INVESTORS have welcomed news that telecoms and retail giant Carphone Warehouse will demerge – when conditions are right.
Shares moved 7.5% ahead, gaining 9.5p to 136.75p, after the group’s buoyant fourth-quarter trading update.
Founder Charles Dunstone confirmed that Carphone will press ahead with a demerger of its TalkTalk broadband arm from the group’s retail business.
This will create two separate listed companies, both headed by Mr Dunstone in the role of executive chairman.
However, the business said the timing of the split was unclear as the move will depend on credit conditions.
Mr Dunstone revealed: “The operational separation of the two businesses has already effectively been achieved.”
The demerger decision came as Carphone announced a “significant improvement” in performance at its TalkTalk broadband business, which notched 74,000 net broadband adds – new customers less those leaving – in the fourth quarter.
TalkTalk has a significant call centre presence at Warrington’s Birchwood which could benefit from plans to restore some offshore call centre operations, currently in India, to the UK.
Although the trading update revealed strong fourth quarter sales across the broadband and retail operations, Mr Dunstone warned that the current financial year, to March, 2010, will be broadly flat.
A review of the two divisions in the second half of the last financial year led to reorganisation and redundancy costs of up to £12m in TalkTalk and £7m in the Best Buy Europe retail arm.
But these are expected to generate annual pre-tax savings of about £10m and £50m respectively.
Mr Dunstone added that, despite “present challenges”, the group does not see any further deterioration in its markets.
Carphone now has 2.8m subscribers in its TalkTalk broadband business.
The group will also expand its Best Buy Europe chain, which operates in Europe and the US after US consumer chain Best Buy bought a 50% stake for £1.1bn last year.
Up to 40 “Big Bo” larger format electronic stores will open in the year to next March.
