Carphone Warehouse is getting TalkTalk ready for round 2 in the communication wars with BT despite losing £70m introducing their free broadband service last year. 

 

Customer demand was hugely underestimated, forcing Carphone Warehouse bosses to recruit hundreds of staff and put a hold on new customer acquisition. Things weren’t helped by BT and their unhurried approach to unbundling.

Even so, Carphone reported pretax profits for the 12 months to March 31st was £123.1 million, down 9.5 per cent from £136.1 million in the previous year.

CEO Charles Dunstone said: "The success of our unbundling strategy has encouraged us to broaden our exchange footprint for both TalkTalk and AOL customers…we expect the level of investment to fall materially in the following financial year once our exchange build-out is completed."

He said that Carphone Warehouse would start advertising TalkTalk again during the second half of the year after a marketing break whilst it sorted out customer service problems. "You will see us pick up the pace and become much more aggressive on advertising," he said, adding that it would have been "galling" to continue to market the free broadband product heavily whilst existing customers were waiting months to get online.

Carphone have reportedly won a few million pounds in compensation from BT’s Openreach division, who’s responsibility it is to unbundle the lines.

Dunstone said: "The customer service issues which arose from the unprecedented response to our Free Broadband offer have now substantially been addressed. We are now provisioning over 80 per cent of new customers directly onto unbundled lines, which simplifies the process and reduces waiting times to no more than three weeks from sign-up."

The group’s new attack on the fixed line market started yesterday with a cut in TalkTalk’s line rental from £11 to £10.50 along with an offer of free international calls to 30 countries. This was in direct response to similar discounts introduced by BT.

A BT  spokesperson said: “Yet again, Carphone is following BT’s lead. They’ve been forced to copy many of our price cuts but have also thrown in some smoke and mirrors for good measure.”

Begun these communication wars have.