integrating the acquisition. In January, it will rebrand the Tiscali assets to TalkTalk. It hopes the name change and investment in its network will prevent the churn of customers leaving.

Richard Heap, head of telecoms at the accountancy group BDO, said: "This is undoubtedly a good set of results. Carphone Warehouse has significantly strengthened its broadband customer base by adding customers through the acquisition of Tiscali." Yet, he cautioned: "The long-term question remains as to whether or not TalkTalk can retain this leadership position in an oversaturated market, particularly with new threats such as mobile and satellite broadband emerging." Carphone is also looking at bolstering its television service. The Tiscali deal brought a small TV operation, but the group is looking to do more. Mr Dunstone said: "We are looking at the market place and considering our options."

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