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Business & Media: Carphone buys into Spanish telecoms

Posted on: Monday, 8 March 2004, 06:00 CST

Mobile phone retailer Carphone Warehouse is expanding its fixed- line service to mainland Europe after acquiring Spanish company Xtra Telecom in a euros 24m (pounds 16.1m) deal.

Carphone targeted BT with a move into the UK fixed-line market last year by launching Talktalk, which has 240,000 paying customers. Charles Dunstone, chief executive of Carphone Warehouse, said the Xtra deal would be followed by similar acquisitions.

"We see opportunities to enter this market in a number of countries where we already have well established operations. The Spanish market is particularly attractive as our first fixed-line step abroad because of the critical mass and momentum of our retail business and the relatively high market share of the incumbent provider."

The company is expected to set up a fixed-line service in France, its biggest retail mar ket on the continent. Carphone Warehouse owns 700 stores in mainland Europe and 500 outlets in Britain.

The move into fixed-line calls is part of the strategy to turn Europe's largest independent mobile phone retailer into a one-stop shop for telecoms. Talktalk made a loss of pounds 5.5m in the first half of last year but it is expected to have attracted between 350,000 and 400,000 customers by the end of the month.

Xtra Telecom generated revenues of euros 34.9m last year and does not offer a residential service, instead focusing on business and wholesale customers and the international pre-pay market. The Phone House, Carphone Warehouse's Spanish retail outlet, will launch a residential service over the next six months.

Carphone Warehouse will pay an initial euros 11.5m for Xtra Telecom, with another euros 12.2m payable over the next two years if the Spanish company hits earnings targets.

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