Member Article

Fall in prepay sales hits Carphone Warehouse earnings

Carphone Warehouse suffered a 37.5% drop in earnings before interest or tax in its half year results as a result of weakness in the prepay market.

The number of customers buying pay-as-you-go phones and SIM cards fell year-on-year, according to the mobile phone retailer, however Carphone Warehouse remained positive for the coming months.

Subsidies from network providers were blamed for a drop in prepay deals, after regulations resulted in cuts to the amount it costs to cancel a phone contract.

Revenues rose 1.6% like-for-like in Europe after phone contract deals increased, while gross margins narrowed from £444.4m to £418.1m like-for-like.

Roger Taylor, Chief Executive, commented: “We have delivered a good performance in a dynamic mobile market, with sales benefitting from our renewed focus and specific investment initiatives.

“As a result, we have substantially increased our market share of UK postpay volumes.”

Mr Taylor acknowledge the weak prepay market, but was optimistic about recovery as pipelines continue to broaden.

Exploration of growth opportunities and partnerships in Europe are also part of the company’s strategy for the coming year.

Mr Taylor added: “Virgin Mobile France has grown its revenue and postpay customer base, despite intense competition, and is starting to benefit as it moves its customers onto its Full MVNO infrastructure.

“Looking ahead, we reiterate our full year guidance, we continue to focus on operational execution across the business and we remain well-placed to benefit from a strong product cycle.”

Further to the company’s plans in Europe, a joint venture with Best Buy to offer a wider range of wireless devices in “Wireless World” stores has been developed, and the store said it hopes to have approximately 280 sites in the UK by Christmas this year.

This was posted in Bdaily's Members' News section by Miranda Dobson .