Carphone Warehouse 2005 Annual Report Download - page 12

8
Chief Executive Officer’s Review continued
Everything that our business-to-business and
residential fixed line operations can achieve is reliant
on the technical excellence and outstanding efficiency
of the Opal network. During the year, the build-out
into BT’s local exchange network was completed,
maximising the cost efficiency of carrying calls over
our network. This year we plan to add further capacity
and to adapt the network for future integration into
BT’s 21st Century Network. Through these avenues,
we are preparing our network for continued strong
growth in traffic, and for the further move towards
corporate data products.
Outlook
The business has never been in better shape. The
markets in which we operate arevery attractive.
Continued intense competition between mobile
networks translates into compelling offers for our
customers. We expect further competition over the
medium term as networks seek to migrate customers
to their 3G platforms and moreMVNOs enter the
market. The handset market is vibrant, with more
models than ever before due to be released in the
next 12 months and a number of new manufacturers
seeking to gain a foothold in the European market.
In response to these excellent market conditions,
the acceleration in the expansion of our retail platform
will continue into this financial year, as outlined above.
This feeds through into strong growth prospects across
the whole of the Distribution division. Although the
current weakness in UK consumer spending has been
well documented, we believe the dynamics of mobile
phone retailing are materially different from the sale of
other consumer goods. This, in addition to our diversified
and service-orientated proposition and our European
platform, gives us some insulation from the consumer
economic environment.
On the fixed line side, we have now proved that
TalkTalk has all the ingredients to become the major
alternative force in UK residential communications, and
further regulatory change over the next year should
allow us to move to the next level in terms of the scale
of our operations and the range of services we offer.
The investment we are making in the Opal network
will continue to maximise the value we achieve from
providing services to homes and businesses, and
extend the range of those services. Outside the UK,
we will invest further in building our existing customer
bases and entering new fixed line markets.
The outlook for our mobile services operations is
very promising. Our German service provision
business, The Phone House Telecom, has significantly
outperformed our expectations and we will continue
to invest in growing the base strongly. Our MVNO
strategy is gaining pace and reflects the true
entrepreneurial roots of the Group: identifying and
exploiting market niches while using our existing
assets in innovative new ways.
We ask a lot of our employees and every year they
respond to the challenges we set them. This year,
despite no major acquisitions, a further 2,000 people
have joined The Carphone Warehouse, taking the total
number of employees to over 12,000. We are very
pleased to welcome all the new joiners and extend
our thanks to all of our employees for their exceptional
service in the last twelve months.
Finally, I would like to take this opportunity to thank
Hans Snook for his valuable contribution to the
development of the Group during his three years as
Chairman. Wehave been very lucky to benefit from
his knowledge and guidance over that time. In turn,
I am delighted to welcome John Gildersleeve as our
new Chairman. John knows the business well, having
already served on the Board for five years, and I know
his rich commercial experience will be invaluable to
the Group as we enter this next phase of growth.
The Carphone Warehouse Group PLC Annual Report 2005
Charles Dunstone, Chief Executive Officer
3GMIGRATION TO BE
AKEY FUTURE DRIVER
CONVERGENCE OF MULTIPLE
APPLICATIONS ON THE
MOBILE HANDSET
FURTHER BENEFITS FROM
REGULATORY CHANGE IN THE
UK FIXED LINE MARKET