Carphone Warehouse results underline telecom sector weakness

Stocks of Carphone Warehouse, the biggest independent mobile retailer and one of UK's biggest broadband provider, have fallen sharply after disappointing results hit both its broadband connection scheme and its core mobile segment.

The company added 109,000 new customers to its roaster, significantly below the 128,000 the City was expecting; this puts Charles Dunstone and CW in a precarious position as they will have to add nearly 300,000 customers by the end of the year to match their own previsions.

Carphone Warehouse also said that their full-year profit would hover around £220 million, a big chunk of it coming from new mobile connections which were better than expected.

This was fuelled by rising PAYG connections while more expensive contracts were shunned leaving analysts to believe that consumers are less likely to spend.

Dunstone however, was positive that smartphones like the RIM Blackberry and Apple's iPhone could be the silver lining.

Carphone Warehouse is the only company on the market to give free broadband to its customers through its Talktalk offer; in effect, each new customer that gets signed in as a fixed/landline user becomes a CW broadband user.