Carphone Warehouse says broadband services will need extra investment |
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Wed, 11 Oct 2006 10:20
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LONDON - Carphone Warehouse has said that it would have to shell out an extra £20 million as investment due to an "unprecedented" demand for its broadband services.
The firm added that it is "a victim of our own success" as over 625,000 applications for its broadband service, integrated phone and broadband offer, were received, which is a lot more than it had expected. It said that over 200,000 customers still have to be connected.
Carphone said that the initial cost for the offer has increased to £70 million, up from £50 million. However it assured that this increase will be limited only till the end of 2006-07. The firm said that new customers are undergoing an average waiting period of 5 weeks and added that its customer service has been updated.
The chief executive of Carphone, Charles Dunstone said, "The unprecedented take-up of our free broadband offer means we have accelerated our customer service recruitment plans and incurred additional wholesale broadband costs". However he said that this demand has been good for the company adding that the first half profit, excluding cost incurred for the start of the broadband offer, will be 50 percent higher.
Carphone launched its broadband initiative in April offering free broadband connections to those customers who will sign up for its £20.99 per month Talk Talk phone package apart from a one-off £29.99 connection fee. The firm claimed that its offer would reduce residential phone bills by over 60 percent.
The company said that its estimation of the number of applications within the first four months was reached by first eight weeks. Shares fell 324-1/4 pence, down by 2.8 percent, in the morning trading as the company revised its pretax profit to £110 million, down from £120 million.
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Carphone Warehouse expects profits to be in line with forecasts 