Trading Statement

Carphone Warehouse Group PLC
28 July 2004


Wednesday 28 July 2004

Embargoed until 0700 hours


The Carphone Warehouse Group PLC

First Quarter Trading Update

The Carphone Warehouse, which is holding its AGM today at 11.00 am, announces
its first quarter trading update.  Performance continues to be strong and we
remain confident of the outlook.  Figures relate to the 13 weeks to 26 June
2004.


Distribution

  • Retail revenues up 23.2% to £221.5m, 13.8% like-for-like
  • Retail gross profit up 17.1%, 8.8% like-for-like
  • Total connections up 21.9% to 1.22m
  • Subscription connections up 25.6% to 0.60m
  • 65 new stores opened, taking the portfolio to 1,279
  • Insurance base up 28.9% to 1.37m


Telecoms Services

  • Opal revenues up 9.7% to £57.9m; higher margin revenues up 33.5%
  • 0.51m TalkTalk customers
  • Mobile customer base up 8.9% to 2.00m
  • Launch of MVNO in France and re-launch of Fresh in the UK
  • Recent acquisitions in Spain and Switzerland performing in line with plan



Charles Dunstone, Chief Executive Officer, said:

'The year has started very well.  The Retail business has continued the momentum
of last year and the benefits of sustained subscription connections growth are
feeding through strongly into our other business streams.  TalkTalk is
increasing its market share in a competitive environment and Opal's margins are
ahead of our expectations, thanks to a significant improvement in the revenue
mix.  With The Phone House Telecom also performing ahead of our expectations,
all of our core businesses are making good progress.  This gives us confidence
to increase revenue investment in broadband and our MVNO strategy.'


Distribution

Total connections grew by 21.9% to 1.22m in the first 13 weeks of the year,
driven by strong demand in all categories.  Subscription connections grew by
25.6% to 0.60m and pre-pay connections (including SIM-free) grew by 18.5% to
0.62m, with a strong performance across all our major markets.  Pre-pay growth
accelerated through the quarter and into July as we sought to compete more
aggressively in the marketplace.

Within Retail, revenues grew by 23.2% to £221.5m.  Like-for-like revenue growth
was 13.8% and like-for-like gross profit growth was 8.8%.  Gross profit per
connection was flat year-on-year on subscription, but fell on pre-pay, as
anticipated, as reduced retail prices encouraged more general retailers to enter
the market.  We opened 65 net new stores in the period, taking the total to
1,279, compared to 1,151 at June 2003.

Our Insurance customer base grew by 28.9% year-on-year to 1.37m.  We continue to
achieve good levels of penetration of insurance on mobile connections.
Insurance revenues grew 21.0% to £23.6m.

Ongoing revenues grew 33.5% to £11.4m, supported by continued good subscription
growth over the last twelve months.  This strong performance has also been
driven by a gradually increasing trend towards ARPU-sharing agreements
representing a greater overall proportion of our commercial terms with networks.


Telecoms Services

Total fixed line revenues increased by 71.9% to £94.1m.  Excluding the impact of
the acquisitions of N Tel and Xtra, underlying revenue growth was 47.7%.  Opal
revenues grew by 9.7% to £57.9m, with higher margin direct and reseller revenues
growing by 33.5% and lower margin premium rate revenues falling by 29.7%.  As a
result of this change in mix, overall margins at Opal were ahead of our
expectations.  Business traffic switched through the Opal network grew by 24.7%
over the same period, to 1.22bn minutes.

TalkTalk had 511,000 tolling customers at the end of the period, up from 67,000
at the end of June 2003.  The base has grown 32.7% over the last quarter.  We
continued to strengthen our competitive position in the market, with our market
share of net new CPS lines increasing to 38% in the quarter, compared to 30% in
the three months to March 2004.  Total TalkTalk revenues were £23.0m.  As
previously announced, we intend to launch a broadband product by the end of the
year, and will offer line rental when a 'fit for purpose' wholesale solution is
available.

Non-UK fixed line revenues were £13.3m.  Xtra, the business we acquired in
Spain, traded in line with expectations, and our Spanish management team is
making good progress towards the launch of TalkTalk in September.  N Tel, our
Swiss reseller, finished the quarter with 49,000 customers, with an in-store
tariff launch scheduled for October.  In France, we have been very pleased with
the initial success of TalkTalk,  and we also now plan to launch TalkTalk in
Germany in October 2004.

Mobile revenues increased by 117.0% to £89.7m.  The Phone House Telecom recorded
revenues of £68.4m in the quarter, compared to £17.3m in June 2003.  The
customer base grew by 7.4% year-on-year to 0.71m, with the subscription base
growing by 9.3% to 0.56m.  We have succeeded in maintaining margins despite the
growth in the customer base.

Other mobile revenues fell by 11.2% to £21.4m.    Although the customer base (ex
Phone House Telecom) grew by 9.7% to 1.30m, revenues per customer were affected
as the base acquired from Sainsbury's migrated over the last 12 months from a
service provision arrangement (under which full ARPU is recognised in the
revenue line) to a facilities management arrangement (under which only our share
of ARPU is recognised).  In addition, whilst once again growing, the Fresh base
was smaller than a year ago.

During the period we have started to adopt a more proactive MVNO strategy.  In
the UK we have relaunched the Fresh proposition, so that it now offers the
cheapest cross-network voice and text tariffs in the market.  In July, we formed
OMER Telecom, an MVNO business in France on the Orange network.  The strategy
for OMER is to target under-penetrated regions of France with a locally-branded
pre-pay and subscription proposition distributed through our own stores and
other third party channels.  The first regional business has launched in
Brittany under the Breizh Telecom brand.


Conference call

There will be a conference call for investors and analysts at 8.30 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 1684886#.


Next trading update

The group will issue a first half trading update, covering connections and
customer numbers, on 6 October 2004, and publish its interim results on 3
November 2004.



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 (Citigate Dewe Rogerson)                    07973 611 888
                                                             020 7638 9571




Operating and Financial Statistics

     
•    Revenues (£000s)
                                                     13 weeks to 26 June 2004

                                               2004                 2003        % change
Distribution
Retail                                       221,534             179,826           23.2%
Online                                        21,564               9,932          117.1%
Insurance                                     23,593              19,504           21.0%
Ongoing                                       11,396               8,536           33.5%
Total                                        278,087             217,798           27.7%

Telecoms Services
Mobile                                        89,721              41,354          117.0%
Fixed Line                                    94,127              54,771           71.9%
Total                                        183,848              96,125           91.3%

Wholesale                                     31,186              67,972         (54.1%)

Eliminations                                 (3,557)                   -               -

Group Total                                  489,564             381,895           28.2%


     
•    Like for like data
                                                  13 weeks to 26 June 2004

                                           Revenue                   Gross Profit

Group                                       13.8%                        8.8%



     
•    Connections, mix and store numbers
                                                     13 weeks to 26 June 2004

                                                2004                2003        % change
Connections
Subscription                                 601,597             478,876           25.6%
Pre-pay                                      517,915             413,041           25.4%
SIM-free                                     100,800             109,301          (7.8%)
Group                                      1,220,312           1,001,218           21.9%

Store numbers                                  1,279               1,151           11.1%



     
•     Customer bases
                                                        As at 26 June 2004
     
(000s)                                               2004            2003        % change

Insurance                                           1,374           1,066           28.9%
Telecoms Services - Mobile                          2,005           1,842            8.9%
TalkTalk                                              511              67               -



     
•    Switched minutes
                                                     13 weeks to 26 June 2004

(m)                                                  2004            2003        % change

Opal                                            1,219,990         978,427           24.7%
TalkTalk                                          707,263          64,850               -
Total                                           1,927,253       1,043,277           84.7%




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