Newspaper article The Evening Standard (London, England)

Carphone Raises Stakes in Head-to-Head with BT; CITY BRIEFING

Newspaper article The Evening Standard (London, England)

Carphone Raises Stakes in Head-to-Head with BT; CITY BRIEFING

Article excerpt

Byline: NICK GOODWAY

BT RANG up forecast-busting first-quarter earnings today as its upstart rival Carphone Warehouse announced that it has more than a million fixed-line customers and will launch a line-rental package to take on BT head to head next month.

BT chief executive Ben Verwaayen declared: "This has been a great first quarter and builds on the momentum we have seen gathering for more than a year."

The group is concentrating more and more on its "new wave" businesses such as broadband and international IT contracts. Its revshareenues rose by 5% to [pounds sterling]4.78 billion in the three months to the end of June.

Pre-tax profits soared by 20% to [pounds sterling]511 million, with earnings per share up 25% at 4.5p.

But BT admitted it is continuing to lose revenue and market share in its fixed-line business. Revenues from traditional services fell by another 9% during the quarter, 2% of that coming from the cut in charges for calling mobile phones from fixed lines and another large part from people abandoning dialup internet services.

But Verwaayen also admitted there had been another 2% drop in the volume of calls between fixed lines and "a reduction in market from competitive pressure".

BT hopes that its Fusion service, combining the benefits of a fixed line with a mobile phone and due to be launched widely in September, will help it retain customers.

Meanwhile, Carphone Warehouse chief executive Charles Dunstone is optimistic that he can sign up even more customers to his fixedline TalkTalk service now that regulator Ofcom has ordered BT to open up further to its rivals.

From next month Carphone will offer line rental at [pounds sterling]9.99 a month against BT's [pounds sterling]10.50. Dunstone said this was not so much a moneysaving offer as "a response to the fact that people don't really like having to pay two different bills".

He said: "In fact, up until next March it will cost us to take on new customers. …

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