Carphone Warehouse sales surge on cut-price handsets

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The Independent Online

Mobile phone prices are being slashed to levels not seen for five years, driving sales and intensifying the already cut-throat competition between handset manufacturers and network operators.

Mobile phone prices are being slashed to levels not seen for five years, driving sales and intensifying the already cut-throat competition between handset manufacturers and network operators.

New health concerns regarding mobile phone usage and children, which emerged this week, came too late to dampen Christmas sales, according to Carphone Warehouse, which yesterday reported an 11.2 per cent rise in like-for-like revenues during the three months up to 25 December.

Charles Dunstone, the chief executive, said the biggest growth had been in pre-paid mobile phones, which were up 33 per cent to 1.31 million connections. He said this had been driven by prices last seen in the 1999 to 2000 period as handset manufacturers cut prices of popular models and the network operators offered bigger subsidies to persuade consumers to sign up.

Subscription connections were up 8.9 per cent to 0.75 million and overall, total connections were up 23.1 per cent to 2.06 million, Carphone added.

The combination produced buoyant Christmas trading for Carphone in contrast to relatively weak figures on Wednesday from The Link, part of Dixons. Carphone Warehouse's 1,424 shops produced revenues of £355.8m, up 24.9 per cent.

Mr Dunstone said: "Looking ahead, we believe market conditions will continue to play to our strengths, and we are confident of delivering a full year result ahead of current consensus market expectations."

Third-generation (3G) mobile services launched last year by 3 and Vodafone also had a good Christmas, according to Mr Dunstone, who said 20 per cent of Carphone Warehouse sales in the UK over the period were of the new 3G phones.

TalkTalk, the company's home phone business, added 114,000 customers, bringing the total to 762,000.

Mr Dunstone said the service lost between £5m and £6m in the first half of the year but he expected it to convert the deficit into a small profit by the year end.

TalkTalk will roll out its broadband service in the second half of the year as well.

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