Broadband

A run of gloomy financial interim reports was brought to an end this week when Carphone Warehouse did not follow the trend in announcing job cuts but instead hinted at demerging its retail and teleco operations.

The move, which the City is known to favour, would see the two arms of the company parted because analysts had long believed it made for an awkward fit and could be seen as potentially undermining the independence of the chain of stores it will be rolling out under the Best Buy name.

A Carphone Warehouse spokesman confirmed to SamKnows that the ‘structural review which may lead to a separation of the businesses’ but also pointed out the retail and the telco arm of the business have been run separately for the best part of a year now anyway.

The crucial piece of new is there are no plans to cut jobs. Hence despite a warning about tough trading conditions Carphone’s shares increased in value and Charles Stanley upgraded its advice to a ‘hold’. With no debt, following the £1.1bn the Best Buy deal bought in, Carphone is being looked upon as being in better shape than other telecommunications and retail enterprises.

As Carphone’s interims were released, Sky unveiled plans to raise £400m through ten year bonds which will allow it to service its debt – it must make repayments of £800m next year – as well as, analysts agree, ensure it has the money to buy Tiscali. It is now the only bidder left talking to the Italian-Anglo ISP.

It marks a contrast to a week ago when there seemed little other than bad news as ISPs lined up to admit a tough market would require large cuts in personnel, adding to the sombre mood of the media which was dominated by coverage of Remembrance Day.

Virgin Media announced it would be shedding 15% of its work force by 2012, Vodafone vowed to cut £1bn of expenditure by 2012 and BT stole the headlines with the announcement of 10,000 job losses.

However, not all was quite as dire as it seemed, particularly at BT where a spokesperson confirmed to SamKnows that the cuts would have very little impact among BT staff and would not impact plans to begin roll out Fibre to the Cabinet (FTTC) from next year.

“The jobs situation will have no impact on FTTC which will go ahead as planned,” the spokesman insisted.

“The job cuts are not a knee-jerk reaction to the credit crunch or indeed Global Services’ fortunes. In fact, what has been announced is part of plan put in place at the beginning of the year. Four thousand of the ten thousand posts have already gone in the first half of the year. Six hundred of these were direct BT people, more than three thousand have been indirect people - subcontractors, agency staff and so on, split between the UK and overseas.

“Around seven thousand people leave BT every year without packages so this is as much about reining in recruitment as it is about people leaving.”

The spokesman did not believe that the BT announcement of old job cuts, or at least job cuts that had been nearly half completed, was made to placate city investors who had been pushing for news of cost cuts following failings at its Global Services division as well as asking questions (along with the unions) of where the extra money needed to top up the corporation’s pension fund were going to come from.

Tags: BT, Carphone Warehouse, Sky