TalkTalk spin-off to be considered by Carphone Warehouse

It has recently been reported that plans are being considered by Carphone Warehouse to spin off its broadband business, TalkTalk.

The future of its broadband arm is currently being reviewed by Charles Dunstone, The founder of Carphone Warehouse as part of the group’s strategic overhaul. Launched in 2003, TalkTalk is the third biggest provider of broadband access in the UK with a customer base of more than 2.8 million users.

The company is valued at £1.3 billion, of which a third is still owned by Mr Dunstone. In an attempt to increase the company’s value for its shareholders he is looking to split the stores businesses and the broadband of Carphone Warehouse.
Reports have stated, however, it would be next year before any moves were made to split the company up as it was only in the early stages of its review. There has been interest placed in TalkTalk by rivals in the Marketplace like Vodafone, the mobile phone operator.

Having sold of 50 percent of its retail business for a total of £1.1 billion to Best Buy, a US electronics firm six months ago it now appears that this shake up of the business will be to allow it to take its first steps into the European market.
The slump in the property sector and the resulting reduction in connection demands have caused a considerable drop in broadband customers for TalkTalk and are likely to have a serious impact on the Carphone Warehouse results, which are due soon.

Over the last three months up to September 27th the net additions of its broadband users (customers leaving compared to customers joining) dropped by over half year-on-year to 41 000 recent figures found.

While the joint venture between the company and Best Buy is costing tens of millions the city has still dropped forecasts following the recent update. With half-year figures looking to drop from last years £56 million to £45.2 million, according to Credit Suisse analysts, which will be a drop in headline profits of 19 percent.

“We do not comment on market speculation,” Said a spokesman for Carphone Warehouse.