3rd Quarter Trading Update

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 [phone]
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 [phone] 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%



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