iPhone sales lift Carphone

Demand for so-called smartphones, such as Apple's iPhone, helped Carphone Warehouse increase its full year earnings forecasts yesterday, after a robust Christmas trading period.

Reporting its third-quarter trading performance, the company also confirmed that plans to split the business in two in March are on schedule, and that shareholder documents will be sent out at the end of this month.

Earnings-per-share are likely to reach 15p in March, the company said, scaling the upper end of analyst predictions, which were increased three times during last year.

Best Buy Europe, Carphone's retail division, is expected to generate net income of between £40m and £45m by March, after revenues jumped by 5.5 per cent in the three months to the end of December.

Internet arm Talk Talk is expected to deliver revenues of £446m, a 29 per cent improvement on last year.

The company warned, however, that 2010 could be tough as taxes increase and unemployment continues to rise even as the economy emerges from recession.

Carphone is planning to demerge its Best Buy Europe business, a joint venture with the US retail giant, which will include its 47.5 per cent stake in mobile operator Virgin Mobile France and the group's property interests, leaving Talk Talk as a separate business.

Analysts at UBS said that the demerger could further unlock value for investors, as the move may prompt other telecoms companies to bid for the Talk Talk operations.