Carphone Warehouse jumps 3% after positive outlook despite weak pre-pay market

Carphone Warehouse has said its full year earnings will meet forecasts despite a fall fall in its European revenues due to weakness in the pre-pay market. Sales in Europe fell 4.7% but if the low-end of the market was in trouble, the rest of the business including tablets and so on did well. A number of longer term UK customer contracts came up for renewal at the same time as the launch of new smartphone products, which boosted business, but it reckoned the pre-pay market fell 35% to 40% in the third quarter. This was due to a reduction in subsidies from the networks, and a lack of smartphone products in this segment. Revenue from non-cellular products - including tablets which the company is increasingly emphasising - grew 15% in the quarter, but this is still less than 10% of total sales. Virgin Mobile France, where it owns 47%, saw revenue growth of more than 15%, with the company reducing its focus on low-end pre-pay customers. Elsewhere it has now closed all eleven of its unsuccessful Best Buy UK stores - its partnership in electrical retailing with the US group. Following a number of transactions with Best Buy it plans to return 172p a share to investors, with an ex-dividend date of 27 January. With its positive outlook, the company's shares have climbed 10.25p to 324p. Matthew McEachran at Singer Capital Markets said: The third quarter statement shows like for likes in Europe down by 4.7%, slightly below consensus forecasts of a 4.2% fall, and Virgin Mobile France revenues up 15%. All eleven Best Buy UK stores have now been closed and management remain confident that leases can be assigned. Press speculation has centred around Kiddicare and Decathlon recently.