3rd Quarter Trading Update
15 January 2004 - 6:00PM
UK Regulatory
RNS Number:2578U
Carphone Warehouse Group PLC
15 January 2004
Thursday 15 January 2004
Embargoed until 0700 hours
The Carphone Warehouse Group PLC
Third Quarter Trading Update
The Carphone Warehouse announces its third quarter trading update. Trading
exceeded our expectations and we remain confident of the outlook. Figures
relate to the thirteen weeks to 27 December 2003.
Distribution
* 32.8% growth in Retail revenues, +27.7% like-for-like
* 15.6% growth in like-for-like Retail gross profit
* 25.7% growth in connections to 1.67m
* 30.1% growth in subscription connections to 0.69m
Telecoms Services
* Fixed Line pro forma revenue growth of 47.8% to #63.1m
* 239,000 talktalkTM(TM) tolling customers
* 1.95m mobile customers under management across the group
Charles Dunstone, Chief Executive Officer, said:
"Third quarter trading was stronger than anticipated. Subscription connections
growth accelerated again, stimulated by network competition and a vibrant
handset market. The gift market was strong, driven by attractive pre-pay deals
and good accessories sales. Opal and talktalkTM continue to demonstrate good
momentum and I am confident that the group will achieve a full year result ahead
of current consensus market expectations."
Distribution
Total connections grew by 25.7% to 1.67m. Our markets continued to be buoyant
throughout Europe. A strong range of new handsets and renewed competition
between networks combined to create a favourable trading environment. Handset
supply constraints were less severe than anticipated, with only a few key models
being affected from time to time.
Subscription connections grew by 30.1% to 0.69m. Pre-pay connections grew by
33.0% to 0.86m, with entry-level phones performing very strongly. However, the
aggressive pricing of pre-pay connections created some cannibalisation of the
SIM-free market, with the result that SIM-free unit sales fell by 20.1%. Online
connections grew by 7.9% to 86,000.
Retail revenues rose by 32.8%, driven by the strong connections growth and
further store openings. Like-for-like revenue growth was 27.7% and
like-for-like gross profit growth was 15.6%. Higher levels of subsidy led to
increased revenues per connection on both subscription and pre-pay. Within
subscription connections, gross profit per connection continued to be affected
by the increased upgrade mix year-on-year, although the trend has improved from
the first half.
Our Insurance customer base grew by 15.7% to 1.25m, with 95,000 customers added
in the past three months as a result of the strong growth in subscription
connections. Insurance revenues grew by 17.8% to #21.2m. Ongoing revenues
from our share of subscription customers' ARPU grew by 23.1% to #9.5m.
Telecoms Services
Total Mobile Telecoms Services revenues grew 319.3% to #88.4m, including
revenues of #64.1m from Hutchison. Organic revenue growth was 15.1% as strong
growth in the UK customer management base more than offset the loss of the SFR
service provision base last year. In Germany, the Hutchison subscriber base
began to grow in the third quarter as the business started to benefit from
customers signed up in The Phone House stores.
Total Fixed Line Telecoms Services revenues grew 124.8%, or 47.8% on a pro forma
basis. Total traffic through the Opal network rose by 111.5% year-on-year, with
1.44bn minutes switched in the third quarter.
Opal revenues grew by 27.4% to #54.4m on a pro forma basis, driven by further
strong growth in traffic on the network, with switched minutes (excluding
talktalkTM traffic) growing by 71.5%. The mix of revenues within Opal
improved, with a 54.8% growth rate in direct and reseller business-to-business
revenues and a slowdown in low margin, high revenue premium rate business.
We added a further 99,000 talktalkTM customers in the third quarter, taking the
tolling customer base to 239,000, and we remain on target to achieve our goal of
350-400,000 customers by March. The rate of sign-up was strong throughout
October and November and, as expected, slowed in December as the stores became
busier with Christmas traffic. We continue to maintain about a 20% market share
of all net new CPS lines each month. talktalkTM revenues were #8.7m and trends
for ARPU, margins and SAC are all in line with expectations.
Outlook
The outlook for Retail and associated business units remains positive. The good
market conditions of the last six months are likely to continue into 2004, and
we are confident of further good progress, although the percentage growth rate
in mobile connections in the next financial year is likely to be lower given our
increasingly strong performance in the current year.
On the fixed line side, our continued investment in the Opal network is creating
efficiencies that will allow us to continue to price competitively while still
achieving attractive margins. We anticipate further strong progress from
talktalkTM as the service continues to evolve, and we are in the process of
evaluating opportunities to enter the residential fixed line market in some of
our other territories.
Conference call
There will be a conference call for investors and analysts at 9.00 am this
morning. The dial-in numbers are 0845 245 3471 in the UK and +44 1452 542 300
for international callers. A replay will be available for seven days, for which
the dial-in numbers are 0845 245 5205 in the UK and +44 1452 550 000 for
international callers. The replay access code is 816927#.
Next trading update
The next trading update will be on 1 April 2004, when we will disclose Q4
connections and customer numbers and give further guidance on the full year
outcome. We will also be hosting a morning of presentations for analysts and
investors on that day, in line with previous years.
For Further Information
For analyst and institutional enquiries
Roger Taylor 07715 170 090
Peregrine Riviere 07909 907193
For media enquiries
Vanessa Tipple 07947 000 021
Anthony Carlisle 07973 611 888
Citigate Dewe Rogerson 020 7638 9571
Operating and Financial Statistics
Connections, mix and store numbers
13 weeks to 27 December 2003 39 weeks to 27 December 2003
2003 2002 % change 2003 2002 % change
Connections
Subscription 690,215 530,419 30.1% 1,750,572 1,408,441 24.3%
Pre-pay 861,987 648,310 33.0% 1,825,611 1,494,691 22.1%
SIM-free 122,785 153,764 (20.1%) 336,337 351,588 (4.3%)
Group 1,674,987 1,332,493 25.7% 3,912,520 3,254,720 20.2%
Store numbers 1,221 1,136
Like for like data
13 weeks to 27 December 2003 39 weeks to 27 December 2003
Revenue Gross Profit Revenue Gross Profit
Group 27.7% 15.6% 17.3% 12.2%
Customer bases
As at 27 December 2003
(000s) 2003 2002 % change
Insurance 1,245 1,076 15.7%
Telecoms Services - Mobile 1,954 1,152 69.7%
talktalk 239 - -
Revenues
13 weeks to 27 December 2003 39 weeks to 27 December 2003
(#000s) 2003 2002 % change 2003 2002 % change
Distribution
Retail 284,770 214,461 32.8% 685,960 546,058 25.6%
Online 16,555 12,328 34.3% 43,046 32,021 34.4%
Insurance 21,150 17,956 17.8% 56,965 46,973 21.3%
Ongoing 9,530 7,744 23.1% 28,912 20,456 41.3%
Total 332,005 252,489 31.5% 814,883 645,508 26.2%
Wholesale 38,579 248,182 (84.5%) 140,768 675,631 (79.2%)
Telecoms Services
Mobile 88,361 21,075 319.3% 216,573 61,853 250.1%
Fixed Line 63,104 28,077 124.8% 175,361 28,077 524.6%
Total 151,465 49,152 208.2% 391,934 89,930 335.8%
Group Total 522,049 549,823 (5.1%) 1,347,585 1,411,069 (4.5%)
Pro forma switched minutes
13 weeks to 27 December 2003 39 weeks to 27 December 2003
(m) 2003 2002 % change 2003 2002 % change
Opal 1,166 680 71.5% 3,248 1,858 74.9%
talktalk 272 - - 485 - -
Total 1,438 680 111.5% 3,733 1,858 101.0%
Pro forma Fixed Line revenues
13 weeks to 27 December 2003 39 weeks to 27 December 2003
(#000s) 2003 2002 % change 2003 2002 % change
Opal 54,411 42,707 27.4% 160,211 112,138 42.9%
talktalk 8,693 - - 15,150 - -
Total 63,104 42,707 47.8% 175,361 112,138 56.4%
This information is provided by RNS
The company news service from the London Stock Exchange
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