Broadband News

While the talk of flat markets was hardly surprising, the biggest news to come out of Carphone Warehouse’s Q4 trading update, released this morning, was confirmation the group will split its retail and telecoms operations.

Analysts and investors have long called on the group to realise there was never much logic behind having a retailer and a telco within the same company and, in fact, it could be seen as a conflict of interest.

Hence, Charles Dunstone took the opportunity this morning to announce that the two operations would demerge and that he would head both, although he is not being drawn on timing. The company reported that it already sees a ‘sea change’ in banking and believes that a demerger, through which its telco and retail shares would be separately listed, could take place as early as next year.

Analysts believe this would not only make sense through floating on a, hopefully, more positive market but would also allow debt restructuring negotiations to take place at more favourable rates than would likely be possible today.

The quarterly trading statement pointed to a largely flat broadband market in which TalkTalk added 97,000 net subscribers, a figure reduced to 74,000 for the group by the loss of 23,000 AOL users. The prediction is net additions for the year will slow to around 125,000 to 175,000.

The company, however, remained upbeat about its unbundling efforts, claiming that 2.2m of its 2.8m broadband subscriber base are unbundled, making TalkTalk the UK’s largest provider, accounting for just over three in four of British web users who have switched both their phone line (not just the billing company) and broadband connection to a non-BT provider.