Third Quarter Trading Update

Carphone Warehouse Group PLC
12 January 2006



Thursday 12 January 2006


For immediate release


                        The Carphone Warehouse Group PLC

                          Third Quarter Trading Update

                            Strong Christmas Trading

                            Group Revenues up 22.7%


The Carphone Warehouse announces its third quarter trading update for the
thirteen weeks to 31 December 2005.


Distribution

  • 18.4% growth in Retail revenue, +7.1% like-for-like
  • 13.1% growth in like-for-like Retail gross profit
  • 32.7% growth in connections to 2.73m
  • 30.1% growth in subscription connections to 0.98m
  • 126 net new stores, taking the total to 1,712
  • Acquisition of Planet Phone in Spain and distribution agreement with
    Telefonica


Telecoms Services

  • UK residential base up to 2.4m customers
  • 40.9% growth in Fixed Line revenue to £140.5m
  • 20.1% growth in Mobile revenue to £121.5m
  • 205,000 new MVNO customers recruited after successful relaunch of Fresh,
    taking base up to 429,000
  • Acquisitions of Onetel and Tele2 UK & Ireland


Charles Dunstone, Chief Executive Officer, said:


'These figures represent a very strong performance across the Group, reflecting
excellent market conditions, exclusive products and continued focus on
investment in service and value for our customers.  Our fixed line businesses
have delivered revenue growth of over 40%, and our MVNO base has nearly doubled
in the last three months following the relaunch of Fresh.


'The acquisitions of Onetel and Tele2's UK operations have cemented TalkTalk's
position as the number one challenger in the UK residential telecoms market, and
we have a substantial, profitable platform from which to launch our drive into
broadband this year.  The relaunch of Fresh has comfortably exceeded our
expectations.  Despite the increase in recruitment costs arising from the
acceleration in our MVNO business to drive future profitable growth, we
anticipate a full year result at the top end of current market expectations.'


Distribution

Total connections rose 32.7% to 2.73m.  Subscription connections were up 30.1%
to 0.98m and pre-pay connections (including SIM-free) were up 34.1% to 1.76m.
The acceleration in growth from the first half reflected continued attractive
market conditions, good availability of exclusive product, and a new focus on
category management combined with a more aggressive trading stance.



Retail revenues rose 18.4% to £421.2m.  Like-for-like revenue growth was 7.1%,
driven by a substantial rise in connections per store but offset by a fall in
average revenue per connection, particularly on pre-pay, which had been
exaggerated in the prior period by high subsidies on 3G handsets.  Like-for-like
gross profit growth, the key driver of Retail performance, was 13.1%, with gross
profit per connection on subscription similar to the comparable period.  Gross
profit per connection on pre-pay fell slightly as we focused on driving volume.
We opened 126 net new stores during the quarter, taking the total portfolio to
1,712.  We anticipate opening a further 30-40 new stores by the end of March.



Subsequent to the period end we acquired Planet Phone in Spain, a chain of 9
stores acting as an exclusive Telefonica Moviles distributor.  This significant
development represents the first step in building a distribution relationship
with Telefonica Moviles, which has given its support both for the transaction
and for our aim to increase significantly our exclusive Telefonica stores over
the coming years.



Our Online business, which will be reported within Retail from our next
financial year, continued to trade well, with clear evidence of an increased use
of the internet for purchasing in the run-up to Christmas.  Online revenues were
up 40.1% to £55.5m.  The Insurance customer base grew by 20.6% to 1.9m, driving
Insurance revenues up 16.6% to £30.5m.  Ongoing revenues from our share of
subscription customers' ARPU were up 22.4% to £14.3m.



Telecoms Services

Total Fixed Line revenues rose 40.9% to £140.5m.  Business traffic over the Opal
network grew 13.2% year-on-year, and Opal revenues were up 23.8% at £64.9m.  The
acceleration in revenue growth at Opal reflects the annualisation of mobile
termination rate cuts, and increased sales of line rental and data services and
equipment.  Xtra, our Spanish network, grew revenues 9.6% to £8.0m.



TalkTalk UK added a further 88,000 customers in the quarter, taking the total
base to 1.15m.   Total TalkTalk UK revenues were £51.3m, up 60.3%.   Outside the
UK our residential fixed line base grew by 177.9% to 298,000, and revenues were
up 104.9% to £16.2m.



During December we completed the acquisitions of Onetel and Tele2's UK and
Ireland businesses.  Together, these have brought a further 1.3m residential CPS
customers into the Group, giving us an overall market share of 10% of UK
residential lines.  Our goal is to become the number one alternative residential
telecoms provider in the UK market.  These acquisitions propel us clearly
towards that position and give us a substantial platform of profitable voice
customers from which to launch our drive into the broadband market this year.
At the same time we continue to make preparations for our major investment in
local loop unbundling in the UK as we seek to unbundle up to 1,000 exchanges
over the next three years.



Total Mobile Services revenues were up 20.1% to £121.5m.  The overall Mobile
customer base grew 36.1% to 3.0m.  Revenues at The Phone House Telecom grew
15.9% to £93.6m, driven by further strong growth in the customer base, with
total customers up 35.2% year-on-year to 1.1m, and the subscription base up
30.5% to 808,000.



Our MVNO operations continued to show strong momentum, with total MVNO customer
numbers up 224.0% year-on-year to 429,000.  The main driver was Fresh, which saw
a significant uplift in the rate of customer recruitment after its relaunch at
the beginning of the quarter.  Although the lifetime value of a Fresh customer
to the Group is higher than that of a standard network pre-pay connection, the
high Fresh connections levels and the continued success of Mobile World will
lead to trading losses in excess of £5m within the MVNO business in the current
year as a result of the upfront subsidy costs.  We continue to make good
progress in our preparations for the launch of Virgin Mobile in France.



Outlook

Market conditions continue to benefit our retail business model, and we
anticipate further like-for-like growth in the fourth quarter, supported by
further store openings.  The recent acquisitions in the UK residential telecoms
market and our commitment to local loop unbundling will enable us to create a
mass market alternative in residential telecoms over the next few years.  The
recent success of Fresh and our plans for Virgin Mobile in France highlight the
increasing opportunities available to us in the MVNO market.  As a result we are
confident of continuing to deliver profitable growth while making significant
investments to seize new opportunities as they arise.



Conference call

There will be a conference call for investors and analysts at 2.00 pm GMT this
afternoon.   The dial-in numbers are 0845 301 4094 for UK callers and +44 20
7081 9482 for international callers.  The call will also be broadcast on our
website, www.cpwplc.com.  A replay will be available for seven days, for which
the dial-in number is [phone], account number 897311, recording number
569816.



Presentation of UK broadband strategy

There will be a presentation to investors and analysts in March to communicate
our broadband strategy in more detail. The exact date will be confirmed nearer
the time.



Next trading update

The next trading update will be on 6 April 2006, when we will publish Q4
connections and customer numbers and give further guidance on the full year
outcome.  We will also be hosting a morning of presentations for investors and
analysts 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 and store numbers


                               13 weeks to 31 December 2005            39 weeks to 31 December 2005

                              2005         2004       % change        2005         2004       % change

Connections

Subscription                   978,142      751,741         30.1%    2,531,840    2,041,213         24.0%
Pre-pay                      1,608,828    1,159,951         38.7%    3,038,147    2,392,670         27.0%
SIM-free                       147,349      149,437        (1.4%)      394,578      392,897          0.4%
Group                        2,734,319    2,061,129         32.7%    5,964,565    4,826,780         23.6%

Store numbers                    1,712        1,424         20.2%


Excluding franchise
stores                           1,583        1,362         16.2%
                                 

Like for like data

                               13 weeks to 31 December 2005            39 weeks to 31 December 2005

                                Revenue          Gross Profit          Revenue           Gross Profit

Group                             7.1%              13.1%               4.3%                 7.2%



Customer bases

                                                      As at 31 December 2005


(000s)                                               2005            2004          % change

Insurance                                           1,890           1,567           20.6%
Telecoms Services - Mobile                          2,992           2,197           36.1%
TalkTalk UK                                         1,146             762           50.4%
Onetel - Residential CPS                            1,113             N/A               -
Tele2 UK and Ireland                                  223             N/A               -
TalkTalk Broadband                                     75             N/A               -
TalkTalk non-UK                                       298             107          177.9%

Switched minutes

                        13 weeks to 31 December 2005                39 weeks to 31 December 2005

(m)                   2005         2004        % change        2005          2004           % change

Opal                     1,518         1,341         13.2%         4,861         3,868              25.7%
TalkTalk                 1,688         1,187         42.2%         4,499         2,798              60.8%
Total                    3,206         2,528         26.8%         9,360         6,666              40.4%



Revenues

                                13 weeks to 31 December 2005           39 weeks to 31 December 2005

(£000s)                        2005         2004       % change       2005         2004       % change

Distribution

Retail                          421,242      355,758        18.4%      994,065      847,119         17.3%
Online                           55,523       39,641        40.1%      151,783       84,896         78.8%
Insurance                        30,487       26,140        16.6%       86,855       73,958         17.4%
Ongoing                          14,330       11,706        22.4%       40,890       34,658         18.0%
Total                           521,582      433,245        20.4%    1,273,593    1,040,631         22.4%

Dealer                           49,227       39,513        24.6%      122,367      100,245         22.1%

Telecoms Services
Mobile                          121,540      101,240        20.1%      340,792      282,035         20.8%
Fixed Line                      140,456       99,690        40.9%      396,810      291,764         36.0%
Total                           261,996      200,930        30.4%      737,602      573,799         28.5%

Eliminations                   (12,307)      (5,096)       141.5%     (22,377)     (13,129)         70.4%

Group Total                     820,498      668,592        22.7%    2,111,185    1,701,546         24.1%


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