Trading Update

Carphone Warehouse Group PLC
12 January 2007


Friday 12 January 2007

For immediate release



                        The Carphone Warehouse Group PLC

                          Third Quarter Trading Update

                            Group Revenues up 31.8%



The Carphone Warehouse announces its third quarter trading update for the
thirteen weeks to 30 December 2006.



Distribution

  • 19.8% growth in Retail revenue, +7.3% like-for-like
  • 3.0% growth in like-for-like Retail gross profit
  • 19.2% growth in connections to 3.26m
  • 20.3% growth in subscription connections to 1.18m
  • 149 net new stores opened, taking the total to 2,070



Telecoms Services

  • 2.2m residential broadband customers with completion of AOL acquisition
  • 413,000 customers unbundled, including 281,000 AOL customers
  • 569 exchanges unbundled, with 1,109 handed over in total
  • Highly successful launch of Virgin Mobile France, with 379,000 active
    customers





Charles Dunstone, Chief Executive Officer, said:



'We have had another very good Christmas period.  Delivering profitable
like-for-like growth after last year's very strong performance is a great
achievement, reflecting all our people's efforts, and driving market share gains
through the strength of our customer proposition.



'The completion of the AOL deal makes us the clear number three player in the UK
broadband market with 2.2 million residential broadband customers, giving us the
scale we need to deliver significant profitable growth in the medium term.  Our
immediate focus continues to be on improving our processes and customer service,
where we have made good progress in recent months.



'In just its first nine months, Virgin Mobile France has established itself as
the fastest growing virtual network in the market with 379,000 active customers,
and customer acquisition is accelerating as the brand becomes more prominent and
distribution becomes broader.  In addition, Best Buy Mobile, our US joint
venture, has enjoyed a promising start.



'Overall we anticipate a full year result in line with current market
expectations.'



Distribution

Total connections were up 19.2% to 3.26m.  Subscription connections were up
20.3% to 1.18m, with UK subscription connections growth of 18.5%, and pre-pay
connections (including SIM-free sales) were up 18.6% to 2.08m.  The strength of
our proposition continued to be attractive and we benefited from good footfall
and increased market share.



Retail revenues were up 19.8% to £571.3m.  Like-for-like revenue growth was
7.3%, driven by higher like-for-like connections, and like-for-like gross profit
growth was 3.0%.  These figures reflect a strong trading performance,
particularly in the context of an exceptional comparable period last year.  We
opened 149 net new stores in the quarter, taking the total portfolio to 2,070.



During the quarter, we launched Best Buy Mobile, our new mobile retail format in
the US, in conjunction with Best Buy Co., Inc.  The initial customer response
has been promising and the trial will continue over the coming months.



Insurance revenues rose 14.4% to £34.9m, driven by further strong growth in the
customer base, which was up 16.8% to 2.21m.  Ongoing revenues were up 21.7% to
£17.4m, as sustained growth in subscription connections continued to add
incremental value beyond the point of sale.





Telecoms Services



Fixed Line

Total fixed line revenues were up 104.0% to £286.5m.  By the end of the quarter
and with the completion of the AOL acquisition, our UK broadband base had
increased to 2.16m customers, making TalkTalk/AOL the clear number three
operator in the UK broadband market.  The TalkTalk broadband base rose to
632,000, including 540,000 live on the new offer.  The rate of growth reflects a
continued major focus on provisioning and customer service processes, as well as
the normal seasonal slowdown as the Retail business prioritises Christmas
trading.



At the end of the quarter, 413,000 of our broadband customers were on unbundled
lines, comprising 132,000 TalkTalk customers and 281,000 AOL customers.  We plan
to increase the rate of unbundling materially over the next few weeks but we
continue to be reliant on the quality of the line migration process to minimise
customer disruption.



We made further good progress on our next generation network roll-out during the
period, with a total of 569 exchanges now unbundled by Opal.  AOL has a further
52 unbundled exchanges that do not overlap with Opal's existing coverage.  We
are well on target for our goal of 1,000 exchanges by May, and have begun to
increase our footprint beyond our original plans because of the strength of
demand.  Opal currently has over 1,100 exchanges handed over by BT for
unbundling, and will give a detailed update on our planned expansion in our
April teach-in.



In total, including our voice-only customer base and 115,000 voice customers
acquired with AOL, we had 2.77m residential voice customers at the period end,
and residential revenues across the Group were up 186.2% to £193.3m.  Voice ARPU
and margin are still exceeding our original expectations.



Business revenues were up 27.8% to £93.3m. Opal continued to enjoy good
underlying growth, as well as benefiting from the inclusion of the Onetel B2B
operations and the Alto Hiway acquisition.



Mobile

Total Mobile revenues were up 8.5% to £131.9m.  The Phone House Telecom, our
German service provision business, continues to deliver steady growth, with the
customer base up 27.0% to 1.42m and revenues up 5.7% to £98.9m.  Within our
wholly-owned MVNO operations, we have now launched new businesses in Belgium,
Portugal, Spain and Switzerland this year, mainly focused on offering cheap
calls to international destinations.



Virgin Mobile France has had a very good first nine months of trading, and has
today announced a base of 379,000 active customers.  This performance
establishes Virgin Mobile as the fastest growing MVNO in France and the business
is well set to reach its target of 1 million customers within three years of
launch.



Outlook

The outlook for our businesses remains good.  The market continues to favour our
impartial model and brand strength.  We expect further growth in Distribution,
driven by customer demand and by our own expansion plans, and as we continue to
adapt and evolve our retail model to meet customers' needs effectively.  In
Broadband, we have now significantly improved our provisioning and customer
service processes, and are ready to increase the rate of recruitment once more.
Migration to unbundled lines remains crucial to future profitability, but we are
encouraged by the progress being made by BT Openreach and the underlying
customer economics continue to support our business plan.



Conference call

There will be a conference call for investors and analysts at 9.00 am this
morning.   The dial-in number is [phone], or 1866 4327 186 for US
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 +44 20
8196 1998, or 1866 583 1035 for US callers, and the code is 897311.





Next trading update

The next trading update will be on 24 April 2007, 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 Godsal                                       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 30 December 2006            39 weeks to 30 December 2006

                           2006         2005            % change   2006         2005       % change
Connections*
Subscription              1,177,163      978,142          20.3%    2,997,110    2,531,840         18.4%
Pre-pay                   1,909,092    1,608,828          18.7%    4,188,631    3,038,147         37.9%
SIM-free                    174,134      147,349          18.2%      414,804      394,578          5.1%
Group                     3,260,389    2,734,319          19.2%    7,600,545    5,964,565         27.4%
* Excludes Best Buy Mobile

Own stores                    1,884        1,583          19.0%
Franchises                      186          129          44.2%
Total stores                  2,070        1,712          20.9%


Like for like data


                               13 weeks to 30 December 2006            39 weeks to 30 December 2006

                                Revenue          Gross Profit          Revenue           Gross Profit

Group                             7.3%               3.0%               10.1%                5.4%


Customer bases
                                                      As at 30 December 2006


(000s)                                               2006            2005    % change

Insurance                                           2,207           1,890           16.8%

Mobile - TPHT                                       1,416           1,115           27.0%
Mobile - UK MVNO                                      536             382           40.3%

Voice/line rental UK
Existing                                            2,052           2,447
  Of which line rental                                847             456
New offer                                             607               -
  Of which line rental                                607               -
AOL voice customers                                   115               -
Total                                               2,774           2,447
  Of which line rental                              1,454             456

AOL dial-up customers                                 576               -

Broadband
Existing                                               92             135
New offer                                             540               -
  Of which unbundled                                  132               -
AOL                                                 1,523               -
  Of which unbundled                                  281               -
Total                                               2,155             135
  Of which unbundled                                  413               -

TalkTalk non-UK                                       373             333           11.7%


Additional broadband statistics (excludes existing base and AOL)

                                               30 December 2006        30 September 2006        26 July 2006


% inside 1,000 exchange footprint                           82%                      83%                 83%
Live on calls and line rental (000s)                        607                      516                 402
Live on broadband (000s)                                    540                      421                 247
% from existing TalkTalk base                               50%                      51%                 53%
% existing broadband users                                  43%                      45%      40% (estimate)
Exchanges unbundled                                         569                      370                 303
Exchanges with backhaul                                     824                      543                 N/A
Exchanges handed over                                     1,109                      846                 518






Revenues


                                13 weeks to 30 December 2006           39 weeks to 30 December 2006


(£000s)                        2006         2005          % change       2006         2005       % change
Distribution
Retail                          571,278      476,765        19.8%    1,428,778    1,145,848         24.7%
Insurance                        34,887       30,487        14.4%       99,187       86,855         14.2%
Ongoing                          17,435       14,330        21.7%       49,735       40,890         21.6%
Total                           623,600      521,582        19.6%    1,577,700    1,273,593         23.9%


Telecoms Services
Fixed Line
  UK Business                    83,958       64,903        29.4%      237,072      176,112         34.6%
  Non-UK Business                 9,299        8,040        15.7%       27,054       22,873         18.3%
  UK Residential                173,452       51,313       238.0%      489,445      150,407        225.4%
  Non-UK Residential             19,803       16,200        22.2%       56,361       47,418         18.9%
Total Fixed Line                286,512      140,456       104.0%      809,932      396,810        104.1%

Mobile
  TPHT                           98,934       93,600         5.7%      278,734      260,800          6.9%
  MVNO                           13,905        8,742        59.1%       41,605       22,094         88.3%
  FM                             19,089       19,198       (0.6%)       58,089       57,898          0.3%
Total Mobile                    131,928      121,540         8.5%      378,428      340,792         11.0%

Total                           418,440      261,996        59.7%    1,188,360      737,602         61.1%

Dealer                           53,361       49,227         8.4%      154,161      122,367         26.0%

Eliminations                   (13,881)     (12,307)        12.8%     (29,225)     (22,377)         30.6%

Group Total                   1,081,520      820,498        31.8%    2,890,996    2,111,185         36.9%






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