Carphone Warehouse Announces 8 Mbps Free Broadband Internet Access
UK-/April 11, 2006 - Wi-Fi Technology News/-Carphone Warehouse today announces its pricing strategy for broadband and residential telephony in the first 1,000 exchanges it has committed to unbundle, and the financial impact of this strategy.
Customer offer:
For a monthly fee of £9.99, TalkTalk customers will receive:
Unlimited local and national landline calls, 24 hours a day
Unlimited international landline calls to 28 countries, 24 hours a day
Up to 8 Mbps broadband access
This offer is available from today to all customers in all 1,000 exchange areas, covering nearly 70% of the UK population. If the local exchange has not yet been unbundled, the customer will initially be connected via BT’s wholesale IP Stream service, and then migrated at a later date at no extra cost to them. The first customers will go live from the beginning of July 2006.
In addition to the monthly fee, all customers will pay the standard monthly line rental charge of £11.00.
To support this strategy and to generate a more rapid payback on our investment, we intend to deploy our exchange infrastructure as quickly as possible. Based on current forecasts, we expect to reach our initial target of 1,000 exchanges by May 2007. In addition, we will invest substantially in marketing and customer acquisition.
Charles Dunstone, Chief Executive Officer, said:
“Our approach to business has always been about how little we can afford to charge our customers, rather than how much we can get away with. So today we are cutting more than 60% off the cost of the average UK residential telephony and broadband bill, and additionally providing unlimited calls to 28 international destinations. The residential telecoms market in the UK will never be the same again. From today, broadband is a right, not a privilege.”
Financial impact
Carphone Warehouse currently has approximately 2.6 million residential voice customers in the UK under the TalkTalk brand. As a result of this new proposition, we now aim to have 3.5 million residential customers by March 2009, of which we plan over half to be combined voice and broadband customers.
We anticipate that this investment strategy will result in an operating loss from our broadband business (after all related depreciation and amortisation) of around £50m in the current financial year to March 2007. The total cash investment in the current year, including trading losses, infrastructure investment and capitalised acquisition costs, is forecast to be approximately £110m. In the year to March 2008, we provisionally estimate that the project will deliver an operating profit of £30-40m and be free cash flow positive. We anticipate a total cash payback on our investment in the fourth year.
Roger Taylor, Chief Financial Officer, said:
“We believe that the investment and short term profit impact are fully justified by the rapid recruitment of customers to ensure higher penetration of our unbundled exchanges. The pricing reflects what we believe to be the real costs and benefits of providing residential telephony and broadband through unbundled exchanges. Furthermore, the investment we are making per customer compares favourably with what we and others have previously paid for acquiring Carrier Pre Select subscriber bases.”
Free broadband from TalkTalk is subject to the following conditions:
18 month contract
£29.99 connection fee, inclusive of VAT
40 gigabit monthly download limit
Prefix of 18418 required to make unlimited international calls. 28 countries are Australia, Austria, Belgium, Canada, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, New Zealand, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, The Netherlands, and United States
Standard line rental of £11.00 and all calls package of £9.99, each inclusive of VAT
“Forever” means whilst you continue to take standard line rental of £11.00 and the all calls package of £9.99
A premium of £9.99 per month is payable for customers residing outside the footprint of the 1,000 exchanges to be unbundled
Full terms and conditions are available at
http://www.talktalk.co.uk
The broadband product is available to be purchased separately at £35 per month.
Note: the £29.99 connection fee reflects the charge levied by BT for each customer TalkTalk connects to an unbundled exchange.
Source and more information:
http://www.cpwplc.com/cpw/media/press/2006/2006-04-11b/
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