Dixons still seeks to sell Irish mobile unit as profits slide
Electrical goods group Dixons-Carphone is still looking for a buyer for its iD Mobile arm in Ireland after seeing core group sales and profits slump in the first half of its financial year, writes
The group, better known for its Carphone Warehouse, Currys and PC World retail brands, has been looking to dispose of iD Mobile — a mobile virtual network operator, which uses the Three Ireland network — and pull out of the Irish mobile communications market since June. A spokesperson said the process is “ongoing”.
On a group-wide basis, Dixons-Carphone reported a 60.3% annualised slump in pre-tax profits, to £61m (€69m) for the six months to the end of October. Although overall revenues were slightly up, core UK and Ireland sales fell 2%, to just over £3bn, and mobile phone sales here and in the UK fell 3% on the same period last year.
That said, the group’s share price rose by as much as 9% as investors took heart from management’s upbeat line on second-half trading, to date, and a record sales haul from last month’s ‘Black Friday’ event. First half sales of electrical goods were up 6%, year-on-year.
The British group, which issued a profit warning in August, also cut its profit forecast again for the full 2017-18 year, reflecting the later launch of the iPhone X. It also plans to re-position its mobile phone sales business which was hurt by a weak mobile market as customers hold onto handsets for longer.
Chief executive Seb James said a combination of higher handset costs and relatively incremental technology growth meant customers were holding onto handsets for longer and some were choosing a SIM-only contract in the meantime.
The group had made “a very conscious decision to fight hard to drive sales” in mobile, retaining its position as the British market leader, but the move had hit profitability.
“We recognise that the performance of the mobile division needs addressing, and are taking action to adapt our model,” said Mr James.
“We believe that we can, over time, reduce the complexity and capital intensity of our mobile business model, and increase the simplicity and profitability of what we do,” he said.
Finance director Humphrey Singer said Dixons-Carphone had already improved its SIM-only range and had introduced “leasing propositions” on some phones.
More strategically, the firm is considering changes to its relationships with the big phone networks in the UK — EE, O2 and Vodafone.
“Those are three big relationships with complicated, long-term agreements, which we are talking to them about re-aligning,” Mr Singer said.
Additional reporting Reuters
