Carphone Warehouse 1Q Revenue +42%

LONDON -(Dow Jones)- U.K.-based mobile telecommunications operator Carphone Warehouse Group, Thursday said its first-quarter revenues soared 42.1% amid strong customer demand for its broadband product.

Carphone - which recently launched the Free Broadband, Forever product from TalkTalk - said that broadband applications as at July 26 stood at 596,000, including 476,000 for the broadband product.

The Free Broadband product, which actually costs GBP9.99 a month plus the standard monthly line rental charge of GBP11, gives broadband access and unlimited national landline and international calls to 28 countries, 24 hours a day.

The company launched the product amid heavy competition from UK telecoms operator BT Group, cable company NTL Group and France Telecom, as well as British Sky Broadcasting Group.

Carphone said the rate of sign-up for the new broadband package has been consistent over the last seven weeks. Of these applications, 402,000 are now live for calls and line rental with 247,000 live on broadband as well.

However, Chief Financial Officer Roger Taylor told Dow Jones Newswires that at present, the 247,000 customers are live through BT's system, not Carphone's.

He said "it will only work for Carphone Warehouse if these customers go through the company's systems" as Carphone pays around GBP11 per customer for BT's infrastructure.

Carphone's systems are currently being tested and are expected to be ready before October, he said, adding that the company is planning to invest GBP50 million into broadband this year.

Group total revenue for the 13 weeks to July 1 came in at GBP857.6 million, up from GBP603.6 billion.

Retail revenues were up 29.7% to GBP394.3 million, while mobile revenues were up 12.4% to GBP117.7 million.

Total connections increased 34.8% to 1.96 million, the company said.

Carphone's shares opened almost 2% higher but then fell back. At 0741 GMT, they were down 0.5 pence or 0.2% at 285p.

Bridgewell Securities analyst Dan Gardiner said the results "highlight some of the concerns we have about (the company's) ability to execute its free broadband strategy."

He said the industry had been expecting the bulk migration of customers to take place this month, rather than September, and that could have "a significant impact" on profitability.

Chief Executive Charles Dunstone said that there's no doubt the company has underestimated the strength of demand, but that capacity has been expanded substantially since June.

"This has enabled us to increase significantly the rate at which we are provisioning customers onto broadband," he said.

Company Web site: http://www.carphonewarehouse.com

-By Anita Likus, Dow Jones Newswires; +44-207-842-9463; anita.likus@dowjones.com

(END) Dow Jones Newswires "

Posted to the site on 27th July 2006