Carphone Warehouse 2003 Annual Report Download - page 9

Average ARPU on our UK customer base increased by
20% during the year, thus demonstrating our ability to
create meaningful value for the networks.
inadequate VAT documentation in one of our overseas
subsidiaries from trading in the period ending March 2000.
We believe that this could give rise to a liability of £2.4m
and have therefore provided for this amount within the
result of the Wholesale division.
The other activities included within Wholesale, our voucher
distribution business and the wholesale shipment of trade-in
handsets, continue as normal.
Telecoms Services
2003 2002
£m £m
Turnover 158.8 67.3
Mobile 82.7 67.3
Fixed 76.1 –
Contribution 26.0 13.9
Mobile 18.0 13.9
Fixed 8.0 –
Support costs (10.4) (6.7)
EBITDA 15.6 7.2
Depreciation (5.7) (3.2)
EBIT 9.9 4.0
Before amortisation of goodwill and exceptional items.
The Group’s Telecoms Services division is split into
two businesses, Mobile and Fixed. The Mobile business
encompasses our facilities management operations,
managing customers on behalf of networks, and our own
customers including our MVNO, Fresh. The Fixed business
comprises Opal Telecom’s core business fixed line service
and the new residential service, talktalk™. Turnover for the
division grew 135.7% year-on-year, and EBIT grew 150.3%,
both boosted by the acquisition of Opal in November 2002.
Mobile
The management of customers beyond the point of sale
is an important element of our strategy to align our interests
more closely with our network partners and generate more
value from our customers throughout their mobile lifetimes.
We continued to make progress in Mobile Telecoms
Services during the year. Turnover grew 22.8% to £82.7m,
and contribution grew by 29.7% to £18.0m. The key drivers
of this business are the customer bases we manage, the
ARPU on those bases, and the efficiency with which we
provide our management services.
Customer numbers in our FM operations increased 15.1%
to 994,000. This was achieved through the organic growth
of our Vodafone and O2customer bases in the UK, which
increased by 49.6% to 394,000. We continue to manage
600,000 customers on behalf of Orange and SFR in France.
Average ARPU on our UK customer base increased by
20% during the year, thus demonstrating our ability to
create meaningful value for the networks. Meanwhile we
continue to seek to improve our bad debt management
performance, and are exploring ways to make our call
centre operations more efficient.
We continue to pursue opportunities to manage customers
on behalf of third parties in the UK and France, while also
assessing potential means of developing a similar model
in some of our other major markets. Just after the year end
we were delighted to sign an agreement with Sainsbury’s to
provide mobile and fixed line services for the supermarket
chain’s 11 million UK customers.
Our own MVNO, Fresh, had a satisfactory year. To our
surprise, the networks demonstrated a renewed interest
in the pre-pay market, to the extent that pricing became
very competitive and our core Fresh product was a
relatively less attractive customer proposition. Nevertheless
our Fresh customer base grew from 92,000 to 120,000.
Our strategy for Fresh is to avoid heavily subsidising the
product, but rather to take advantage of profitable niche
opportunities in the market as and when they arise. A further
example of this strategy was the launch, just after the year
end, of a new Fresh contract product aimed at the first-time
subscription customer seeking a low monthly line rental.
Within our own customer base we have been managing a
number of service provision customers on behalf of SFR, a
base we acquired as part of the acquisition of CMC in May
2001. Just prior to the year end, this base was transferred
back to SFR as part of an arrangement made at the time
of the acquisition.
Fixed
We have been delighted with the progress made by
Opal since it became part of the Group in November 2002.
It has continued to generate the impressive rates of growth
it had demonstrated prior to acquisition, with significant
new business wins and growth in the number of minutes
switched through the Opal network.
7
The Carphone Warehouse Group PLC Annual Report 2003
9214 1,019 1,115
02 03 01 00
Mobile managed
base
(000s)
70 166 322
03 0201
Opal switched
minutes
(m)