Demerger plans to be delayed by Carphone Warehouse

A move to separate its company into two individual businesses has been put on hold by Carphone Warehouse until the company can improve the costs involved in financing the split, which has in part been affected by the current economic situation.

The decision was made recently by Carphone Warehouse to split into a telecoms and retail business, both of which will be separately listed, although until the cost of financing such a move is reduced it has decided delay the separation.

The retail side of the operation will be controlled by Carphone warehouse, and the landline and broadband part of the business will be focussed on by its telecoms arm TalkTalk once the go ahead is given for the separation. The chairman of each of these companies will be Charles Dunstone, the current chief executive.

In its fourth quarter trading update Carphone Warehouse said “The board has now completed its initial review and following discussions with stakeholders and advisers believes that a demerger structure can be achieved to create two separately listed companies. Given the wider economic climate, the board is still reviewing various options in respect of the most appropriate allocation of existing debt facilities and expects to make further progress in this regard in the coming months.”

The full year results for the company are expected to be in line with the forecasts it has made and mid-cap for the UK reported that in both divisions the sales momentum for the businesses continued.

During this quarter it has achieved broadband net adds of 74 000, which gives the company 2.8 million total subscribers, which compared to the years previous quarters is an improvement. The number of mobile connections rose to 3 million, which is an increase of 12 percent.

Even in light of the current recession the firm has updated guidance, predicting that the level of earning would be similar to that of the year up to March 2009, although revenue has level out for its telecoms arm, TalkTalk.