Acquisition

Carphone Warehouse Group PLC
03 June 2003


Tuesday 3 June 2003

Embargoed until 0700 hours

The Carphone Warehouse Group PLC

Acquisition of Hutchison Telecommunications GmbH, German Mobile Service Provider

  • Creates platform for sustained profitable growth in Europe's largest
    mobile market
  • Extends Carphone Warehouse's recurring revenue model
  • Strong management team retained
  • Net cash consideration of £32.4m
  • Significant merger synergies
  • Immediately earnings enhancing

The Carphone Warehouse Group PLC ('The Carphone Warehouse') today announces that
its German subsidiary The Phone House Deutschland GmbH ('Phone House') has
exchanged contracts with Orange Holdings Limited ('Orange') to acquire the
entire issued share capital of Hutchison Telecommunications GmbH ('HTG'), a
mobile service provider business ('SP') operating in Germany, for a total
consideration of £46.8m.  Net of cash in the acquired business, the
consideration is £32.4m.  The consideration will be paid in cash on completion.

Completion is subject to appropriate regulatory and other authority approvals,
including that of the Federal Cartel Office in Germany, being received on or
before 31 August 2003.

HTG has a total of 670,000 mobile customers, of which 510,000 are high value
subscription customers.  The acquisition of HTG transforms The Carphone
Warehouse's position in Germany, Europe's largest mobile phone market place.  It
doubles The Carphone Warehouse's market share in Germany and marries its
existing 'Phone House' retail distribution channel with HTG's service provider
business, enabling The Carphone Warehouse to earn recurring revenues on a
significant proportion of the customers attracted by the combined business.

The acquisition creates a reliable platform for sustained profitable growth in
Germany and extends The Carphone Warehouse's recurring revenue model to that
country.   HTG has a high quality customer base, a focussed customer service
culture, a deep understanding of the German service provider market, and a
strong management team.

Commenting on the acquisition, Charles Dunstone, Chief Executive Officer of The
Carphone Warehouse, said:

'Hutchison Telecommunications is a strategically important acquisition, which
fits perfectly with our existing German business. The combination transforms our
position and establishes a strong platform for sustained profitable growth in
Europe's largest mobile marketplace.  The acquisition cost and synergies are
also attractive, and we shall be returning HTG's focus to growth.'

Dr Ralf-Peter Simon, CEO of HTG, said:

'We absolutely welcome this deal.  The Carphone Warehouse is the perfect partner
for us.  We see significant growth opportunities in Germany.  We can now pursue
these, reinforced by a much expanded distribution capability and as part of
Europe's leading independent mobile distributor.  The strategic and financial
synergies, and our common focus on customer service, are also compelling.'

Financial effects of the acquisition

It is anticipated that the combination of Phone House and HTG will achieve
profitability in the year to March 2004 and will be marginally
earnings-enhancing after finance costs.  The retail Phone House component of the
combined business will continue to be loss-making in the short term, but at a
reduced level, and we are confident that the enlarged business in Germany will
generate profitable growth as the retail channel acquires customers for the
service provider operation and builds its own recurring revenue stream.

Post-acquisition integration

Over the next few months, the existing Phone House head office in Munich will be
closed and the combined German operations will be run from HTG's headquarters in
Munster.  A number of employees will be relocated as a result of this closure.
Dr Ralf-Peter Simon, CEO of HTG, will become Managing Director of the combined
operations.

Since the year end, 12 loss-making Phone House stores in Germany have been
closed.  A restructuring provision of £4.5m will be made in the year to March
2004 to cover the associated costs of closure of these stores and the Munich
support centre.

For Further Information

The Carphone Warehouse Group PLC
Charles Dunstone
Roger Taylor                                               07715 170 090
Vanessa Tipple                                             07947 000 021

For analyst and institutional enquiries
Roger Taylor
Peregrine Riviere                                          07909 907193

Citigate Dewe Rogerson                                     07973 611 888
Anthony Carlisle                                           020 7638 9571


Notes to Editors



About HTG

HTG is a service provider business based in Munster in Germany connecting
subscription customers via the T-Mobile, Vodafone and E-Plus networks.  It has
510,000 subscription customers that have an above-average ARPU and of which over
30% are business customers.  It also owns a small and declining base of pre-pay
customers.  The company was founded in 1986 and bought by Hutchison Whampoa in
1991, subsequently becoming part of Orange, now a subsidiary of France Telecom.

HTG signs up customers through a combination of eight directly-owned stores, its
online and direct sales teams, and a network of 250 dealers.  Customers are
managed through HTG's own call centre operations.  HTG has a strong customer
management ethos, with customers being segmented by ARPU, with this segmentation
driving communication and service levels through the customer lifetime.

The existing management team, under Chief Executive Officer Dr Ralph-Peter
Simon, has significantly improved the operational performance of HTG over the
last two years.  With insufficient funds for expansion, the focus has been on
managing the quality of the customer base and reducing operating costs.

As at 31 December 2002 HTG had unaudited net assets of €30.1m.  In the year to
December 2002, HTG generated an unaudited profit before tax of €10.2m.  HTG has
approximately 500 employees.

About the service provider business model

The German market is regulated by the Federal Regulatory Authority for
Telecommunications ('RegTP').  Because they are deemed to have a dominant
position, the German mobile network operators are required by law to offer their
networks to third parties to enhance competition.  This has given rise to the SP
model, which accounts for 30% of the German market.

A service provider buys airtime from network operators in the form of discounted
tariffs, which it then repackages as its own tariffs.  In turn the service
provider bears a greater proportion of the subscriber acquisition cost and is
responsible for billing, collection and customer care, and has ownership of the
associated customer data.  The most attractive service provider customers are
those with high ARPUs and a low propensity to churn, as in the case of the HTG
customer base.


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            The company news service from the London Stock Exchange