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Carphone Warehouse courts iPhone

Wanted: exclusive relationship

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Charles Dunstone, CEO of Carphone Warehouse, Europe's largest retailer of mobile phones with 2,070 stores, wants an iPhone - lots of them - under his Christmas tree, and his alone, this year.

While giving the company's quarterly results, Dunstone said he's after an exclusive deal with Apple to sell iPhones in the UK. On the company's website there is already a pre-order form to get your new iPhone.

At the iPhone's launch last week, Apple said it would have the product available in the UK by year-end.

It appears Carphone, which has 700 stores in the UK, might be able to move a lot of iPhones. In the last three months it signed up 3.26m mobile phone subscribers. Dunstone credited that to having lots of handsets in inventory, the demand for pink phones, and the cheap prices of Motorola's Razr phone. He said the company shipped more Motorola phones than any other brand, with Nokia in second place.

Carphone Warehouse, which offers "free" broadband in the UK, reported that its broadband base had increased to 2.16 million customers at the end of 2006. Some 413,000 of them are using unbundled lines in the BT exchanges where Carphone has its own equipment. The free broadband offer is for any subscriber paying more than £20 ($37) per month for Carphone's Talk Talk fixedline phone service.

The company says it's on target to be in 1,000 BT exchanges out of 5,690, by May, taking advantage of the British government's mandate for local loop unbundling (LLU). LLU allows third parties such as Carphone to install their own broadband gear (DSLAMS) in BT's equipment centres rather than having to pay to use BT's. The consumer or the third party then needs to pay BT a monthly rent for the line from the exchange to the home - £11.99 ($21.90) a month. The £11.99 is not included in Carphone's "free" broadband.

After its recent acquisition of AOL's UK internet business for £370m, Carphone is now the country's third-largest broadband service following BT and Virgin Media (nee NTL). Carphone says it has 90,000 customers waiting for an LLU broadband connection.

The company reported an overall 32 per cent increase in sales for the last quarter of 2006, which was its fiscal Q3.

In October, Carphone lost its deal to sell Vodafone's mobile service when Vodafone signed an exclusive mobile phone contract with Phones4U.

Dunstone said it's difficult to see how Carphone can maintain the same growth over the next three months if that Vodafone decision stays in place.

Copyright © 2007, Faultline

Faultline is published by Rethink Research, a London-based publishing and consulting firm. This weekly newsletter is an assessment of the impact of the week's events in the world of digital media. Faultline is where media meets technology. Subscription details here.

This coverage first appeared in The Online Reporter from Rider Research, email peter@rethinkresearch for contact details.

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