Product Launch

Carphone Warehouse Group PLC
11 April 2006

Tuesday 11 April 2006

For immediate release

                        The Carphone Warehouse Group PLC

                Launch of Free Broadband, Forever, from TalkTalk

Carphone Warehouse today announces its pricing strategy for broadband and
residential telephony in the first 1,000 exchanges it has committed to unbundle,
and the financial impact of this strategy.

Customer offer

For a monthly fee of £9.99, TalkTalk customers will receive:

  • Unlimited local and national landline calls, 24 hours a day
  • Unlimited international landline calls to 28 countries, 24 hours a day
  • Up to 8 Mbps broadband access

This offer is available from today to all customers in all 1,000 exchange areas,
covering nearly 70% of the UK population.  If the local exchange has not yet
been unbundled, the customer will initially be connected via BT's wholesale IP
Stream service, and then migrated at a later date at no extra cost to them.  The
first customers will go live from the beginning of July 2006.

In addition to the monthly fee, all customers will pay the standard monthly line
rental charge of £11.00.

To support this strategy and to generate a more rapid payback on our investment,
we intend to deploy our exchange infrastructure as quickly as possible.  Based
on current forecasts, we expect to reach our initial target of 1,000 exchanges
by May 2007.  In addition, we will invest substantially in marketing and
customer acquisition.

Charles Dunstone, Chief Executive Officer, said:

'Our approach to business has always been about how little we can afford to
charge our customers, rather than how much we can get away with.  So today we
are cutting more than 60% off the cost of the average UK residential telephony
and broadband bill, and additionally providing unlimited calls to 28
international destinations.  The residential telecoms market in the UK will
never be the same again.   From today, broadband is a right, not a privilege.'

Financial impact

Carphone Warehouse currently has approximately 2.6 million residential voice
customers in the UK under the TalkTalk brand.  As a result of this new
proposition, we now aim to have 3.5 million residential customers by March 2009,
of which we plan over half to be combined voice and broadband customers.

We anticipate that this investment strategy will result in an operating loss
from our broadband business (after all related depreciation and amortisation) of
around £50m in the current financial year to March 2007.  The total cash
investment in the current year, including trading losses, infrastructure
investment and capitalised acquisition costs, is forecast to be approximately
£110m.  In the year to March 2008, we provisionally estimate that the project
will deliver an operating profit of £30-40m and be free cash flow positive.  We
anticipate a total cash payback on our investment in the fourth year.

Roger Taylor, Chief Financial Officer, said:

'We believe that the investment and short term profit impact are fully justified
by the rapid recruitment of customers to ensure higher penetration of our
unbundled exchanges.  The pricing reflects what we believe to be the real costs
and benefits of providing residential telephony and broadband through unbundled
exchanges.  Furthermore, the investment we are making per customer compares
favourably with what we and others have previously paid for acquiring Carrier
Pre Select subscriber bases.'

This announcement should be read in conjunction with our Fourth Quarter Trading
Update, also released this morning, which contains detailed guidance for the
rest of Carphone Warehouse's operations for the coming year.  There will be a
presentation at 10.00 am today to investors and analysts at the London Stock
Exchange, 10 Paternoster Square, London EC4M 7LS.  The event will also be audio
webcast live at cpwplc.com.

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

1.      Comparative offers for line rental, calls and broadband

Provider                        Package                                                             Monthly cost

Bulldog                         Unlimited broadband (up to 8Mbps), all UK landline                        £42.00
                                calls
BT                              'Option 4' broadband package (up to 8 Mbps), 'Together                    £55.49
                                Option 3' calls package
NTL                             Up to 10Mbps broadband package, 'Talk Unlimited 24'                       £59.99
                                calls package
Telewest                        Elite broadband package (up to 10Mbps), 'Talk                             £60.50
                                Unlimited' calls package

TalkTalk                        Up to 8Mbps broadband, unlimited landline calls in the                    £20.99
                                UK and to 28 countries

2.      Small print

Free broadband from TalkTalk is subject to the following conditions:

  • 18 month contract
  • £29.99 connection fee, inclusive of VAT
  • 40 gigabit monthly download limit
  • Prefix of 18418 required to make unlimited international calls.  28
    countries are Australia, Austria, Belgium, Canada, Cyprus, Czech Republic,
    Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy,
    Latvia, Lithuania, Luxembourg, Malta, New Zealand, Poland, Portugal,
    Slovakia, Slovenia, Spain, Sweden, The Netherlands, and United States.
  • Standard line rental of £11.00 and all calls package of £9.99, each
    inclusive of VAT
  • 'Forever' means whilst you continue to take standard line rental of £11.00
    and the all calls package of £9.99
  • A premium of £9.99 per month is payable for customers residing outside the
    footprint of the 1,000 exchanges to be unbundled
  • Full terms and conditions are available at www.talktalk.co.uk

The broadband product is available to be purchased separately at £35 per month.

Note: the £29.99 connection fee reflects the charge levied by BT for each
customer TalkTalk connects to an unbundled exchange.



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