Carphone Warehouse announces separation

The retail and telecoms provision arms of Carphone Warehouse (CW) will be split up, to allow the telecoms division to stay competitive as rival BT prepares to launch super-fast Internet using fiber optic cable.

TalkTalk, Carphone Warehouse’s fixed line phone and Internet service, currently uses BT’s copper lines to provide broadband, prompting concerns that the profitable CW division could lose out when BT makes the switch. The Financial Times reports that the demerger is being viewed by some analysts as a precursor to a sale of the telecoms firm, which would leave CW free to focus on growing its Best Buy Europe retail joint venture.
CW founder and chairman Charles Dunstone says the firm does not perceive an immediate threat from BT’s fiber plans, noting that he believes the UK market would be served by a mix of copper-line and fiber in the coming years, because rollout of fiber networks could take up to eight years.
Any demerger could also lead to the sale of Carphone’s stake in four-year-old Virgin Mobile France, which is forecast to turn its first profit this year.
Details of the demerger are contained in lengthy documents on CPW’s website, and Dunstone and CPW finance director Roger Taylor are scheduled to begin briefing UK and US investors next week.