Carphone Warehouse eye 4G cash as Harrison promoted

Andrew Harrison of Carphone Warehouse. Picture: ContributedAndrew Harrison of Carphone Warehouse. Picture: Contributed
Andrew Harrison of Carphone Warehouse. Picture: Contributed
MOBILE phone retailer Carphone Warehouse has delivered a solid performance from its UK stores and said the roll-out of superfast 4G mobile broadband services will maintain strong demand for smartphones and tablet computers.

The firm also revealed that Carphone Warehouse Europe boss Andrew Harrison will be promoted to group chief executive from next month in place of Roger Taylor, who will become deputy chairman.

The group, which yesterday completed its deal to buy out US partner Best Buy and take control of its retail division, hailed sales growth of more than 10 per cent across its UK stores as it posted a modest rise in underlying pre-tax profits to £59 million, from £58.3m a year earlier.

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Carphone has been benefiting from the booming tablet computer and smartphone market, but said sales had also been lifted by more affordable contract phone deals.

Like-for-like revenues rose 4.6 per cent across its 2,377 stores in the Carphone Warehouse Europe retail arm, helped by the strong UK performance, and it said developments in the 4G arena would help maintain sales growth in the face of “challenging” consumer conditions.

Taylor added: “The more widespread development and promotion of 4G services may provide a stimulus to the handset replacement cycle.”

The retailer predicted that tablet sales would benefit from “significantly” improved download speeds under 4G.

Ofcom raised almost £2.4 billion by selling off airwaves for the superfast services, well below the £3.5bn forecast by Chancellor George Osborne.

The new 4G standard should deliver download speeds that are between five and seven times faster than existing 3G networks, according to the telecoms regulator.

Underlying earnings across Carphone edged up 1 per cent to £137m in the year to 31 March and the firm said it expected an increase to between £140m and £160m over the current financial year.

The group yesterday completed its £471m acquisition of Best Buy’s 50 per cent stake in Carphone Warehouse Europe – a decision that saw it call time on the ill-fated joint venture.

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It secured a cut-price deal for the stake, paying much less than the £1.1bn it received from the US group for the shareholding in 2008.

Independent retail analyst Nick Bubb said the “transformational” deal is expected to deliver “astonishing” growth in earnings per share this year. He added: “The ‘new’ Carphone is a serious, institutional stock again and we are looking forward to seeing its future progress.”

Carphone spun off nearly 2,400 stores into the venture in a bid to create a new consumer electronics empire to take on the likes of Dixons Retail, but closed the 11 “big box” shops it opened with Best Buy in 2011 after failing to make headway.

The group proposed a final dividend of 3.25p a share to be paid on 9 August, taking the total payout for the year to 5p.

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