Pre-pay slump casts shadow over Carphone

But shares still rise slightly in early trading

pre-pay market decline worse than expected - harrison

Pre-pay deals at Britain’s Carphone Warehouse slumped by nearly a third in the last quarter, latest trading figures reveal, damping down revenues generally. Even so, Carphone says it still has achieved sixth consecutive quarters of revenue growth, coming in again at the 3 per cent mark, though it expects business will perk up as 4G gathers momentum. Carphone still expects full year pre-tax earnings to come in at around £140 million £160 million as it aims to increase market share. Earlier today [21st January 2014], the retailer’s shares climbed a modest 1.5 per cent to 284 pence as the market took stock of the news.

CommentedCPW UK, CEO, Andrew Harrison, “The pre-pay market volume decline was worse than expected in the UK, down an estimated 25 per cent to 30 per cent, and overall Q3 connections for the group were consequently down 12.7 per cent.”

“Despite these challenges, postpay connections were broadly flat on a like-for-like basis and CPW outperformed the UK market, delivering like-for-like revenue growth of 5 per cent and continuing to gain market share in both the prepay and postpay categories in the quarter.”

“Overall revenues reflect reduced levels of activity within our dealer channels, which operate at very low margins and therefore have a limited impact on earnings.”

About Dave Evans

Dave Evans is a long established commentator on both the IT and cellular industries. His current focus is on share price trends within the sector. You can email him here
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