Carphone Warehouse considers TalkTalk sell-off

Carphone Warehouse is considering plans to spin off its TalkTalk broadband business, it was reported today.

Carphone’s founder, Charles Dunstone, is reviewing the future of the broadband arm as part of a strategic overhaul of the group, the Sunday Telegraph said.

TalkTalk was launched in 2003 and has 2.8 million customers, making it the UK’s third largest broadband provider.

Mr Dunstone, who still owns almost a third of the £1.3bn (€1.5bn) company, is said to want to split Carphone’s broadband and stores businesses to create more value for shareholders.

The review is at an early stage and any move to split up the company would not take place until next year, the report said.

Rivals such as mobile phone giant Vodafone have also been linked in the market as potentially interested in TalkTalk.

The possible shake up comes just six months after Carphone sold a 50% stake in its retail business to US electronics firm Best Buy for £1.1bn (€1.28bn) as it looks to enter the European market for the first time.

Carphone’s results – due on Tuesday – are likely however to bear the brunt of sharply lower broadband customers at TalkTalk as a property slump hits demand for connections.

It said last month that net additions of broadband users – those leaving less those joining – plunged by more than half year-on-year in the three months to September 27, to 41,000.

The City trimmed its forecasts after the update, while the company is also spending tens of millions on the joint venture with Best Buy.

Credit Suisse analysts are expecting the half-year figures to reveal a 19% drop in headline profits, to £45.2m (€52.9m) from £56m (€65.6m) a year ago.

A Carphone Warehouse spokesman said: “We do not comment on market speculation.”