Carphone Warehouse 2008 Annual Report Download - page 29

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Business Review
www.cpwplc.com 17
business streams, delivering an overall improvement to the quality of the
business. Excluding revenues from very low margin premium rate phone
services, which fell 50.5% year-on-year, business-to-business revenues
were up 5.0%.
EBITDA rose 25.0% to £39.0m (2007: £31.2m), reflecting the
improvement in gross margin stemming from the higher quality
revenue mix, and continuing cost control.
Looking forward, Opal continues to have attractive opportunities in its
target small company segment, particularly since a number of major
telecoms players have withdrawn from this part of the market. An
ongoing challenge for the business is to seize the opportunity provided
by The Carphone Warehouse Networks’ industry-leading telecoms
network to supply a wider range of telecoms and data services into
its target customer base.
EBIT
UK Fixed Line EBIT rose to £125.6m (2007: £19.7m). The EBIT margin
improved from 1.8% to 9.0%, driven by the expansion of the EBITDA
margin described above, but partially offset by significant increases in
depreciation and amortisation. Depreciation rose 49.3% to £33.9m,
as a result of the continued investment in network infrastructure as we
broaden our footprint and increase capacity. Amortisation, primarily relating
to subscriber acquisition costs (“SAC”), rose 151.3% year-on-year to
£66.1m, reflecting a total SAC investment in fixed line of £105.8m
(2007: £37.0m).
UK Broadband market share
BT Retail 27%
Virgin Media 23%
CPW 17%
Tiscali 11%
Sky 9%
Orange 7%
Others 5%
O2/Be 1%
Broadband customer base
now over 2.7m (000s)
2,713
2,271
168
‘06 ‘07 ‘08
Source: CPW research using non-financial data published by competitors