Pay-as-you-go ‘set to see revival’

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Carphone Warehouse is predicting a Christmas revival in the pay-as-you-go market after the availability of more affordable smartphones drove a surprise sales turnaround.

Carphone reported a better-than-expected 57 per cent leap in half-year profits to £8.3 million and said it was “quietly optimistic” for the festive season as smartphone deals breathe new life into the pay-as-you-go market. The group said that, on a “headline” basis, profits were up 30 per cent to £8.6m for the six months to 30 September.

Pay-as-you-go sales have slumped by as much as 40 per cent over the past year after the regulator ordered a cut in the rates that operators charge to handle other networks’ traffic, resulting in subsidies on mobile handsets being slashed.

However, there are now a number of smartphones available for under £100 for those unwilling to be tied into contracts, and these appear to be luring customers back into pay-as-you-go deals.

Carphone added that 200 jobs are being axed in its Acton head office under a restructure of its UK and European business, which is set to deliver annual cost savings of up to £25m.