Carphone Warehouse splits in two
To demerge TalkTalk
Carphone Warehouse has hit its financial targets for the year and confirmed it will split into two businesses - the telecoms biz TalkTalk and retail arm Best Buy Europe.
CPW chairman Charles Dunstone said the two operate as effectively separate companies so the time is right to split them, and give shareholders a bit of each business. The demerger is expected to complete by July 2010.
TalkTalk claims 2.8m broadband customers and 1.1m voice-only and dial-up subscribers. The company will be the UK's second biggest broadband provider by the end of the month, when the acquisition of Tiscali's UK business completes. Some 78 per cent of its subscribers are on unbundled lines.
In an earnings release today, CPW revealed TalkTalk residential revenue fell two per cent to £1.089bn and business revenue fell from £312m last year to £296m this year. EBITDA (earnings before interest, depreciation and amortisation) was £181m compared to £116m last year.
Best Buy Europe, 50 per cent owned by CPW, grew revenues 15 per cent to £3.563bn - although nine per cent of this growth was attributable to the strong euro. Like-for-like sales grew 1.1 per cent. But headline EBIT fell a third from £151m in 2008 to £101m in 2009.
The company said sales growth was driven by high-end internet-enabled handsets and mobile broadband packages. CPW said: "In contrast, the market for mid-tier handsets, the historical “bread and butter” of the subscriptions market, was in decline throughout the year."
CPW opened 180 stores in the year, and shut or moved 132, to gain 48 shops net. At year end the company's retail chain stood at 2,459 outlets.
It has also changed the way it pays its shop staff - instead of low salaries and commission staff get a higher basic pay and a bonus based on the difference between good and bad customer feedback. The change was trialled last year and will now be rolled out across the group. ®