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Up to 80,000 AOLers face the boot from Carphone network

As it dials down broadband targets

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Carphone Warehouse's ongoing network integration prompted by its purchase of AOL's broadband business in 2006 could spell trouble for tens of thousands of customers, CEO Charles Dunstone warned today.

In the firm's Q2 trading update, he said: "We have successfully migrated over 1.3m AOL customers: a further 80,000 customers, whose operating systems or hardware are incompatible with the new platform, are yet to be migrated and a proportion of these are likely to be at risk."

Carphone has already lost 12,000 AOL customers as a direct result of the migration. We've asked the firm which specific hardware and software set-ups are under threat and will update this story if we get an answer.

Losing a further 80,000 subscribers would pile further pressure on Carphone's broadband operation. It was forced today to lower its revenue guidance, predicting "broadly flat" fixed line sales year-on-year. April's prediction of 400,000 net broadband additions for the year has been slashed to between 200,000 and 250,000.

Dunstone put a positive spin on the slowdown: "One of the benefits of the current environment is that churn is low and falling, making our relationship with customers increasingly valuable."

It's likely that most broadband providers will see churn reducing over the next couple of years if the property market slump takes hold. In June Carphone blamed the current mortgage turmoil for its disappointing financial results. Today it said that as broadband penetration slows generally, it will focus on increasing the £22.10 average bill its fixed line customers pay per month by offering more services.

The launch of the 3G iPhone is providing a ray of light in the current quarter for Carphone's retail business, amid gathering High Street gloom. The Revenge of the Jesus Phone drove a "sharp pick up in subscription connections", it reports. Execs remain "understandably cautious about the consumer environment", however.

CPW’s distribution revenues were up 4 per cent to £735m for the 13 weeks to June 28, or 6 per cent when non-core business was excluded, while retail revenues were up 10 per cent to £498m, or 1.4 per cent like for like. Its fixed line revenues were down 1 per cent to £343m, with its residential share flat at £268m.

The full trading update is here. ®

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