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Carphone puts £60m tag on Best Buy Europe project

Trading update says well placed to ride out downturn

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Carphone Warehouse has lifted the lid on how much its cooperative deal with Best Buy is going to cost, along with a trading report on how well the year is going for it so far.

CEO Charles Dunstone reckons everything's peachy this year, with subscribed mobile connections up 21 per cent and two million broadband customers now handled on unbundled exchanges.

The company is investing in better infrastructure to connect its busiest exchanges without paying carriage to anyone else.

Revenue on mobile connections is down, as many of them are mobile broadband contracts - lacking the opportunity for raising revenue through termination fees, international roaming or out-of-bundle minutes. Pre-paid revenue is showing disappointing growth, but the company has high hopes for a good Christmas.

The economic downturn might slow things up, but Dunstone claims the company is well placed to weather the storm: "Our robust balance sheet and the quality of our assets leave us well placed to ride out the downturn and emerge in an even stronger position on the other side."

The company managed to increase the number of stores by 16 - to 2,430 - but isn't planning many more of the high-street shops synonymous with the brand as the focus shifts to the "Best Buy Europe" project.

That endeavour will see stores of greater than 30,000 square feet popping up around Europe, with £20m being spent to March 2009, and another £40m over the following 12 months, £30m of which is start-up money.

Best Buy and Carphone Warehouse have already put the money aside for the project, and given that it's a long-term investment the current depression in land prices might serve them well, assuming the economy recovers in good order. ®

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