1st Quarter Results

Carphone Warehouse Group PLC
27 July 2006



Thursday 27 July 2006


For immediate release



                        The Carphone Warehouse Group PLC

                          First Quarter Trading Update

                            Group revenues up 42.1%


The Carphone Warehouse, which is holding its AGM today at 11.00 am, announces
its first quarter trading update.  Figures relate to the 13 weeks to 1 July
2006.


Distribution

  • Retail revenues up 29.7% to £394.3m, 10.8% like-for-like
  • Retail gross profit up 30.5%, 6.8% like-for-like
  • Total connections up 34.8% to 1.96m
  • Subscription connections up 18.1% to 0.86m
  • 77 net new stores opened, taking the portfolio to 1,855
  • Insurance base up 13.8% to 1.94m


Telecoms Services

  • 596,000 broadband customers as at 26 July 2006, including 476,000
    applications for free broadband
  • 303 exchanges unbundled as at 26 July 2006
  • Fixed Line revenues up 105.8% to £257.4m; up 39.5% ex Onetel and Tele2
  • Integration of Onetel ahead of plan
  • Mobile revenues up 12.4% to £117.7m
  • Mobile customer base up 46.7% to 1.60m



Charles Dunstone, Chief Executive Officer, said:


'All our businesses are enjoying strong momentum. The Distribution division has
started the year very well, as mobile market conditions continue to benefit our
model. The Telecoms Services businesses are growing strongly: the integration of
Onetel is ahead of schedule and our free broadband offer is attracting an
excellent rate of sign-ups, building on its spectacular launch.



'We have unbundled 303 exchanges, which is ahead of schedule. As planned, we
have now started connecting customers to unbundled lines; we expect this rate of
progress to accelerate over the coming months.



'On the customer service side, there is no doubt that we initially
underestimated the strength of demand. We have expanded our customer service
capacity substantially since June to meet this additional demand, and this is
now having a noticeable effect. In turn, this has enabled us to increase
significantly the rate at which we are provisioning customers onto broadband. We
still have some way to go, however, to reach the leading service levels we
target, and I take personal responsibility for ensuring we achieve these.'



Distribution

Total connections grew by 34.8% to 1.96m in the first 13 weeks of the year.
Subscription connections grew by 18.1% to 0.86m and pre-pay connections
(including SIM-free) grew by 51.4% to 1.10m.   Revenues in our Retail business
(including Online) grew by 29.7% to £394.3m.  Like-for-like Retail revenue
growth was 10.8% and like-for-like gross profit growth was 6.8%.  Subscription
gross profit per connection was up year-on-year, but average gross profit per
connection fell slightly with an increased proportion of pre-pay within the mix.
We opened 77 net new stores in the period, taking the total to 1,855, compared
to 1,536 at June 2005.



Our Insurance customer base grew by 13.8% year-on-year to 1.94m, with growth in
the high tier base of 19.2%.  Insurance revenues grew 14.2% to £31.6m.  Ongoing
revenues grew 20.2% to £15.7m.  The growth in both of these business lines has
been driven by the sustained rate of subscription connections over the last 12
months.





Telecoms Services

Total fixed line revenues were up 105.8% to £257.4m.  Excluding the acquisitions
of Onetel and Tele2 UK, revenue growth was 39.5%.  UK Business revenues rose
41.6% to £80.5m, including £8.1m from Onetel.  Underlying growth in the core
business was good, with incremental revenue growth from higher line rental
penetration and a new premium rate contract with a major television channel.



Total TalkTalk UK revenues were £150.4m, up 227.7% year-on-year. As at 1 July
2006, the existing TalkTalk UK voice and line rental business had 2.32m live CPS
customers.  785,000 customers, or 33.9% of the base, are now also taking line
rental services from TalkTalk.  The introduction of free calls for Onetel
customers under the TalkTalk brand has led to a clear reduction in churn.  We
have now successfully migrated all the Onetel CPS customers onto the Opal
network ahead of plan, and the integration of Onetel continues to proceed very
well.  The total UK residential CPS base as at 1 July 2006, including 346,000
customers signed up to the free broadband offer, was 2.66m.



As at 26 July 2006, we had received 476,000 applications for our new broadband
package.  The rate of sign-up has been consistent over the last seven weeks.  Of
these applicants, 402,000 are now live for calls and line rental, with 247,000
live on broadband as well.  To date we have unbundled 303 exchanges, with a
further 215 exchanges handed over by Openreach.  Unbundling costs are in line
with budget.  A total of 692 exchanges now have more than 250 applications,
giving good visibility of future profitability.



During July we began to test the process for putting new customers onto
unbundled lines, and expect to accelerate the rate of connection over the summer
and begin bulk migration of wholesale customers in September.  Again, this rate
of progress is in line with our forecasts.  Call centre recruitment has
accelerated to meet the additional demand.  As a result, we are seeing some
signs of improvement, and progressively reducing the time taken to connect
customers to broadband.  Achieving industry-leading customer service levels
remains our clear priority.



Mobile revenues increased by 12.4% to £117.7m.  The Phone House Telecom revenues
were up 6.3% year-on-year to £87.7m, reflecting good growth in customer numbers
over that period but a lower average ARPU and lower indirect handset
distribution revenues.



MVNO revenues (excluding Virgin) were up 72.5% to £10.2m, again reflecting
growth in the customer base.  Excluding Breizh Mobile revenues from last year's
figures, revenue growth was 86.7%.  The launch of Virgin Mobile in France has
been successful, with customer recruitment, ARPUs and margins all in line with
plan.  We will continue to expand our third party distribution platform and our
investment in brand-building through the rest of the year.





Conference call

There will be a conference call for investors and analysts at 9.00 am this
morning.   The dial-in numbers are 0845 301 4094 in the UK, 1866 4327 186 for
callers from the USA and [phone] for other international callers.  A
replay will be available for seven days, for which the dial-in number is +44 20
8196 1998.  The account number is 897311.  The conference call will also be
webcast at www.cpwplc.com.



Next trading update

The group will issue a first half trading update, covering connections and
customer numbers, on 11 October 2006, and publish its interim results on 2
November 2006.






For Further Information



For analyst and institutional enquiries
Roger Taylor                                   07715 170 090
Peregrine Riviere                              07909 907193

For media enquiries
Vanessa Godsal                                 07947 000 021


Anthony Carlisle (Citigate Dewe Rogerson)      07973 611 888
                                               020 7638 9571



Operating and Financial Statistics

•       Revenues (£000s)
                                                 13 weeks to 1 July 2006

                                             2006                2005            % change
Distribution
Retail (inc Online)                          394,270             303,935           29.7%
Insurance                                     31,587              27,661           14.2%
Ongoing                                       15,694              13,055           20.2%
Total                                        441,551             344,651           28.1%

Telecoms Services
Fixed
  UK Business                                 80,519              56,857           41.6%
  Non-UK Business                              8,707               7,223           20.5%
  UK TalkTalk                                150,385              45,897          227.7%
  Non-UK TalkTalk                             17,752              15,065           17.8%
Total Fixed                                  257,363             125,042          105.8%

Mobile
  TPHT                                        87,729              82,565            6.3%
  MVNO                                       10,198*               5,912           72.5%
  FM                                          19,772              16,194           22.1%
Total Mobile                                 117,699             104,671           12.4%

Total                                        375,062             229,713           63.3%

Dealer                                        46,333              34,201           35.5%

Eliminations                                 (5,306)             (4,904)            8.2%

Group Total                                  857,640             603,661           42.1%


* excludes Virgin Mobile France

•       Like for like data
                                                 13 weeks to 1 July 2006

                                           Revenue                   Gross Profit
Retail LFL                                  10.8%                        6.8%


•       Connections, mix and store numbers

                                                 13 weeks to 1 July 2006

                                              2006                2005            % change
Connections
Subscription                                 855,552             724,216           18.1%
Pre-pay                                      994,055             620,585           60.2%
SIM-free                                     108,556             107,477            1.0%
Group                                      1,958,163           1,452,278           34.8%

Own stores                                     1,700               1,449
Franchises                                       155                  87
Total stores                                   1,855               1,536


•       Customer bases

                                                         As at 1 July 2006

(000s)                                               2006            2005          % change

Insurance                                           1,938           1,703           13.8%

Mobile - TPHT                                       1,215             925           31.3%
Mobile - UK MVNO                                      383             164          133.4%

TalkTalk UK - existing                              2,318             990          134.1%
  Of which line rental                                785               -               -
TalkTalk UK - new offer                               346               -               -
  Of which line rental                                346               -               -
TalkTalk UK - total                                 2,665             990          169.2%
  Of which line rental                              1,111               -               -

Broadband  - existing                                 128              62          106.5%
Broadband  - new offer                                156               -               -
Broadband  - total                                    284              62          358.1%

TalkTalk non-UK                                       349             200           74.7%


•       Latest broadband statistics (excludes existing base)

                                                                           As at 26 July 2006


Total applications (000s)                                                                 476
% inside 1,000 exchange footprint                                                         83%
Live on calls and line rental (000s)                                                      402
Live on broadband (000s)                                                                  247
% from existing TalkTalk base                                                             53%
% existing broadband users                                                                40%
Exchanges unbundled                                                                       303
Exchanges with > 500 customers                                                            189
Exchanges with 250-500 customers                                                          503

Existing broadband customers (000s)                                                       120
Total applications plus existing (000s)                                                   596




                      This information is provided by RNS
            The company news service from the London Stock Exchange