Carphone Warehouse sees bumper Christmas

Carphone Warehouse predicted a bumper Christmas for mobile phone sales yesterday but warned that third-generation (3G) phones were unlikely to be filling many stockings.

Carphone Warehouse predicted a bumper Christmas for mobile phone sales yesterday but warned that third-generation (3G) phones were unlikely to be filling many stockings.

The company, publishing its second-quarter trading update, also said its domestic fixed-line TalkTalk service was profitable in August and September despite heavy marketing costs on its free calls campaign between TalkTalk customers. However, overall in the first half, TalkTalk is expected to make a loss of £6m.

Carphone Warehouse said it was hoping to combine TalkTalk, which now has 648,000 customers, with a broadband internet connection in November and add its own line rental by the spring when it will lease phone lines from BT. But Charles Dunstone, the Carphone Warehouse chief executive, complained BT was still dragging its feet when it came to co-operating and providing it with so-called wholesale line rental. "It's not in their interests," Mr Dunstone said. TalkTalk was launched in Germany last week and in Spain in September.

The company, which opened a further 50 stores in the 13 weeks to 25 September, taking its total to 1,329, is predicting half-year pre-tax profits of £27m when it publishes interim results on 3 November - a 30 per cent increase on 2003.

This year, Christmas sales will be driven by pre-pay customers being wooed with new handsets from manufacturers and cut-price deals from network operators, the company said.

But it warned that new 3G mobile phone services from the likes of Vodafone would not see large sales in the run-up to Christmas apart from 3, the service owned by Hutchison Whampoa. It has already been aggressively targeting UK customers and now has more than 1.2 million customers here.

In its second quarter, Carphone Warehouse said mobile connections sold through its shops were up 25 per cent to 1.55 million, with subscriptions up 18 per cent to 690,000 as part of that. Profit margins on mobile phone subscriptions were said to be flat, while pre-pay margins were down slightly year-on-year, the company said.

Opal, the company's fibre optic network, reported a 76.6 per cent increase in traffic. But most of this was down to the increase in call volumes resulting from the growth in the company's own TalkTalk service. Excluding this business, Opal saw an 18.7 per cent increase.