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Carphone Warehouse Holds 2.8m Broadband Subscribers

Posted: 18th Nov, 2008 By: MarkJ
The Carphone Warehouse (TalkTalk, AOL etc.) has released its latest quarterly results to the end of September 2008. Sadly its total broadband subscriber base has remained largely unchanged from the previous quarter at 2.8m.

Most of this is because 93,000 un-reconciled accounts were excluded from the customer base, which is due to a mix of administrative issues and migration problems. AOLs net additions during the half-year were 82,000, while TalkTalk recorded 168,000, reflecting slower growth:

Charles Dunstone, CEO, said: "Within the Fixed Line business, we have continued to grow the broadband base steadily in a slowing market. TalkTalk, in particular, has performed very well, as customers are increasingly recognising that it offers outstanding value combined with a significantly improved customer experience. Capex is now falling in absolute terms, with spending now focused primarily on backhaul capacity and quality of service.

“Having completed the AOL Broadband migration, we now have a fully reconciled customer base. This has resulted in a reduction of 93,000 customers from the base, many of whom were not paying or were not connected to the network. In view of the pressure on family budgets we plan to re-price AOL services and move people to TalkTalk with incremental line rental services more quickly than previously planned.
"

TalkTalk is expected to be the main vehicle for customer acquisition in the future, although Dunstone also confirmed that its Internet access business could ultimately split off into a separate operation:

"I believe we have reached a watershed in the evolution of the Group, with two discrete and focused businesses with strong market positions and solid financial foundations. We recognise, however, that the structure of the Group may now no longer be appropriate for the optimal development of the two businesses.

The Board has therefore initiated a formal review of the Group’s corporate structure and capital requirements, which may lead to a separation of the two businesses. In this instance I would remain closely involved with both companies. We will provide an update on the review’s progress in Spring 2009.
"

2m broadband customers were on Carphone's own unbundled (LLU) network (73% of all broadband customers), a 47% increase over the year. The TalkTalk fully unbundled network now extends to 1,669 exchanges, equivalent to 79% coverage of the UK population.

Unfortunately the immediate consumer outlook remains very uncertain for Carphone, much as it does for other UK broadband providers. It's hoped that the new customisable myTalkTalk broadband product (news) will help to improve sales.
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