EE and Carphone boosted by high-end smartphones

Use of top-of-the-range smartphones is soaring, boosting profits at retailers and networks. Picture: Getty Images
Use of top-of-the-range smartphones is soaring, boosting profits at retailers and networks. Picture: Getty Images
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Booming demand for high-end smartphones has helped mobile operator EE and retailer Carphone Warehouse ring up better-than-expected results.

EE, which runs the UK’s largest mobile phone network, said it was on track to beat its target of signing up one million 4G customers by the end of the year as it delivered a 9 per cent rise in first-half profits.

The firm had 687,000 4G users at the end of June, with the superfast service available to 60 per cent of the population. Coverage is set to rise to 98 per cent by the end of next year.

Chief executive Olaf Swantee said: “We are on track to exceed our target of one million 4G customers by year end.”

EE, which was founded in 2010 as a joint venture between Deutsche Telecom and France Telecom through a merger of their respective T-Mobile and Orange businesses, is now the largest network in the UK with 25.3 million mobile customers.

While adjusted underlying pre-tax profits rose to £734m for the six months to 30 June, up from £673m a year ago, mobile service revenues dipped 4.4 per cent to £2.8 billion, which EE blamed on regulatory changes to charges levied on other networks to call its customers’ phones, as well as EU roaming charges.

The fall in revenues was in line with that reported last week by Vodafone, the UK’s third-largest network. Telefonica, the Spanish owner of second-placed rival O2, is due to report quarterly figures today.

Carphone Warehouse, which has more than 2,000 stores, also said yesterday that its sales had been lifted by the “continued shift towards high-end smartphones”.

Like-for-like sales during the three months to 29 June were 10.6 per cent higher than a year ago, compared with analysts’ forecasts of 8 per cent. Former chief executive Roger Taylor, who became deputy chairman yesterday, said increasing numbers of customers were choosing to sign up for longer contracts, because that enabled them to buy handsets such as Apple’s iPhone and rival offerings from Samsung.

Taylor, who has been replaced as chief executive by former retail boss Andrew Harrison, added: “We have enjoyed a good first quarter with strong like-for-like revenue and connections growth.”

The strong figures from the mobile phone sector came after iPhone maker Apple said it had sold a record 31.2 million handsets during the three months to June, an increase of 20 per cent on the same period last year.

However, much of the growth came from older and cheaper versions of the smartphone as the technology giant came under intense pressure from rival Samsung, and the resulting drop in margins pushed profits down 22 per cent to $6.9 billion (£4.5bn), although this was ahead of analysts’ expectations.

Jonathan Jackson, head of research at Killik & Co, said: “We still believe that Apple has a very strong competitive position, with a significant ecosystem built up around the iPhone, iPad and iTunes ensuring strong customer loyalty. Growth going forward will increasingly come from emerging markets.”